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Pleasanton General Plan Fiscal Impact Analysis Final Report 01/16/14 Sales Tax Pleasanton has established a strong regional retail position due to its central location and Stoneridge Mall retail cluster. Pleasanton expects addition of nearly 700,000 square feet of retail through buildout, including regional and local retail, as well as auto sales and gasoline stations. Tri-Valley is a highly competitive retail market area and other cities in the region are gradually developing their own retail space to compete for sales, such as the recently opened premium outlets in Livermore. This analysis assumes that Pleasanton's regional and auto sales retail will continue serving a regional focus, while local-serving retail will be primarily driven by household spending from new residential growth. This approach ensures that the City's General Plan fiscal planning is based on internal growth dynamics rather than an assumption that supply creates demand. EPS estimated retail spending capacity of future residents based on their household incomes as a share of home values or rents (see Table 13). Incomes for retirement/convalescent home occupants are excluded from the analysis while incomes of elderly housing occupants are based on the citywide retiree income average. It is assumed that resident growth will support a share of non-local retail categories ranging between 30 percent for regional retail and 70 percent for gas station sales, while resident growth is also assumed to support 95 percent of neighborhood retail. Sales are assumed to be shifted from other existing retailers in Pleasanton when sales capacity of new retail exceeds that supportable by new residents. This approach suggests that creating additional capacity for neighborhood retail will not necessarily improve the City's long- term fiscal health without household income growth. In addition to resident expenditures, the analysis assumes that Pleasanton continues to be a regional retail leader with a net capture of sales across various categories. Nearly half of the City's future regional sales are estimated to be supported by regional shoppers and employees that live outside of Pleasanton. As shown in Table 14, future resident spending and regional capture combine for $339 million in taxable sales. However, some of these sales would likely shift from existing retailers in the City. Specifically, one-third of new sales are assumed to be shifted from existing retail attributed to both, regional and local-serving sales categories. beyond those supportable by new resident growth would also shift sales from existing retailers. This shift falls within a 5 to 10 percent range of where performance of existing retailers could be adversely affected by sales loss. In other words, growth in new household incomes is likely to support only a portion of the new retail space capacity, suggesting that the remainder of new retail space will either require higher regional sales capture or will shift sales from existing retail tenants. The total sales tax rate is 9 percent (9%) levied on taxable sales generated in the City. Out of the 1.0 percent (1.0%) of sales tax generated to local jurisdictions, the City's General Fund receives 0.95 percent (0.95%) of taxable sales under the Bradley Burns Act with the County receiving the remaining 0.05 percent (0.05%). This rate results in $2.1 million a year in new sales tax revenue to the City's General Fund. Economic&Planning Systems, Inc. 29 P:\121000\121062PleasantonkReport1121062Report_FINAL.doc