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Market Assessment and Fiscal Impact Analysis of the Pleasanton Gateway Business Park Report 3/31/10 Property Tax Property tax in California is based on 1.0 percent of assessed value and will be collected from the Pleasanton Gateway Business Park development. While the existing property tax is generated by land value, the additional value of improvements is assumed to generate a net increase in property tax. The property tax revenue portion accruing to the City's General Fund is estimated at 24.5 percent of the 1.0 percent based on the City's property tax capture. The property tax calculations are based on the value projections estimated by EPS of $330 per square foot for a new Safeway, $300 per square foot for a bank and a coffee shop /restaurant buildings, and $250 per square foot for other retail and office development. The property tax calculations are shown in Table 7. Property Tax In Lieu of Vehicle License Fees In 2004, the State of California adjusted the method for sharing VLF with local jurisdictions. While the actual amount of VLF decreased for each jurisdiction, the State backfilled those losses by sharing more of the property taxes than previously. The property tax backfill was based on the lost revenues in the initial year and since then has been adjusted based on the proportionate increase in assessed values each year. The Project will add an additional 1.0 percent to the current assessed value of property in Pleasanton (assuming no other assessed value growth) and will generate the same increased percentage in in -lieu VLF revenues (see Table 7). Sales Tax The City's sales tax revenues will be driven by new employment and new retail space as summarized in Table 8. These sources of retail demand, and thus sales tax, are described below. The City will receive 0.95 percent of new taxable sales. Employees As shown in Table 9, 2,088 new employees supported by the Project are estimated to spend a portion of expenditures in Pleasanton. About 25 percent of these expenditures are estimated to occur off site but elsewhere in Pleasanton given the City's competitive retail supply. New Retail Based on the proposed and expanded Safeway grocery stores, about 120,000 to 127,000 square feet of new retail space will also generate sales tax revenue , with Safeway expected to generate $600 per square foot, the coffee shop /restaurant expected to generate $375 per square foot, and other retail expected to generate $350 per square foot in annual sales. Since a portion of 6 The City collects special taxes in addition to the 1.0 percent of value; these taxes are excluded from this analysis as special taxes typically apply to specific uses and do not impact the General Fund. 7 Does not include the temporary property tax increase resulting from the "triple flip" effect that reduces local sales and use tax revenues and offsets the reduction by property tax revenues from the State. 6 This analysis assumes about 117,173 square feet of retail space to reflect a 5 percent vacancy assumption for the "Other Retail" category. Economic & Planning Systems, Inc. 14 P: 118000s118101PIeasantanlRepoM 18101ryt8.doc