City Council Study Session Summary 2008 09 23

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City Council Study Session Summary September 23, 2008 Page 3 of 4 o Sales Tax - The 2008 model assumes only $170 per square foot of retail development. The $170 amount appears to be a better average of taxable sales per square foot of retail/commercial development. Three new variables have been incorporated into the sales tax revenue projections: o Cannibalization factor of new retail o Sales generated by new residential units o Sales generated by non-resident employees o Building Use Tax - Since Building Use Tax revenue is considered a non- recurring revenue the 2008 model takes a conservative approach and allocated the entire 3.375% to capital expenditures. o Motor Vehicle Use Tax - Assumptions are the same for both models except the 2008 model establishes a 'turnover' rate. o Current Land Use - The 2008 model updates the current land use mix and presents non-residential land use by retail, industrial and office categories, which is biggest change of the model. o Impact Fees - The 2008 model incorporates the new impact fees approved in 2006. o Allocation of Other Revenue - The 2008 model replaces the "Other Tax and Miscellaneous Revenue" assumptions with a listing and distribution of 14 different revenue items. These specific revenue items are a major change from the 2005 model. o Allocating of Operating Costs - The allocation percentages of departmental operating costs has been reassessed and updated by City departments o Comprehensive Plan Development Estimates - The 2008 model includes the development estimates for the 20-year buildout of the current Comprehensive Plan Mayor Sisk asked if the Motor Vehicle Use Tax was for automobile travel only. Director Watson said currently it was. Assistant City Manager Balser said that if travel trends change then those changes could be incorporated into the model. Mayor Sisk asked if Director Watson could build into the model a use tax passing in 2009 and how it would impact the City. Director Watson said that he could do that. Mayor Sisk thanked John Leary for his assistance in the 2008 model and asked if he had any comments. Mr. Leary said the 2008 model is a good tool and the ability to change the assumptions adds to its value. Mr. Leary said that a lot of work went into this model and included work done at night and the weekends. Mr. Leary felt that the model was lacking in the capital side which requires that Tischler Study be updated regularly. Mr. Leary pointed out that the model does not allow for assessment of future needs such as street maintenance or recurring capital needs. Mr. Leary said that the assumptions should be routinely questioned. Assistant City Manager Balser said that the 2008 model was one tool in the toolbox that could be used in determining the value of a development, but there are other tools and considerations.