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• Projected annual sales at the Johnson Dr. Home Depot store would be $32.8 million after a 15% transfer of sales to the proposed Home Depot store and a 20% transfer of sales to the new Lowe's in Dublin. • Projected annual sales at all other existing home improvement stores in Pleasanton would be $89.4 million after a 10% transfer of sales to the new Lowe's store in Dublin and a 6% transfer of sales to the proposed Home Depot store for a total reduction in sales of 16%; • The proposed Home Depot store will recapture approximately $3.9 million in sales revenue from the Livermore Home Depot, Livermore Orchard Supply, and Dublin Lowe's. The conclusions of the study were: • Net new sales at the proposed Home Depot would be substantial enough to justify opening a new store (Home Depot sales would increase 53% as a result of opening the proposed Home Depot store); • Both the Johnson Dr. store and proposed store can operate and meet the company's financial thresholds; • Pleasanton stands to lose $20.5 million in home improvement expenditures due to the opening of Lowe's; • Allowing the proposed Home Depot store to open would reduce this loss to approximately $2.0 million, or $20,000 in sales tax revenues to the City; • Closing or relocating the Johnson Dr. store is unlikely since without it, Lowe's rather than the proposed Home Depot store would be in a better position to capture the Johnson Dr. sales; • It is difficult to quantify the long-term impact on the smaller home improvement businesses; however, the consultant believes based on his experience that new home improvement stores tend to increase home improvement expenditures in the trade area overall and that this increase would tend to benefit the smaller operators, as well. Fiscal Analysis: Staff prepared a fiscal analysis for the May 15 City Council hearing; however, staff revised this analysis using the results of PRC's study for the proposed Home Depot store. The fiscal analysis included a review of the increase in the City's operating expenditures as a result of adding the Pleasanton Gateway project. These expenditures were developed using both an average costing method based on current City services and a marginal costing method based on the required increase in City services. Based on PRC's numbers, staff's revised analysis shows that with the project the City would show an annual net positive fiscal impact of between $185,000 (based on the average costing method) and $260,000 (based on the marginal costing method) as a result of the project. However, at the November 1 workshop some members of the community felt that due to higher potential enforcement costs which could result from the project, amore conservative marginal costing assumption should be used to account fora "worst case" scenario of additional Code Enforcement and Police Department staffing. Staff then re-calculated the marginal costing fiscal analysis using additional staffing in these areas and determined that the City's costs would be Page 4 of 14