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JDEDZ PROJECT REVIEW
<br />SEPTEMBER 2017
<br />II: SALES TAX REVENUE SHARING REPAYMENT
<br />The next step is to determine if these sales forecasts produce sufficient revenue to meet the
<br />obligations the City of Pleasanton is assuming in the JDEDZ Sales Tax Sharing Agreement with
<br />Costco.
<br />The city and Costco have proposed to enter into a Sales Tax Sharing Agreement designed to
<br />repay Costco's $6.8 million upfront investment in infrastructure necessary to the development of
<br />the store plus 1.5% annual interest with a maximum term of 25 years. The agreement proposes
<br />to return to Costco up to 40% of the sales tax revenue associated with taxable revenue at the
<br />store, and does not include other retail facilities within the JDEDZ.
<br />Taxable Sales
<br />Civic Economics has not had the time to conduct its own assessment of Costco to estimate the
<br />proportion of total sales that will be subject to the city's 1% sales tax. Fortunately, ALH Econ
<br />did conduct such an analysis. We have no reason to believe that the mix of customers or of
<br />goods sold has changed in significant ways since ALH conducted its study, and thus have here
<br />adopted those analyses for the limited
<br />purpose of projecting sales tax revenues.
<br />First, Costco is different from ordinary
<br />retailers in that many of its business
<br />members purchase goods from Costco for
<br />resale, and are thus exempt from paying
<br />sales taxes on those purchases. ALH
<br />estimated that 12% of all revenue at the
<br />Pleasanton Costco would likely fall under
<br />an exemption from sales tax collection.
<br />Secondly, Costco sells a broad selection of
<br />goods. Pharmacy and food are generally
<br />exempt from sales tax and gasoline is
<br />subject to its own tax regime. ALH
<br />estimated that 54.36% of all sales at a
<br />Pleasanton Costco would be subject to city
<br />sales tax.
<br />From that figure and the realistic sales
<br />forecasts developed in Section I, Civic
<br />Economics is able to project sales tax
<br />revenues from the Costco (Figure 4).
<br />Figure 4
<br />AMORE REALISTIC FORECAST
<br />Salesland Taxable
<br />Growth
<br />Year Rate Total Sales Taxable Sales
<br />1 $ ;108,750,000 $ 58,725,000
<br />2 4.48% $ 113,620,758 $ 61,355,209
<br />3 5.67% $ .120,059,419 _.$" 64,832,086-j
<br />4 3.50% $ 124,259,921 $ 67,100,357
<br />$ 128;582,116' $ 69,434;343.1
<br />6 1.36% $ 130,325,732 $ 70,375,895
<br />7 ' 2.64% $ 133;761,718 $ 72,231,328
<br />8 0.50% $ 134,430,527 $ 72,592,484
<br />9 . 0.50% $ 135,102,679 $ 72,955,447,
<br />10 0.50% $ 135,778,193 $ 73,320,224
<br />11 0.50%_4$1-136,457,084' 1_73;686,825)
<br />12 0.50% $ 137,139, 369 $ 74, 055, 259
<br />13 , 0.50% $ 137:825,066 $ 74, 425, 536
<br />140.50% $ 138, 514,191 $ 74,797,663
<br />15
<br />0.50% $ 139,206,762 $ 75,171,652
<br />16 0.50% $ 139,902,796 $ 75,547,510
<br />17 0.50%..$ 140;602,310 $ 75,925,247
<br />18 0.50% $ 141,305,322 $ 76,304,874
<br />19 0.50% $ _142;011,848$ 76,686,398
<br />20 0.50% $ 142,721,907 $ 77,069,830
<br />21 _ 0.50% $ 143,435,517 $ 77,455,179
<br />22 0.50% $ 144,152, 695 $ 77,842,455
<br />23 0.50% $ 144,873,458 $ 78,231,667
<br />24 0.50% $ 145,597,825 $ 78,622,826
<br />25 0.50% $ .146;325,814 $ 79,015,940.
<br />Civic Economics
<br />7
<br />P14-0852 and PUD -105, JDEDZ - Public Comments Provided for October 11, 2017 Planning Commission Meeting 45
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