75D - PH- MAIN PLACE TRANSFORMATION

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The Consultant estimates an average yearly salary of approximately $40,000 for Phase 1 and $80,000 for full buildout for the total employment in the operations stage of the Development. While the Phase 1 employees will be concentrated in retail and hotel sectors, full buildout anticipates the addition of 2,500 office jobs spread across various industry sectors. This indicates an average yearly salary of approximately $100,000 for the office workers. IMPLAN Labor Income includes the full estimation of salary and benefits, which inflates the average salary. These estimates fall within the approximate range for workers in the industry sectors they represent. Depending on the mix of industries that will occupy space in the proposed Development, these estimates are largely in line with economic patterns in Orange County. 3. Fiscal Impacts The Consultant estimates the generation of additional revenue for the City's General Budget from increased Property Tax, Property Tax in -Lieu of VLF, Property Transfer Tax, Sales Tax (Direct and Indirect), Hotel Visitors Tax, Utility User Tax, Franchise Tax and Business Tax. These estimates are largely derived from well -established methodologies, and AECOM highlights only a few assumptions that need clarification. Property Tax Estimated Property Tax revenues are based on the assessed value of the development at full buildout. In turn, the assessed value is based off the estimated development costs for the entire project with the land acquisition costs excluded. This cost approach to property valuation is widely accepted and the most suitable for this project in the current stage of development. Sales Tax The recent promulgation of Measure X in 2018 increases the relative importance of sales tax to the City of Santa Ana and will be a significant source of revenue for the coming two decades. Estimates of direct Sales Tax depend on predicted sales per square foot for the currently vacant and new retail space in the Development. The Consultant estimates $500 in sales per square foot for general retail. According to an eMarketer survey of retail locations in Southern California in 2018, average sales per square foot was found to be $436, with a median sales per square foot of $322. For new retail space, these estimates are within the acceptable range for the region and will depend on future tenants and strategies for attracting clientele. Sales per square foot for the proposed food hall, entertainment and theater uses fall within the ranges of eMarketer survey data and AECOM verified examples from 2018, again on the high end of ranges. Estimates for indirect sales tax rely on several assumptions regarding household/employee spending habits and the City's capture of this spending. In terms of capture rates for the City, the Consultant estimates 50% of taxable spending for new households and hotel guests and 40% for on -site employees. Comparable studies from AECOM (2018), Economic Planning Systems (2016) and Keyser Marston Associates (2018) calculate ranges from 25%-50%, with greater capture rates for developments near the commercial center of larger cities. A review of retail surplus/leakage data from ESRI reveals that Santa Ana had a retail surplus of approximately $1.5 billion in 2018. This indicates that the City has an abundant supply of retail trade, food and drink that both satisfies the potential demand of City residents and absorbs demand of non-resident households. Nonetheless, a 50% capture rate for the City of new household spending is optimistic considering the peripheral location of the Development in the City of Santa Ana More clarification on the justification for this capture rate would be helpful. The estimate of taxable sales for households, however, is comfortably within the range of several data sources. The Bureau of Labor Services Consumption Survey for the Los Angles Metro Area that Includes the City estimates approximately $22,000 for households across the region, and ESRI estimates approximately $18,000 for the City. However, the level of household spending is determined by many factors, including income and household size. The question of household size will be addressed in the Fiscal Expenditures section below. Taxable sales generated by on -site employee spending, however, are more contentious. Particularly for office workers, the Consultant's estimate of $18,454 per year exceeds figures from the International Council of Shopping Center's Office -Worker Retail Spending that estimate approximately $15,000 per year for the highest category of worker (suburban, senior managers with ample retail option in the immediate vicinity of the office). Nonetheless these AECOM 7 75D-576