ECONOMIC IMPACT ANALYSIS
OF THE PROPOSED BENICIA
BUSINESS PARK
FISCAL ANALYSIS
RETAIL COMPETITIVENESS ANALYSIS
ECONOMIC MULTIPLIER ANALYSIS
May 2008
Prepared by
Applied Development Economics
100 Pringle Avenue, Suite 560 • Walnut Creek, California 94596 • (925) 934-8712
2151 River Plaza Drive, Suite 150 • Sacramento, California 95814 • (916) 923-1562
www.adeusa.com
CONTENTS
Executive Summary ..................................................................................................................... 1
Project Description ...................................................................................................................... 1
Fiscal Impact................................................................................................................................. 1
Retail Competiveness Analysis ................................................................................................... 2
Economic Benefits....................................................................................................................... 3
Project Description ...................................................................................................................... 7
Land Uses ...................................................................................................................................... 7
Economic Characteristics Of The Project ............................................................................... 9
Approach To The Analysis....................................................................................................... 11
City Budget ................................................................................................................................. 11
Project Impact On The City Budget ....................................................................................... 15
Scenario 1 .................................................................................................................................... 15
Scenario 2 .................................................................................................................................... 18
Revenues ..................................................................................................................................... 21
Expenditures ............................................................................................................................... 23
Project Contribution To City And County Impact And Connection Fees ....................... 28
Retail Market Analysis ............................................................................................................... 31
Introduction ................................................................................................................................ 31
Methodology ............................................................................................................................... 32
Retail Demand (Spending) ........................................................................................................ 33
Benicia Retail Sales..................................................................................................................... 45
Commercial Development Opportunities.............................................................................. 46
Sales Tax Projections ................................................................................................................. 49
Conclusion .................................................................................................................................. 50
Economic Multiplier Effects .................................................................................................... 51
Annual Economic Effects ........................................................................................................ 51
Conclusion .................................................................................................................................. 56
APPENDICIES
Appendix A: City Budget Excerpts, 2003-2005 Adopted Budget
Appendix B: City Budget Excerpts, 2005-2007 Proposed Budget
TABLES
1 Benicia Business Park Projected Land Uses And Onsite Employment Estimate .......... 8
2 Economic Characteristics Of The Project ............................................................................ 8
3 City Of Benicia General Fund Budget 2005-06 ................................................................ 12
4 Personnel Positions Adjusted Out Of City Budget For Fiscal Impact Study ............. 14
5a Net Impact Of Proposed Project Over Time Scenario 1 ............................................... 16
5a (Cont.) Net Impact Of Proposed Project Over Time Scenario 1 ................................. 17
5b Net Impact Of Proposed Project Over Time Scenario 2............................................... 19
5b (Cont.) Net Impact Of Proposed Project Over Time Scenario 2 ................................. 20
6 Impact Of Proposed Project On Police Services............................................................... 24
7 Benicia Fire Department Calls For Service 2004 ............................................................... 26
8 Vacant Industrial Land In Benicia........................................................................................ 26
9 Estimated Impact And Connection Fees ............................................................................ 30
10 Existing Benicia Retail Spending Demand (2005) .......................................................... 34
11 Growth In Total Benicia Retail Spending Demand ........................................................ 35
12 Benicia Household Income Distribution (2005) .............................................................. 35
13 Benicia Household Retail Spending Demand (2005) ...................................................... 36
14 Projected Growth In Benicia Households ........................................................................ 37
15 Growth In Benicia Household Spending Demand ......................................................... 38
16 City Of Benicia Jobs (2005) ................................................................................................ 38
17: Benicia Commuter Retail Spending Demand (2005) ..................................................... 40
18 Additional City Of Benicia Jobs ......................................................................................... 41
19 Growth In Benicia Commuter Retail Demand ................................................................ 42
20 Visitor Spending In Solano County ................................................................................... 42
21 Solano County Visitor Spending (2005 Projection) ....................................................... 43
22 Benicia Visitor Retail Spending Demand (2005).............................................................. 44
23 Growth In Benicia Visitor Retail Spending Demand ...................................................... 45
24 Existing Retail Sales And Leakage (2005) ......................................................................... 46
25 Demand Projection For Store Types Relevant To The Proposed Project .................. 47
26 Projected Sales Per Sq. Ft. ................................................................................................... 47
27 Supportable Sq.Ft. ................................................................................................................ 47
28 Anticipated Commercial Development Absorption In The Proposed Project
(Cumulative) .......................................................................................................................... 48
29 Projected Sales ...................................................................................................................... 48
30 Market Demand And Projected Sales For Eating Places ............................................... 49
32 Summary Of Taxable Sales ................................................................................................. 50
33 Direct And Indirect Economic Benefits Of The Proposed Project ($2005) ............... 53
FIGURES
1 Benicia Business Park .............................................................................................................. 3
2 Projected Development Absorption Rates .......................................................................... 4
3 Annual Fiscal Impact of Business Park Project Scenario 1 ................................................ 4
4 Cumulative Net Revenue* Scenario 1 .................................................................................. 5
5 Annual Fiscal Impact with Alternative Services Phasing Scenario 2 ................................ 6
6 Cumulative Net Revenue* with Alternative Services Phasing Scenario 2 ........................ 6
7 Locations of Existing and Proposed Fire Stations ........................................................... 27
8 Components of 2.2 Billion in Economic Benefit ($2005) ................................................ 55
EXECUTIVE SUMMARY
PROJECT DESCRIPTION
This report evaluates the fiscal and economic impact of the
proposed Benicia Business Park Development. The project
consists of non-residential development on 297 acres within a
525 gross acre site (including 2 `28 acres of undeveloped
land), generally between East Second St., Lake Herman Rd.,
and Industrial Way (Figure 1). Full development of the site
would result in 837,000 sq.ft. of commercial uses and 4.4
million sq.ft. of light industrial and flex-space uses. The
commercial uses would include two hotels, and a variety of
retail and commercial services uses, as well as R & D and
other office space. The industrial space would house light
manufacturing, transportation and distribution firms, and
possibly some back office uses including government facilities
and laboratories.
Based upon internal market research, the project sponsor
anticipates that the commercial and lodging portions of the
project could be developed within an eight year time span,
while the industrial uses would require at least twenty five
years to fully develop (Figure 2). The market for the retail
portion of the project has been independently confirmed by
ADE, Inc., and the commercial market analysis is presented
in a later chapter of this report.
FISCAL IMPACT
This development program would produce a positive net
surplus revenue gain for City government that would reach $1
million per year by 2017 and $6.5 million per year at full
buildout.
In terms of public services impacts, City staff has requested a
new fire station and a new police beat at the project very early
after project initiation. This would allow the increased police
services to commence immediately when the project begins
construction and the fire station to come online with the
completion of the first hotel in the project. In addition to the
proposed Business Park project, the fire station and the
APPLIED DEVELOPMENT ECONOMICS
PAGE 1
police beat would also benefit existing developed uses in the
area that currently do not have adequate response times, as
well as new development on other vacant properties in the
industrial areas and elsewhere in the eastern portion of the
City (see Figure 5, p. 24). This phasing of services has been
analyzed as Scenario 1 in the fiscal analysis.
However, under the services plan in Scenario 1, the tax
revenues generated by the project early on would not cover
the added police and fire services (Figure 3). The City would
experience a cumulative net fiscal loss of about $2.3 million
over the first seven years of project development. This loss
would be completely recovered over the next three years of
the project development period. Over the full 25-year
development program, the City is estimated to gain more
than $46 million in surplus revenues after all City expenses
for services have been deducted (Figure 4).
Alternatively, under Scenario 2, if police and fire services
could be ramped up incrementally as the project develops,
reaching full strength after the completion of the first hotel
but before the commencement of the second (approximately
2011 to 2014), the project would be fully self-sustaining
(Figures 5 and 6). Since it is the hotel complex tat largely
provides the funding capacity for the Fire station and police
beat, as well as generating much of the need for these
facilities, the City could negotiate a development agreement
that ties the establishment of the higher levels of police and
fire services to the construction of the second hotel.
In addition, the project is estimated to pay $23.9 million in
development impact fees, which will help fund a number of
facilities improvements both in Benicia and within Solano
County. About $2.2 million of this amount is for the
countywide special tax for facilities such as libraries and other
County services.
RETAIL COMPETIVENESS ANALYSIS
ADE, Inc., prepared a retail market study to indicate how the
commercial portion of the project may affect existing
APPLIED DEVELOPMENT ECONOMICS
PAGE 2
commercial businesses and centers in Benicia.1 The market
analysis demonstrates that the commercial uses planned for
the project include retail sectors that are not currently wellserved in Benicia, and for which many City residents currently
shop outside of Benicia due to a lack of shopping
opportunities locally. Thus, the project would complement
the existing commercial mix in the City and would not
adversely affect the downtown area or other commercial
centers in the City. In fact, the two business hotels would
likely attract additional spending into the community, which
would be a benefit to existing businesses, particularly those in
the downtown area.
ECONOMIC BENEFITS
In addition to the fiscal benefit from the project, there would
be substantial private sector economic benefits. The project is
estimated to generate 7,680 jobs onsite, most which would be
above average in terms of wage levels and benefits. This
economic activity would also support 6,630 jobs in other
businesses throughout the county, as the tenant firms and
their employees purchase goods and services from other
businesses in the area. Altogether, this project would create
more than $2.2 billion ($2005) in economic output per year
once the project is fully developed (see Table 10, p. 31).
Under recent court decisions pertaining to CEQA, it is necessary to determine whether the project has the
potential to engender business competition that could impair the long term viability of existing commercial
districts, thereby creating urban decay, which may be considered an adverse environmental effect.
1
APPLIED DEVELOPMENT ECONOMICS
PAGE 3
Figure 1
Benicia Business Park
APPLIED DEVELOPMENT ECONOMICS
PAGE 4
Figure 2
Projected Development Absorption Rates
Square Feet
3,000,000
2,500,000
2,000,000
Light Industrial
Commercial
1,500,000
Hotel
1,000,000
500,000
0
1
3
5
7
9
11
13
15
17
19
21
23
25
Years
Figure 3
Annual Fiscal Impact of Business Park Project
(Current Dollars)
$10,000,000
Annual Dollars
$9,000,000
$8,000,000
$7,000,000
$6,000,000
Revenue
$5,000,000
Expenditures
$4,000,000
Net Revenue
$3,000,000
$2,000,000
$1,000,000
$0
1
3
5
7
9
11
13
15
17
19
21
23
25
Years
APPLIED DEVELOPMENT ECONOMICS
PAGE 5
Figure 4
Cumulative Net Revenue*
(Current Dollars)
$90,000,000
Total Dollars
$80,000,000
$70,000,000
$60,000,000
$50,000,000
$40,000,000
$30,000,000
$20,000,000
$10,000,000
25
23
21
19
17
15
13
11
9
7
5
3
1
$0
Years

APPLIED DEVELOPMENT ECONOMICS
Represents surplus revenues after all City expenses are
paid, including police, fire, street maintenance, and
general government services.
PAGE 6
PROJECT DESCRIPTION
LAND USES
The proposed project site consists of about 297 developable
acres in 525 gross acre site (including 228 acres of
undeveloped land), situated between Second St., Lake
Herman Road and Industrial Way (see Figure 1). The
development would include about 857,000 sq.ft. of
commercial uses on 33.25 acres and more than 4.4 million
sq.ft. of light industrial and flex space uses on 263.8 acres (see
Table 1).
The commercial portion of the project would include two
hotels and a conference center, various commercial uses such
as a health club, a service station and eating establishments, as
well a bank and R&D office space. These uses are estimated
to create more than 1,850 jobs.
The light industrial and flex space is anticipated to support a
variety of public and private enterprises, some of which
would overlap some of the business activities planned for the
office space. For example, R&D activities and government
operations in the industrial space would involve activities
requiring fabrication, testing or warehousing activities
compared to the types of activities occurring in the office
space. The full range of anticipated uses in the industrial
space includes the following:












APPLIED DEVELOPMENT ECONOMICS
Industrial Research and Development Services
Government Offices
Ambulance Services
Maintenance and Repair Services
Warehousing and Storage
Light Manufacturing
Wholesaling and Distribution
Warehousing and Transportation
Trucking terminal/Freight Transfer Station
Package Distribution
Communication Facilities
Laboratories
PAGE 7
TABLE 1
Benicia Business Park
Projected Land Uses and Onsite Employment Estimate
Land Use
General Commercial
Hotel/Conference Center
3 story hotel
Health and fitness club
Office (4 story)
Movie theater
Office/Professional (2 story)
Retail
Restaurant - Sit Down
Fast Food
Service Gas Station/Washing/Mart
Bank
R&D Services
TOTAL COMMERCIAL
Light Industrial
Tilt-up
Flex Use
TOTAL INDUSTRIAL
GRAND TOTAL
Sq. Ft. per
employee
1,338
1,152
1,000
311
1,000
288
344
350
250
500
750
344
Sq.Ft.
Jobs
**
*
**
*
**
*
*
**
**
**
**
*
140,000
100,000
60,000
200,000
60,000
100,000
100,000
20,000
8,000
7,000
12,000
50,000
857,000
105
87
60
643
60
347
291
57
32
14
16
145
1,857
878 **
688 **
2,020,576
2,422,864
4,443,440
5,300,440
2,301
3,522
5,823
7,680
Data Sources:
* Natelson
** ADE, Inc.
TABLE 2
Economic Characteristics of the Project
Land Use
Industrial Tilt Up
Industrial Flex
Office
Commercial
Lodging
Source: ADE, Inc.
APPLIED DEVELOPMENT ECONOMICS
Floor
Area
Ratio
0.39
0.39
0.59
0.59
0.59
Assessed Taxable
value Per Sales Per
Sq.Ft.
Sq.Ft.
$70
$130
$200
$190
$180
$23
$30
$64
$250
$8
PAGE 8
This portion of the project is estimated to create more than
5,800 jobs, for a total employment complement in the project
of 7,680 jobs.
The commercial portion of the project is anticipated to
develop over the first eight years of the project, while the
light industrial/flex uses may require twenty-five years or
longer to develop.
ECONOMIC CHARACTERISTICS OF THE
PROJECT
ADE has researched the potential development value and
revenue characteristics of the proposed land uses for
purposes of estimating certain revenues in the fiscal analysis.
Based on recent market activity in Solano County, we
estimate that the industrial space would be valued at between
$70 and $130 per sq.ft. while the commercial portions of the
project would be valued at between $180 and $200 per sq.ft..
Both ends of these value ranges have been used to estimate
the assessed value and property tax revenues generated by the
project, as shown in Table 2.
In addition, ADE reviewed sales tax records for various
business types in Benicia, including existing businesses in the
industrial park. We have developed estimates of taxable sales
per sq.ft. for the major land use types as shown in Table 2.
The industrial and office uses would see only a small amount
of taxable sales but the retail space would the primary sales
tax generator in the project. The retail sales projections are
discussed in detail in the next chapter, which presents the
market analysis prepared by ADE, Inc. The commercial
category in Table 2 includes the health club, the bank and the
movie theater in addition to the retail and restaurant space.
Some of these non-retail uses generate relatively little sales
tax, so the taxable sales figure in Table 2 simply reflects the
gross average across all the commercial uses.
We anticipate that the hotels would have some restaurant
space that would generate sales tax as well. The figure of
$8.00 per sq.ft. in Table 2 reflects this small amount of
taxable sales spread across the whole hotel development, for
purposes of calculating the sales tax. The actual taxable sales
APPLIED DEVELOPMENT ECONOMICS
PAGE 9
for the restaurant space would be on the order of $200 per
sq.ft. We have also estimated the hotels would have 380
rooms, in addition to the conference and restaurant space,
which would generate an average room rate $100 per night
with 65 percent occupancy.2 In preparing in the fiscal
projections, the occupancy rates were phased in over a four
year period for each hotel, beginning with about 25%
occupancy in the first year and reaching the average of 65%
in four years.
2
This is the industry standard for a sustainable average occupancy rate. PKF Consulting, Hotel
Development. Urban Land Institute, 1996.
APPLIED DEVELOPMENT ECONOMICS
PAGE 10
APPROACH TO THE ANALYSIS
CITY BUDGET
The fiscal analysis is based on the adopted Fiscal Year 20052006 City budget. The General Fund revenues and
expenditures are shown in Table 3. The property tax is the
single highest revenue source for the General Fund, followed
by the sales tax. Public Safety, including police and fire
protection, are the largest expenditures for the City.
As is true with most local government jurisdictions in
California, Benicia is struggling to fund necessary community
services in the face of severe budget dislocations caused by
State fiscal policy. For a number of years now the state has
shifted local property taxes away from local governments and
into the Educational Augmentation Revenue Fund (ERAF),
which is used to meet state obligations for education funding,
primarily for local school districts. More recently, the State
has implemented the so-called ―triple flip‖ provision, in
which property taxes to local governments are to be increased
to backfill for commensurate reductions in sales taxes and
Motor Vehicle In-lieu fees. Although the legislation is
intended to keep cities whole in terms of total revenues, and
even includes a provision prohibiting further extensions of
the ERAF, the implementation of the plan has several
disadvantages for local government, and there is considerable
uncertainty as to the actual long-term outcome of the state
and local budgetary relationship. Consequently, Benicia, like
most cities throughout the state, is significantly constrained in
its ability to increase costs to meet rising service demands.
APPLIED DEVELOPMENT ECONOMICS
PAGE 11
TABLE 3
City of Benicia General
Fund Budget
2005-06
REVENUES
Property Taxes
Sales Taxes*
Business License*
Franchise Fees*
Utility Users Tax*
Haulers Fee*
Transient Occupancy Tax*
Property Transfer Tax*
Fines/Forfeitures
Licenses & Permits
Other Gov’l Agencies
Charges for Current Services
Other Revenue
Use of Money/Property
Interfund Transfers
TOTAL REVENUE
EXPENDITURES
General Government**
Library
Community Dev/Planning
Police
Fire
Public Works – Streets
Public Works – Other
Community Services
Interfund Transfers
TOTAL EXPENDITURES
BUDGET
$11,527,995
$4,967,200
$167,300
$1,128,100
$3,117,800
$136,600
$109,900
$170,700
$138,000
$697,500
$1,810,375
$1,362,900
$326,900
$203,000
165,910
$26,030,180
$4,946,010
$1,032,265
$1,254,240
$6,657,000
$5,714,705
$843,775
$897,280
$3,918,295
762,005
$26,025,575
*Indicates estimated revenues. All other figures are
budgeted amounts.
** Includes Insurances and Non-Departmental.
Source: City of Benicia Approved Annual Budget
2005-2007.
APPLIED DEVELOPMENT ECONOMICS
PAGE 12
BUDGET ADJUSTMENTS
In order to analyze the impact of the development project on
the City’s ongoing revenues and expenditures, some
adjustments must be made to the original budget figures of
Table 3. Primarily, the adjustments involve removing the
personnel cost associated with the positions of City Council,
Mayor, City Manager, other appointed and elected officials,
including City Department heads (see Table 4). The reasoning
for this adjustment, which is standard practice in fiscal
studies, is that these positions will not be duplicated or
increased with the addition of the development project.
These adjustments are necessary in the calculation of per
capita costs, which are described below.
PER CAPITA COSTS AND REVENUES
Some of the costs and revenues projected in this analysis have
been estimated on a per capita basis, which weights
residential population and non-residential employment levels
in terms of their relative use of City services and payment of
related fees and charges. In general, non-residential uses are
ascribed a certain service cost and revenue-generating
capacity based on the employment they support, which is
weighted half as much as the residential population. The
rationale for this approach, which is a standard methodology
for fiscal impact analysis, is that the residential population
exerts a round-the-clock need for City services, while jobs
usually consist of an eight-hour shift per day. For public
works services, this relationship is reversed, with the
residential population exerting half the impact of the business
uses. This reflects the heavier usage of streets by trucks and
the higher volumes of utilities used by businesses.
The resulting calculations distribute the majority of service
demands and related revenues to population and the
remainder to non-residential development, as measured by
the number of jobs they support. (While some industrial
facilities in Benicia, such as the refinery, may operate 24
hours per day, each daily period include three jobs, at eight
hours each.) The impact discussion in the next section
indicates which costs and revenues have been estimated using
APPLIED DEVELOPMENT ECONOMICS
PAGE 13
this approach, and which have been calculated using direct
estimates.
TABLE 4
PERSONNEL POSITIONS ADJUSTED OUT OF CITY
BUDGET FOR FISCAL
IMPACT STUDY
Position
City Council (Mayor + 4 Council) [b]
City Clerk
City Manager
City Attorney
Human Resources Director
Finance Director [c]
City Treasurer
Library Director
Community Development Director
Police Chief
Fire Chief
Public Works Director [d]
Community Services Director
TOTAL
Actual 0405 Salary
Schedule
$80,240
26,582
242,700
232,635
158,617
172,680
20,300
153,722
176,183
220,431
210,950
186,790
160,040
$2,041,870
Adjustment for
Fiscal Analysis
[a]
$70,240
27,500
250,700
240,300
163,900
160,600
21,000
158,800
182,000
227,700
217,900
135,100
165,300
$2,021,040
CPB Source Notes:
[a] In addition to the adjustments noted below, the figures include a 3.3% inflationary increase over the
2004-2005 figures.
[b] For this line item, these are budgeted 2005-2006 figures: Total budget includes $10,000 for materials
and supplies, which has not been adjusted out here.
[c] Includes 90% of position in General Fund
[d] includes 70% of position in Public Works
Source of Data: City Budget Data, from City Approved Annual Budget, 2004-05 and 2005-2006; Salary
Schedule Data: City's 2004-05 Salary Schedule, provided by Finance Department 060805; Rob Sousa,
Finance Director, 707 746-4217,email, "Rob.Sousa@ci.benicia.ca.us"; Alyson Kauzer, Accounting
Systems Supervisor, 707 746-4224, email, "Alyson.Kauzer@ci.benicia.ca.us"
Salary Schedule is at E step. In City Budget figures, most Dept Heads' "actual" is at E step for year,
except for City Manager who was at E step only 1/2 the year, and unknown re Dir of Library and
Interim Comm Dev Director.
Benefits in Salary Schedule are at the highest rate, "family". In City Budget figures, some Dept Heads'
"actual " benefit amount is less, if they have no children covered.
APPLIED DEVELOPMENT ECONOMICS
PAGE 14
PROJECT IMPACT ON THE CITY BUDGET
The proposed project would affect most of the City service
departments and would generate a variety of tax and fee
revenues for the City. When fully developed, the projected
revenues from this project would greatly exceed the City’s
costs as shown in Table 5 and Figure 3. In certain cases such
as police and fire services, the project would trigger the need
for new facilities or levels of service that would not be
covered by tax revenues generated by the proposed project in
the early years. It should also be noted that these new
facilities and services would also provide service to the entire
eastern portion of the City, including the existing industrial
area. In the case of the fire station operating costs, only the
project’s proportional share of these costs are shown in Table
5. The City will need to look to other funding sources to
complete the needed financing.
SCENARIO 1
Due to the fiscal impact on the City of establishing a new fire
station and police beat, we have analyzed two scenarios that
illustrate the effect of different phasing for the new services.
Scenario 1 represents City staff requests that the police beat
be fully operational by the second year after construction of
the project begins, and that the fire station be operational
prior to opening of the first hotel in the project.
Under this scenario, during the first seven years of project
development the City would experience a cumulative net
fiscal loss of about $2.3 million. This loss would be
completely recovered over the next three years of the project
development period. Over the full 25 year development
program, the City is estimated to gain more than $46 million
in surplus revenues for use in supporting enhanced
community services (Table 5A).
APPLIED DEVELOPMENT ECONOMICS
PAGE 15
TABLE 5A
Net Impact of Proposed Project Over Time
SCENARIO 1
2007
REVENUES
Property Taxes
Sales Taxes
Business License
Franchise Fees
Utility Users Tax
Transient Occupancy Tax
Property Transfer Tax
Fines/Forfeitures
Other Revenue
Use of Money/Property
TOTAL REVENUE
EXPENDITURES
General Government
Library
Community Dev/Planning
Police
Fire
Public Works - Streets
Public Works - Other
Community Services
TOTAL EXPENDITURES
NET (COST)/REVENUE
CUMULATIVE (COST)/REV.
APPLIED DEVELOPMENT ECONOMICS
2008
2009
2010
2011
2012
2013
2014
$105,680
$254,177
$4,794
$10,887
$30,089
$0
$20,983
$1,332
$3,155
$3,406
$434,503
$143,399
$303,564
$6,855
$15,566
$43,020
$0
$6,733
$1,904
$4,511
$4,153
$529,704
$186,139
$293,883
$396,243
$358,577
$552,344
$637,126
$9,175
$13,204
$18,020
$20,835
$29,984
$40,920
$57,584
$82,870
$113,093
$0
$152,205
$235,157
$7,181
$19,190
$15,924
$2,549
$3,668
$5,006
$6,038
$8,689
$11,858
$5,121
$9,135
$11,642
$653,199 $1,165,172 $1,484,988
$489,752
$821,763
$22,622
$51,369
$141,973
$322,949
$13,470
$6,284
$14,886
$14,895
$1,899,963
$569,727
$937,190
$26,910
$61,106
$168,884
$415,797
$10,546
$7,475
$17,707
$17,505
$2,232,848
$668,945
$1,064,603
$32,202
$73,124
$202,099
$428,271
$12,533
$8,945
$21,190
$19,849
$2,531,762
$52,979
$2,560
$5,092
$263,548
$0
$15,450
$15,777
$0
$355,405
$79,098
$106,511
$3,668
$7,296
$552,312
$0
$22,137
$22,605
$0
$714,530
($184,825)
$148,628
$297,979
$313,906
$4,920
$7,095
$9,704
$9,787
$14,115
$19,304
$773,717
$798,631
$824,347
$0
$794,609
$820,195
$29,694
$42,825
$58,568
$30,323
$43,731
$59,807
$0
$0
$0
$997,069 $1,998,984 $2,105,830
($343,870)
($833,812)
($620,842)
$329,845
$12,208
$24,285
$850,891
$846,606
$73,681
$75,240
$0
$2,212,756
($312,792)
$345,659
$14,553
$28,950
$878,289
$873,866
$87,835
$89,693
$0
$2,318,845
($85,997)
$363,257
$17,452
$34,717
$906,570
$902,005
$105,334
$107,563
$0
$2,436,898
$94,864
$79,098
($105,727)
($449,597) ($1,283,409) ($1,904,251)
($2,217,043)
($2,303,040)
($2,208,176)
PAGE 16
TABLE 5A (Cont.)
Net Impact of Proposed Project Over Time
SCENARIO 1
2015
REVENUES
Property Taxes
Sales Taxes
Business License
Franchise Fees
Utility Users Tax
Transient Occupancy Tax
Property Transfer Tax
Fines/Forfeitures
Other Revenue
Use of Money/Property
TOTAL REVENUE
EXPENDITURES
General Government
Library
Community Dev/Planning
Police
Fire
Public Works - Streets
Public Works - Other
Community Services
TOTAL EXPENDITURES
NET (COST)/REVENUE
CUMULATIVE (COST)/REV.
APPLIED DEVELOPMENT ECONOMICS
2016
2019
2022
2025
2028
2031
$872,948
$1,264,967
$40,791
$92,628
$256,002
$741,081
$30,231
$11,331
$26,842
$26,367
$3,363,187
$938,304
$1,353,715
$44,150
$100,254
$277,079
$850,549
$6,437
$12,264
$29,052
$28,540
$3,640,342
$1,178,135
$1,651,189
$56,058
$127,296
$351,817
$1,191,561
$7,607
$15,572
$36,888
$36,476
$4,652,598
$1,508,317
$2,022,146
$71,573
$162,526
$449,185
$1,302,051
$9,297
$19,882
$47,097
$44,187
$5,636,260
$1,981,556
$2,507,034
$92,450
$209,934
$580,210
$1,422,786
$11,954
$25,681
$60,835
$54,462
$6,946,901
$2,706,535
$3,173,498
$122,166
$277,412
$766,702
$1,554,717
$16,735
$33,936
$80,388
$68,999
$8,801,088
$4,017,856
$4,224,782
$171,070
$388,464
$1,073,624
$1,698,881
$30,594
$47,521
$112,569
$92,967
$11,858,328
$385,968
$22,154
$44,071
$935,762
$931,049
$133,713
$136,542
$0
$2,589,260
$773,927
($1,434,249)
$401,488
$24,030
$47,801
$965,893
$961,029
$145,031
$148,100
$0
$2,693,372
$946,970
($487,280)
$452,923
$30,707
$61,085
$1,062,235
$1,056,886
$185,333
$189,255
$0
$3,038,424
$1,614,174
$3,790,483
$513,231
$39,457
$78,491
$1,168,187
$1,162,304
$238,145
$243,184
$0
$3,443,000
$2,193,260
$9,748,469
$585,445
$51,294
$102,038
$1,284,706
$1,278,237
$309,586
$316,137
$0
$3,927,443
$3,019,458
$17,911,398
$675,251
$68,217
$135,701
$1,412,848
$1,405,733
$411,721
$420,433
$0
$4,529,903
$4,271,184
$29,347,839
$798,788
$96,138
$191,244
$1,553,771
$1,545,946
$580,242
$592,519
$0
$5,358,648
$6,499,680
$46,238,219
PAGE 17
SCENARIO 2
The second scenario has police and fire protection increasing
incrementally from existing facilities until after the first hotel
is operational but before the second hotel is built. Based on
the projected absorption of the project, this would occur
between 2011 and 2014 if the project begins construction in
2007. The police beat would be fully operational in 2011 and
the fire station would be operational in 2014, which is when
the second hotel would begin operations. As shown in Table
5B, this phasing mitigates the funding shortfall in the early
years of the project. Based on the net revenue, the City could
ramp up the police beat more quickly if necessary. Over the
full buildout period of the project (2031), the City would
accumulate $51 million in net revenues compared to $46
million in Scenario 1.
We have estimated the fiscal impact of the project on the City
using a variety of methods. Certain revenues have been
estimated directly based on the anticipated characteristics of
the development. Other revenues and costs have been
estimated using a proportional method indicating the amount
of growth the project represents in relation to existing
development in the City. In addition, we have reviewed the
project with key City service departments, particularly police
and fire protection to understand the direct and indirect
effects the project have on those services. The following
discussion describes the main revenue and cost categories
shown in Tables 5a and 5B.
APPLIED DEVELOPMENT ECONOMICS
PAGE 18
TABLE 5B
Net Impact of Proposed Project Over Time
SCENARIO 2
REVENUES
Property Taxes
Sales Taxes
Business License
Franchise Fees
Utility Users Tax
Transient Occupancy Tax
Property Transfer Tax
Fines/Forfeitures
Other Revenue
Use of Money/Property
TOTAL REVENUE
2007
2008
2009
2010
$105,680
$254,177
$4,794
$10,887
$30,089
$0
$20,983
$1,332
$3,155
$3,406
$434,503
$143,399
$303,564
$6,855
$15,566
$43,020
$0
$6,733
$1,904
$4,511
$4,153
$529,704
$186,139
$358,577
$9,175
$20,835
$57,584
$0
$7,181
$2,549
$6,038
$5,121
$653,199
$293,883
$552,344
$13,204
$29,984
$82,870
$152,205
$19,190
$3,668
$8,689
$9,135
$1,165,172
$26,718
$2,560
$5,092
$61,795
$51,843
$15,450
$15,777
$0
$179,234
$255,269
$255,269
$38,282
$3,668
$7,296
$88,542
$74,281
$22,137
$22,605
$0
$256,811
$272,894
$528,163
$51,351
$4,920
$9,787
$118,770
$99,641
$29,694
$30,323
$0
$344,485
$308,714
$836,877
$74,057
$7,095
$14,115
$171,288
$143,701
$42,825
$43,731
$0
$496,812
$668,360
$1,505,237
2011
2012
2013
2014
$396,243
$637,126
$18,020
$40,920
$113,093
$235,157
$15,924
$5,006
$11,858
$11,642
$1,484,988
$489,752
$821,763
$22,622
$51,369
$141,973
$322,949
$13,470
$6,284
$14,886
$14,895
$1,899,963
$569,727
$937,190
$26,910
$61,106
$168,884
$415,797
$10,546
$7,475
$17,707
$17,505
$2,232,848
$668,945
$1,064,603
$32,202
$73,124
$202,099
$428,271
$12,533
$8,945
$21,190
$19,849
$2,531,762
$204,653
$9,704
$19,304
$824,347
$196,528
$58,568
$59,807
$0
$1,372,910
$112,078
$1,617,315
$224,849
$12,208
$24,285
$850,891
$247,242
$73,681
$75,240
$0
$1,508,397
$391,566
$2,008,881
$244,208
$14,553
$28,950
$878,289
$294,735
$87,835
$89,693
$0
$1,638,262
$594,586
$2,603,467
$363,257
$17,452
$34,717
$906,570
$902,005
$105,334
$107,563
$0
$2,436,898
$94,864
$2,698,331
EXPENDITURES
General Government
Library
Community Dev/Planning
Police
Fire
Public Works - Streets
Public Works - Other
Community Services
TOTAL EXPENDITURES
NET (COST)/REVENUE
CUMULATIVE (COST)/REV.
APPLIED DEVELOPMENT ECONOMICS
PAGE 19
TABLE 5B (Cont.)
Net Impact of Proposed Project Over Time
SCENARIO 2
REVENUES
Property Taxes
Sales Taxes
Business License
Franchise Fees
Utility Users Tax
Transient Occupancy Tax
Property Transfer Tax
Fines/Forfeitures
Other Revenue
Use of Money/Property
TOTAL REVENUE
EXPENDITURES
General Government
Library
Community Dev/Planning
Police
Fire
Public Works - Streets
Public Works - Other
Community Services
TOTAL EXPENDITURES
NET (COST)/REVENUE
CUMULATIVE (COST)/REV.
APPLIED DEVELOPMENT ECONOMICS
2015
2016
2019
2022
2025
2028
2031
$872,948
$1,264,967
$40,791
$92,628
$256,002
$741,081
$30,231
$11,331
$26,842
$26,367
$3,363,187
$938,304
$1,353,715
$44,150
$100,254
$277,079
$850,549
$6,437
$12,264
$29,052
$28,540
$3,640,342
$1,178,135
$1,651,189
$56,058
$127,296
$351,817
$1,191,561
$7,607
$15,572
$36,888
$36,476
$4,652,598
$1,508,317
$2,022,146
$71,573
$162,526
$449,185
$1,302,051
$9,297
$19,882
$47,097
$44,187
$5,636,260
$1,981,556
$2,507,034
$92,450
$209,934
$580,210
$1,422,786
$11,954
$25,681
$60,835
$54,462
$6,946,901
$2,706,535
$3,173,498
$122,166
$277,412
$766,702
$1,554,717
$16,735
$33,936
$80,388
$68,999
$8,801,088
$4,017,856
$4,224,782
$171,070
$388,464
$1,073,624
$1,698,881
$30,594
$47,521
$112,569
$92,967
$11,858,328
$385,968
$22,154
$44,071
$935,762
$931,049
$133,713
$136,542
$0
$2,589,260
$773,927
$3,472,258
$401,488
$24,030
$47,801
$965,893
$961,029
$145,031
$148,100
$0
$2,693,372
$946,970
$4,419,228
$452,923
$30,707
$61,085
$1,062,235
$1,056,886
$185,333
$189,255
$0
$3,038,424
$1,614,174
$8,696,991
$513,231
$39,457
$78,491
$1,168,187
$1,162,304
$238,145
$243,184
$0
$3,443,000
$2,193,260
$14,654,976
$585,445
$51,294
$102,038
$1,284,706
$1,278,237
$309,586
$316,137
$0
$3,927,443
$3,019,458
$22,817,905
$675,251
$68,217
$135,701
$1,412,848
$1,405,733
$411,721
$420,433
$0
$4,529,903
$4,271,184
$34,254,347
$798,788
$96,138
$191,244
$1,553,771
$1,545,946
$580,242
$592,519
$0
$5,358,648
$6,499,680
$51,144,726
PAGE 20
REVENUES
PROPERTY TAX
The property tax rate is one percent of the assessed value of
the project, which is then divided among all the taxing
agencies in the county, including the City of Benicia. Each
parcel of land is assigned to a tax rate area (TRA) that
includes a unique combination of taxing agencies that serve
the parcels in the TRA. Within the TRA, each taxing agency
is assigned a percent split of the property tax revenues;
however, state legislation (AB 8) following the passage of
Proposition 13 has established a procedure in which all
property tax revenues are pooled and then distributed to
taxing agencies throughout the county based on a
combination of historical tax distributions and adjustments
reflecting annual growth in assessed value in each jurisdiction.
The distribution percentages for all the jurisdictions are
adjusted each year based on growth in assessed value
throughout the County.
Therefore it is virtually impossible to predict the exact tax
distribution the City may receive from any particular parcel,
including the project site. However, it is extremely important
that the City seek to increase its tax base annually in order to
maintain its share of property tax revenues. The property tax
allocation system actually penalizes slow-growing cities.
Without constant growth, the City may see its property tax
revenues stagnate or decline as other jurisdictions in the
County build up their tax bases. This would further worsen
the City’s budget problems.
In consultation with the County Auditor’s office which
handles the annual property tax distribution system, it was
determined that the tax allocation factors for the TRAs
covering the project site would be a reasonable
approximation of the actual property tax revenues the City
would receive as a result of the project. The project site
includes two TRAs, in which the City receives 31percent and
23 percent of the one percent property tax. We have averaged
APPLIED DEVELOPMENT ECONOMICS
PAGE 21
these figures to calculate the property tax in Table 5.3 The
project assessed value is based on anticipated market values
shown in Table 2 above.
SALES TAX
The businesses occupying the project would generate taxable
sales as discussed in the next chapter. The total tax is 7.375
percent of taxable sales, but the City gets about one percent
of taxable sales, plus additional amounts generated through
the transportation tax override. At full buildout, the project
would generate about $4.2 million in sales taxes per year
(2031 dollars).
TRANSIENT OCCUPANCY TAX
The City charges a tax of nine percent on hotel room
revenues. By the time the project fully develops, the two
hotels would generate about $1.7 million per year (2031
dollars) in Transient Occupancy taxes.4
UTILITY USERS TAX
Both the industrial and commercial businesses in the
proposed project would pay significant utility users taxes to
the City. This is an important revenue source for the City,
comprising nearly 12 percent of total General Fund revenue.
It is estimated that at full buildout the project would generate
about $1.1 million per year (2031 dollars) in utility users
taxes.5
OTHER REVENUES
The remaining revenues in Table 5 are calculated on a per
capita basis as discussed above in the approach to the
analysis. With the exception of the business license tax, of
which 98 percent of produced by non-residential uses, the per
3
The figures do not reflect the recent ―triple flip‖ adjustments, however, which also involve sales tax and
vehicle license fees. This latter adjustment is proposed by the state to be neutral to local agencies over the long
term.
4
The calculation is 380 rooms*$100/night*365 nights*65% occupancy*9% tax = $811,395. The figures shown
in Table 5 reflect the phasing of the hotel projects, the gradual increase in occupancy from about 25% in the
first year to 65% in four years, and an annual inflationary increase in room rates of 3% per year.
5 The calculation is 7,680 jobs*$66.77 per employee in 2005 dollars. The actual figures shown in Table 5 reflect
the phasing of the development and annual inflation of 3% per year.
APPLIED DEVELOPMENT ECONOMICS
PAGE 22
capita revenue factors allocate one-third to businesses and
two-thirds to residential development. The calculations in
Table 5 reflect the increase in employment and business
activity produced by the project.
EXPENDITURES
Police
The Police Department anticipates requiring a new beat to
serve the proposed project. A police beat consists of four
officers, of which three cover a full twenty-four hour period
with the fourth to cover time off for training, vacations, sick
leave etc. In addition, each beat has a supervising sergeant,
and is equipped with a patrol car, radio system and other
equipment (Table 6).
Much of the need for the new beat is related to the
commercial portion of the development, which is projected
to occur early in the development phasing. However,
increased calls for police service will occur as soon as
construction begins for thefts and increased traffic
enforcement. Therefore, the Department anticipates
beginning recruitment to fill the beat immediately upon
project commencement, and completing the hiring process by
within two years. For purposes of the analysis in Scenario 1, it
is assumed that the project would begin construction in 2007
and the full beat costs would occur in 2009. In Scenario 2, the
cost for police services would ramp up more slowly and the
beat would be fully operational in 2011 instead of 2009.
In addition, there is a question of whether the Police firing
range, which is adjacent to the project site, will need to be
moved. The cost of moving the facility is estimated at
$500,000. However, given the topography at this location and
the configuration of the proposed site plan for the business
park, it is unclear that a conflict would exist between the
firing range and the proposed light industrial uses on the
project site. Further environmental and site analysis is
necessary to determine the extent of this impact, if any.
Pending this analysis, the cost of moving the facility is not
included in the figures in Table 5 of this report.
APPLIED DEVELOPMENT ECONOMICS
PAGE 23
TABLE 6
Impact Of Proposed Project On Police Services
Cost Item
Police Officer
Sergeant
Equipped Patrol Car
TOTAL
05-06
Salary
$76,606
$91,760
04-05
Benefits
$51,386
$57,584
Total
Compensation
Per Officer
$127,992
$149,344
Equipment
Total Per Number of
Officer
Positions
$1,545 $129,537
$149,344
$36,050
4
1
Total Cost
$518,149
$149,344
$36,050
$703,543
Source: Lt. Mike Daley, City of Benicia. Salary data is from City's 04-05 Salary Schedule, updated with inflation rates provided by
Finance Dept. Benefits amounts include $900 for cost of uniform per officer.
Fire Protection
Benicia has two fire stations currently, one downtown and in
the northern portion of the City near the Southampton
development (Figure 5). Both of these stations are about
equidistant to the proposed project site, although neither
station provides desirable response times to the eastern
portions of the site and or to the existing development at the
interchange on I-680 at Lake Herman Rd. and other
development east of I-680 in this vicinity. In order to meet
adequate response times and to serve the commercial portion
of the proposed project, the Fire Department has indicated
that a new station would be needed to serve the eastern
portion of the City. The Department’s preferred location for
the station would be near the intersection of Second St. and
Industrial Way. Once established, this station would serve
the entire industrial park area as well as future activity along I680 in this part of town.
Although the third station is warranted on the basis of
achieving adequate response times, the eastern portion of the
City does not currently constitute one-third of the demand
for fire protection services. The existing industrial park area
currently generates a little more than 10 percent of the total
calls for service for the Fire Department, although it
generates more than 20% of the actual fire calls as opposed to
emergency medical and other kinds of calls for service (Table
7). These figures also do not include calls related to traffic or
activities on I-680 through the eastern part of town. It should
APPLIED DEVELOPMENT ECONOMICS
PAGE 24
also be noted that the Valero refinery has its own onsite fire
suppression and emergency response program.
In order to evaluate the proportional share of cost obligation
for the station by the proposed Benicia Business Park, ADE
reviewed the future potential development in the eastern
portion of Benicia. With the adoption of the General Plan in
1999, the City had about 2,550 acres of industrial land. As of
1995, the General Plan suggests that only half of this was
developed, but more recently the City identified only 476
acres remaining undeveloped, including the project site.
Eventually, the northern I-680 ―Gateway‖ site may also be
served by the proposed new station. It is currently designated
open space, but the General Plan acknowledges the City may
consider business uses in this area in the future (Table 8).
Including the Gateway site, the proposed project represents
about half of the vacant land in the service area for the new
station. Of course, the new station would better serve existing
development in this area as well as future development, so
the proposed project’s actual share of responsibility for the
station would be closer to one-third (shared equally by
existing industrial development, the proposed project, and
other future development in the eastern portion of town.)
Calculations from ADE’s fiscal impact model, however,
suggest that the proposed project would generate about half
the cost of operating the new station. The Fire Department
anticipates that the cost to operate the new station would be
about $1.4 million per year. Our fiscal analysis indicates the
pro-rata share of fire protection costs for the project, based
on existing Fire Department costs in Benicia would be
$794,600 per year by 2010 when the station would need to be
operating. We have used this figure in our analysis of
Scenario 1 (Table 5A), but based on the project’s share of
total existing and future development within the station’s
service area, this would appear to be a very conservative
estimate. In Scenario 2, the station would be operational four
years later in 2014.
The above discussion relates to the operating costs for the
fire station. This report does not address capital costs, other
than through the payment of impact fees as shown in Table 9
below. However, it should be noted that, in addition to the
APPLIED DEVELOPMENT ECONOMICS
PAGE 25
cost of constructing the fire station, the EIR for the project
also lists a need for a new fire engine and a training facility on
the new fire station site.
TABLE 7
Benicia Fire Department Calls for
Service 2004
Incident
Type
Fire
EMS/Rescue
Other
Total
Total
City
133
1,275
556
1,964
Industrial Percent
Park
of Total
29
112
69
210
21.8%
8.8%
12.4%
10.7%
TABLE 8
Vacant Industrial Land in Benicia
Sites
Project Site
Pine Lake
Camel barns
Port Area
Oak Road Area
Jefferson Area
Grant St.
Yuba
Hadley
Subtotal Total
I-680 "Gateway" Site**
Grand Total
Notes:
Gross Acres
330.00 *
26.23
3.00
16.50
25.00
7.30
1.00
22.15
45.00
476.18
125.00
601.18
* Net acres for project site are 297.05.
** Approximate acreage.
APPLIED DEVELOPMENT ECONOMICS
PAGE 26
FIGURE 5
Locations of Existing and Proposed Fire Stations
Project Site
* Proposed New Fire Station
* 607 Hastings Drive, Benicia,
Location
CA
* 150 Military West, Benicia, CA
APPLIED DEVELOPMENT ECONOMICS
PAGE 27
OTHER COSTS
Other costs shown in Table 5 have generally been estimated
on a per capita basis, with the exception of the General
Government category. This category includes the City
Manager’s office, City Attorney, City Clerk, Human
Resources, and Finance, as adjusted in Table 2 above. In
Table 5, this category has been treated as an overhead
charge, equal to 21 percent of the other costs in the table.
The per capita calculations generally use the one-third/twothirds split between non-residential and residential uses as
described above for City expenditures. However, in the case
of the Library, only ten percent of the costs are allocated to
non-residential uses, and none of the Community Services
Department, which primarily provides recreation programs, if
ascribed to business uses. Finally, for the Community
Development Department, the revenue obtained from
building permits, plan check fees and other revenues
associated with the entitlement process have been deducted
in order isolate the ongoing costs of the department for
existing development. The costs for the entitlement process
for the project will be paid for directly by the project sponsor
through city fees and direct charges.
PROJECT CONTRIBUTION TO CITY AND
COUNTY IMPACT AND CONNECTION FEES
The Impact and Connection Fees are calculated by the City at
the time the City approves the development’s Tentative Map.
Prior to that, the Impact and Connection Fees have been
estimated, based upon the land uses provided by the
developer, the City of Benicia Commercial and Industrial
Permit, Inspection and Impact Fee Schedule, November,
2005(―Fee Schedule‖), and conversations with City Public
Works staff. Overall, the fees are estimated to be
$23,887,548 (Table 9).
Traffic Impact Fees are calculated on the basis of the type of
facility use and trip generation, which in the Fee Schedule has
been converted to square footage. Many of the planned
development uses are listed in the Fee Schedule. The fee for
the service station is calculated per pump, and 9 pumps were
APPLIED DEVELOPMENT ECONOMICS
PAGE 28
estimated for the project. Fees for the Health and Fitness
facility, Hotel, and Movie Theatre are based on estimated trip
generation rates provided by Korve Engineering, a[pplied to
the average fee of $1,019 per p.m. peak hour trip generated.
The Capital License is a voter-approved tax that has been
authorized for public improvements. The City uses it
primarily for improvements to public facilities, such as
seismic retrofit of the many publicly used historic buildings.
The tax is divided broadly between commercial uses and
industrial uses, with increments per square footage.
Sewer Connection Fees are calculated on the basis of the type
of use and its comparison to the basic unit of an equivalent
dwelling unit (EDU), which is converted in the Fee Schedule
to a use’s square footage. One EDU carries with it the fee of
$4,131, the same amount listed in the Fee Schedule as the
minimum fee per building. Most of the development’s
planned uses are in the Fee Schedule. The hotel fee
($1,082,758), not in the fee schedule, has been calculated as
follows: each guest room, estimated to be 190 rooms in each
of two hotels, has the rate of .6 EDU per room; the
restaurant in each hotel is estimated to be 5,000 sq. ft. per
hotel and is calculated using the Restaurant fee in the Fee
Schedule; the conference facility is estimated to be 40,000 sq.
ft. and the fee is estimated in the category as Office. For the
movie theatre fee ($139,620), City staff suggested using the
equivalent fee for Private School. The fee for the service
station/car wash/mart ($20,410) has been estimated by City
staff, by applying 3 EDU for the service station/car wash
plus the restaurant rate for the mart.
Water Connection Fees will be determined by the actual uses
and parcelization of the site. For the purposes of estimating,
the City has suggesting using the 80 parcels in the site and
assuming 2 meters will be at each parcel; one for landscaping
at 1‖ rate and one for the development activity at 1.5‖ rate.
Water Meter Set Fees are estimated on the same basis.
School Impact Fees are calculated at $.36 per square foot for
the total project. The Public Facilities Fee is charged by
Solano County, but is collected by the City along with the
other fees shown in Table 9.
APPLIED DEVELOPMENT ECONOMICS
PAGE 29
TABLE 9
Estimated Impact and Connection Fees
Fee Category
Traffic Impact Fee
Fee Per Unit
Project
Land
Uses, Sq
Ft
Fee Per
Land Use
Per 1,000 sq. ft.
Sit-down Restaurant
$3,816
20,000
$76,320
Fast food Restaurant
Bank
$17,058
8,000
$136,464
$16,890
12,000
$202,680
100,000
$334,200
Service Station with Mart (fee per pump)
$6,817
Shopping Center
$3,342
General Office
$1,518
350,000
$531,300
$999
2,399,760
$2,397,360
Health & Fitness Club
$1,019
243
$247,617
Hotel
$1,019
266
$271,054
Movie Theatre
$1,019
162
$164,833
Light Industrial
Capital License
Commercial Uses
$61,353
Per sq. ft.
First 15,000 sq ft
$1.13
15,000
$16,950
Next 15,000 sq ft
$0.91
15,000
$13,650
Next 70,000 sq ft
$0.65
70,000
$45,500
Over first 100,000 sq ft
$0.51
757,000
$386,070
First 15,000 sq ft
$0.58
15,000
$8,700
Next 15,000 sq ft
$0.41
15,000
$6,150
Next 70,000 sq ft
$0.34
70,000
$23,800
Over each 100,000 sq ft
$0.27
2,299,760
$620,935
$814,450
Industrial Uses
Sewer Connection
Per 1,000 sq. ft.
Minimum per bldg (1 EDU)
$4,131
Office
$2,327
350,000
Restaurant (+Health &Fitness)
$8,017
88,000
$705,496
Store, Dry Light Industrial
$1,475
2,511,760
$3,704,846
Hotels
(fee basis assorted)
240,000
Service Gas Station/ Wash/Mart
(estimated by City)
7,000
$20,410
$2,327
60,000
$139,620
Movie Theatre
Water Connection
1"
1 1/2"
Water Meter
$1,082,758
Per meter size
$8,047
80
$643,760
$18,084
80
$1,446,720
Per meter size
1"
$110
80
$8,800
1.5"
$200
80
$16,000
School Impact
Per sq. ft.
$.36
Public Facilities Fee
3,256,760
$1,172,434
Per 1,000 sq. ft.
Office
$889
350,000
$311,150
Retail
$534
507,000
$270,738
Industrial
$374
2,399,760
GRAND TOTAL
APPLIED DEVELOPMENT ECONOMICS
$897,510
$16,779,629
PAGE 30
RETAIL MARKET ANALYSIS
INTRODUCTION
The purpose of this analysis is to determine the market
potential for new and expanding retail businesses in Benicia.
In particular, this analysis aims to evaluate whether or not
there will be sufficient market potential for retail businesses
locating in the Benicia Business Park to operate without
resulting in a significant adverse impact to existing businesses.
The approach to this analysis begins with estimating current
and projected demand for retail shopping in Benicia. Retail
demand represents the amount of money that households,
businesses and visitors spend on retail goods and services.
For households in Benicia, we estimate their total retail
spending, whether or not they make all of the purchases in
Benicia, so we can determine how well existing stores in
Benicia serve the local demand. For other groups, we
estimate their actual spending in Benicia and add that to the
total retail spending for the City.
Once we have estimated demand, we review actual sales data
for stores in Benicia to measure how much of the demand is
being captured locally. The difference between demand and
actual sales is the sales ―leakage‖ that represents unmet
demand available for new or expanding stores to capture. In
some cases, the sales at certain stores in Benicia may exceed
local demand, which indicates that those stores serve a more
regional market area that extends beyond the City of Benicia
itself.
For this analysis, we are mainly concerned with retail store
categories experiencing leakage, since the project sponsors are
interested in developing a mix retail of stores that
complements and enhances the existing commercial base in
the City, and does not compete with stores that are already
here. Courts require an analysis of this issue as part of the
CEQA environmental review process. If a project is
determined to have a high potential for causing existing
businesses to leave Benicia, and for the retail centers they
occupy to remain vacant and decline as a result, this can lead
APPLIED DEVELOPMENT ECONOMICS
PAGE 31
to urban decay in Benicia, which may be considered a
significant adverse environmental impact. The analysis
presented below addresses this issue and complies with the
CEQA requirement for consideration of the potential for
urban decay impacts.
The analysis concludes that there is sufficient existing
and future market demand for appropriate kinds of retail
stores in the proposed project that would not exert
undue competition with existing stores in Benicia.
Therefore, the analysis does not identify significant
potential for urban decay impacts from the proposed
project.
METHODOLOGY
The household retail spending totals are calculated from an
analytical model that estimates spending for 40 different store
types and 100 product categories. The taxable sales data is an
annual total listed by product categories. The businesses
listed in the analysis encompass all of the retail businesses
operating in the City of Benicia. The retail sales data comes
directly from the California State Board of Equalization sales
tax allocation records, audited by Hinderliter de Llamas and
Associates. Because certain retail items, such as food and
prescription drugs, are not taxable, the analysis includes a
conversion that calculates nontaxable sales.
In general, retail leakage represents the gap between spending
by local households and retail sales by local retail
establishments. For this analysis, spending by Benicia
households is combined with that by Benicia in-commuters6
and visitors,7 to estimate the gap between retail sales and total
retail demand in the City. This leakage represents the market
potential not currently being captured by existing City
businesses. Over time, it represents the market demand
available for new and expanding Benicia businesses to
attempt to capture. To estimate the potential market demand
available for new and expanding Benicia businesses, this
6
In-commuters are those persons working in the City of Benicia, but not residing in Benicia.
A visitor is a person traveling to or through Benicia provided that person is neither a commuter nor other
routine traveler to or through Benicia.
7
APPLIED DEVELOPMENT ECONOMICS
PAGE 32
analysis not only estimates current retail demand and leakage,
but makes projections for the future.8
RETAIL DEMAND (SPENDING)
This section of the report details the existing and projected
future retail spending demand in Benicia. Table 10, below
shows the existing retail demand in Benicia. Table 11 then
illustrates projected future retail demand. For the purposes
of this analysis, retail demand consists of spending by three
consumer types, 1) Benicia households; 2) in-commuters;
and, 3) visitors. Each of these three consumer groups is
discussed in the following portions of this section with detail
concerning each group’s contribution to existing and future
retail demand.
8
Methodologies specific to estimating current and future demand by households, in-commuters, and
visitors are provided in the later sections detailing the demand estimates for those specific consumer
groups.
APPLIED DEVELOPMENT ECONOMICS
PAGE 33
TABLE 10
Existing Benicia Retail Spending
Demand (2005)
Retail Group
Total
Apparel Store Group
Women's Apparel
Men's Apparel
Family Clothing
Shoe Stores
General Merchandise Group
Department Stores/Other General Merch.
Drug & Proprietary Stores
Specialty Retail Group
Gifts & Novelties
Sporting Goods
Florists
Photographic Equipment
Records & Music
Books & Stationery
Office Supplies/Computer Equipment
Jewelry
Misc. Specialty Retail
Food, Eating and Drinking Group
Grocery Stores
Specialty Food Stores
Liquor Stores
Eating Places
Building Materials And
Home Furnishings Group
Furniture & Home Furnishings
Household Appliances & Electronics
Used Merchandise
Nurseries & Garden Supply Stores
Lumber & Other Building Materials
Home Centers and Hardware Stores
Paint & Wallpaper
Automotive Group
New Cars & RVs
Used Car Dealers
Gasoline Service Stations
Mobile Homes & Trailers
Auto Parts & Accessories
Boats & Motorcycles
Total
Demand
$289,849,845
$17,666,852
$3,942,267
$1,334,479
$9,059,678
$3,330,428
$52,409,280
$41,913,995
$10,495,285
$19,368,190
$1,436,592
$2,453,193
$493,203
$258,051
$1,081,214
$1,672,822
$2,483,555
$1,665,310
$7,824,250
$83,878,348
$41,824,557
$1,414,585
$2,016,574
$38,622,632
$26,513,189
$9,117,031
$5,130,999
$682,654
$2,687,044
$5,377,642
$3,339,310
$178,508
$90,013,986
$54,699,444
$3,955,108
$28,284,405
$1,5021
$1,481,072
$1,578,935
Source: ADE, retail model developed from 1997 US Retail Census and
2002 Bureau of Labor Statistics Household Expenditure Surveys.
APPLIED DEVELOPMENT ECONOMICS
PAGE 34
TABLE 11
Growth in Total Benicia Retail Spending Demand
2005
2007
2010
2015
2025
2031
$289,849,845 $311,232,034 $351,457,891 $443,345,935 $654,694,180 $823,466,721
Source: ADE, retail model developed from 1997 US Retail Census and 2002 Bureau of Labor
Statistics Household Expenditure Surveys. Adjusted for inflation at an annual rate of 3 percent.
LOCAL HOUSEHOLDS
The Association of Bay Area Governments (ABAG)
estimates that in 2005 there were 10,450 households in
Benicia.9 The average annual household income in Benicia in
2005 was approximately $85,000. Table 12 details the income
distribution of Benicia Households in 2005.
TABLE 12
Benicia Household Income Distribution (2005)
Income Range Households
Under $20,000
$20,000 to $29,999
$30,000 to $39,999
$40,000 to $49,999
$50,000 to $69,999
$70,000 and Over
TOTAL
Total
Income
848
$11,223,308
819
$21,885,623
919
$34,668,864
1171
$56,584,460
2,108 $137,746,174
4,586 $626,510,213
10,450 $888,618,642
Average
Income
$13,237
$26,735
$37,732
$48,324
$65,349
$136,617
$85,035
Source: ABAG 2005 Projections for Households; ADE retail model developed
from 1997 US Retail Census and 2002 Bureau of Labor Statistics Household
Expenditure Surveys; Income distributions based on 2000 Census distributions
Note: Households estimates are for the City of Benicia's Sphere of Influence
In 2005, nearly half (44 percent) of Benicia’s 10,450
households earned at least $70,000 annually. Only eight
percent of households earned less than $20,000 annually.
Total income for all households exceeded $888.6 million.
Table 13 illustrates the retail spending demand generated by
this distribution of household incomes.
9
Sphere of Influence
APPLIED DEVELOPMENT ECONOMICS
PAGE 35
TABLE 13
Benicia Household Retail Spending
Demand (2005)
Retail Group
Total
Apparel Store Group
Women's Apparel
Men's Apparel
Family Clothing
Shoe Stores
General Merchandise Group
Department Stores/Other General Merch.
Drug & Proprietary Stores
Specialty Retail Group
Gifts & Novelties
Sporting Goods
Florists
Photographic Equipment
Records & Music
Books & Stationery
Office Supplies/Computer Equipment
Jewelry
Misc. Specialty Retail
Food, Eating and Drinking Group
Grocery Stores
Specialty Food Stores
Liquor Stores
Eating Places
Building Materials And
Home Furnishings Group
Furniture & Home Furnishings
Household Appliances & Electronics
Used Merchandise
Nurseries & Garden Supply Stores
Lumber & Other Building Materials
Home Centers and Hardware Stores
Paint & Wallpaper
Automotive Group
New Cars & RVs
Used Car Dealers
Gasoline Service Stations
Mobile Homes & Trailers
Auto Parts & Accessories
Boats & Motorcycles
Benicia
Household
Retail Demand
$236,007,689
$12,922,299
$2,874,145
$1,029,296
$6,430,323
$2,588,535
$43,959,464
$35,357,580
$8,601,884
$14,721,981
$1,091,872
$1,765,986
$443,444
$232,016
$796,816
$1,339,094
$1,981,583
$1,204,941
$5,866,230
$60,152,416
$37,813,429
$1,154,852
$1,870,019
$19,314,117
$23,140,596
$8,735,806
$4,090,890
$574,051
$2,259,564
$4,522,115
$2,808,060
$150,109
$81,110,932
$53,925,442
$3,899,143
$20,254,831
$14,808
$1,460,115
$1,556,593
Source: ADE, retail model developed from 1997 US Retail Census and
2002 Bureau of Labor Statistics Household Expenditure Surveys.
APPLIED DEVELOPMENT ECONOMICS
PAGE 36
Aggregate retail spending demand generated by Benicia
households in 2005 was approximately $236 million. The
largest portion of that demand (34 percent) was for products
in the automotive group. Within this group, new cars
(including recreational vehicles) and gasoline service stations
represent nearly all (91 percent) of the demand with 66
percent and 25 percent of automotive group demand
respectively. Demand for products in the food, eating, and
drinking group represents the second largest portion of
household spending at 25 percent of the total.
Table 14 details the projected growth in Benicia households
through 2031.10 Between 2005 and 2031, a 15 percent
increase in the number of Benicia households is projected.
Over the expected 25-year phased construction of this
project, the number of households is expected to increase by
14 percent, 1,455 new households between 2007 and 2031.
TABLE 14
Projected Growth in Benicia Households
Income Range
Under $20,000
$20,000 to $29,999
$30,000 to $39,999
$40,000 to $49,999
$50,000 to $69,999
$70,000 and Over
TOTAL
2005
848
819
919
1,171
2,108
4,586
10,450
2007
854
825
925
1,179
2,123
4,619
10,526
2010
863
834
936
1,192
2,146
4,669
10,640
2015
894
863
969
1,235
2,223
4,836
11,020
2025
918
887
995
1,268
2,283
4,968
11,320
2031
972
939
1,053
1,342
2,417
5,258
11,981
Source: ABAG 2005 Projections; calculations by Applied Development Economics
Note: 2007 household projections are ADE calculations based upon annual rate of growth between
ABAG's 2005 and 2010 household estimates; 2031 is based upon annual growth rate between 2025
and 2030.
Assuming the same household income distribution illustrated
in Table 14, Table 15 (below) projects the impacts these new
households will have on retail spending demand in Benicia.
The projections in Table 15 represent the anticipated total
retail demand for households in each of the years listed. For
10
It is anticipated that the first phase of this project will be completed in 2007. To analyze the market
demand over a 25-year time horizon, projections have been made to 2031.
APPLIED DEVELOPMENT ECONOMICS
PAGE 37
instance, the $253.7 million in retail spending projected for
2007 represents the anticipated demand from all Benicia
households in 2007, not just the new ones.
Table 15
Growth in Benicia Household Spending Demand
2005
2007
2010
2015
2025
2031
$236,007,689 $253,737,054 $282,810,230 $347,312,429 $509,411,294 $638,888,914
Source: ADE, retail model developed from 1997 US Retail Census and 2002 Bureau of Labor Statistics
Household Expenditure Surveys. Adjusted for inflation at an annual rate of 3 percent.
Between 2005 and the 2007 completion of Phase 1, the
household demand for retail goods in Benicia is expected to
grow by eight percent. Over the 25-year construction period
for this project, retail demand from this segment of the
market is expected to expand by 152 percent. Overall,
household retail spending by Benicia households is projected
to reach $638.9 million by 2031, a 171 percent expansion
versus 2005.
COMMUTERS
In addition to local households, persons commuting to work
in Benicia also contribute to the City’s overall retail demand.
Table 16, shows, out of the total number of jobs located in
the Benicia,11 the number of those jobs held by persons
commuting from outside the City. Based on data from the
2000 Census, approximately 72 percent of persons working in
Benicia commute from other places. In total, an estimated
11,092 Benicia jobs are held by non-residents.
TABLE 16
City of Benicia Jobs (2005)
Resident Commuter
Jobs
% of Total
4,318
28%
Total
11,092
72%
15,410
100%
Source: ABAG 2005 Projections; 2000 US Census
11
Sphere of Influence
APPLIED DEVELOPMENT ECONOMICS
PAGE 38
Since retail demand from employees who both live and work
in Benicia is assumed to be captured in the household retail
demand discussed in the previous section, Table 17 focuses
on the retail spending generated by the persons who work in
Benicia, but do not live there. In 2005, commuters to Benicia
generated an estimated $29.1 million in retail demand. It is
estimated that approximately $2,626 in retail demand
generated annually per commuter to Benicia. 12 Almost 50
percent of this demand is estimated to be for products from
the food, eating, and drinking group. Another 12 percent
each goes for products in the general merchandise and
building materials/home furnishings groups.
12
A recent survey and retail market analysis ADE conducted in the City of Milpitas (Santa Clara County),
indicates that each commuter there generates about $3,482 in retail demand annually. Using this figure and
applying a cost of living adjustment factor of -0.25 (obtained from Salary.com), ADE estimates that
commuters to be Benicia generate $2,626 in retail demand annually.
APPLIED DEVELOPMENT ECONOMICS
PAGE 39
TABLE 17:
Benicia Commuter Retail Spending Demand
(2005)
Retail Group
Total
Apparel Store Group
Women's Apparel
Men's Apparel
Family Clothing
Shoe Stores
General Merchandise Group
Department Stores/Other General Merch.
Drug & Proprietary Stores
Specialty Retail Group
Gifts & Novelties
Sporting Goods
Florists*
Photographic Equipment*
Records & Music
Books & Stationery
Office Supplies/Computer Equipment
Jewelry
Misc. Specialty Retail
Food, Eating and Drinking Group
Grocery Stores
Specialty Food Stores
Liquor Stores
Eating Places
Building Materials And
Home Furnishings Group
Furniture & Home Furnishings
Household Appliances & Electronics
Used Merchandise
Nurseries & Garden Supply Stores
Lumber & Other Building Materials
Home Centers and Hardware Stores
Paint & Wallpaper
Automotive Group
New Cars & RVs
Used Car Dealers
Gasoline Service Stations
Mobile Homes & Trailers
Auto Parts & Accessories
Boats & Motorcycles
Benicia
Commuter
Retail Demand
$29,121,952
$3,294,516
$745,608
$189,683
$1,907,796
$451,429
$3,517,037
$2,588,870
$928,167
$2,994,225
$222,199
$489,043
$0
$0
$194,986
$183,465
$279,614
$325,159
$1,299,759
$13,601,791
$2,402,367
$210,600
$66,996
$10,921,827
$3,372,592
$381,224
$1,040,109
$108,603
$427,481
$855,527
$531,249
$28,399
$2,341,790
$774,002
$55,965
$1,468,311
$213
$20,957
$22,342
Source: ADE, retail model developed from 1997 US Retail Census and
2002 Bureau of Labor Statistics Household Expenditure Surveys.
Note: Commuter demand for Florists and Photographic Equipment is
included in demand for Misc. Specialty Retail.
APPLIED DEVELOPMENT ECONOMICS
PAGE 40
Development of this portion of the industrial park is
expected to create 7,680 jobs through all phases of
development. Applying the distribution of job holders that
both live and work in Benicia versus those that commute in
(as per Table 16), this will increase the number of person
commuting to work in Benicia by more the 5,500. As shown
in Table 18 (below) with completion of the first phase in
2007, there will be 186 new jobs, of which 134 will be held by
persons commuting into Benicia. The job growth figures in
each of the years in Table 18 represent the number of new
jobs added between that year and the previous year listed; for
instance, between 2020 and 2031, it is projected that
businesses locating this portion of the business park will
create 3,904 new jobs.
TABLE 18
Additional City of Benicia Jobs
Total
Resident
Commuter
2007
186
52
134
2010
738
207
531
2015
2015
565
1450
2020
837
235
603
2031
3904
1094
2810
Total
7680
2152
5528
Source: ADE calculations based upon 2005 ABAG jobs projections and project phasing
assumptions used in ADE's fiscal impact analysis of this project.
Table 19 details the projected growth in retail demand as
project phases are completed and jobs are created. With
completion of phase 1 in 2007, commuters will add an
additional $2.1 million worth of retail market demand. By
2015, commuter retail demand is expected to increase another
$10.8 million over the initial Phase 1 expansion. By the time
this development is built-out in 2031, it is expected to
facilitate nearly a $65 million expansion in the local market
for commuter retail spending.
APPLIED DEVELOPMENT ECONOMICS
PAGE 41
TABLE 19
Growth in Benicia Commuter Retail Demand
2005
2007
2010
2015
2025
2031
$29,121,952 $31,269,315 $35,784,599 $46,600,885 $69,512,775 $94,104,331
Source: ADE, retail model developed from 1997 US Retail Census and 2002 Bureau of
Labor Statistics Household Expenditure Surveys. Adjusted for inflation at an annual rate of
3 percent.
VISITORS
Lastly, the third group that contributes to retail demand in
the City of Benicia is visitors. In general, visitors are persons
traveling to or through Benicia, but are not commuting.
Visitors include person who stay overnight either in local
lodging establishments or private homes, as well as daytrippers. This analysis incorporates estimates both overnight
and single day visitors.
As shown in Table 20, in 2004, visitors to Solano County
spent a projected $495.8 million dollars at their destinations.
Since 1994, visitor destination spending has increased by
approximately 3.68 percent annually. The two largest
spending categories for visitors are food and beverage
services and shopping, with $118.6 million and $113.6 million
respectively per year.
TABLE 20
Visitor Spending in Solano County
Expenditure Type
Accommodations
Food & Beverage Services
Food Stores
Ground Tran. & Motor Fuel
Recreation, Entertainment
Shopping
Air Transportation
Spending at Destination
1994
2000
$27,900,000
$79,900,000
$15,600,000
$54,900,000
$71,300,000
$83,600,000
$0
$333,300,000
$50,400,000
$113,200,000
$22,600,000
$84,500,000
$102,200,000
$119,600,000
$0
$492,500,000
2003
$42,000,000
$114,400,000
$23,700,000
$89,500,000
$99,100,000
$109,600,000
$0
$478,200,000
2004 (Proj)
$43,500,000
$118,600,000
$24,600,000
$92,800,000
$102,700,000
$113,600,000
$
$495,800,000
Source: Dean Runyan & Associates; projections by Applied Development Economics
APPLIED DEVELOPMENT ECONOMICS
PAGE 42
With spending per Solano County visitor at $95.50 per day
(excluding transportation) in 2004,13 an estimated 4.2 million
persons visited Solano County that year. When
transportation costs are factored in, Solano County visitor
spending in 2004 was approximately $117 per visitor per
day.14
Table 21 projects Solano County visitor spending to 2005,
assuming a constant annual growth rate of 3.68 percent. The
distribution of spending is held constant for the purposes of
this analysis.
TABLE 21
Solano County Visitor Spending
(2005 Projection)
Expenditure Type
Accommodations
Food & Beverage Services
Food Stores
Ground Tran. & Motor Fuel
Recreation, Entertainment
Shopping
Air Transportation (visitor only)
Spending at Destination
2005 Projected
Spending
$45,100,000
$122,900,000
$25,500,000
$96,200,000
$106,500,000
117,800,000
$0
$514,000,000
Source: Calculations by Applied Development Economics based
upon data from Dean Runyan & Associates and D.K Shifflet &
Associates, LTD.
Assuming visitors to Solano County spent a constant $117
per person per day, this amounts to approximately 4.4 million
visitors to Solano County in 2005. Utilizing housing data
from Department of Finance, traffic count data from
CalTrans, and lodging establishment data from Dunn &
Bradstreet, ADE estimates that approximately 309,400 of
these were visitors to Benicia.15 Table 22 estimates the retail
demand generated by these 309,000 Benicia visitors.
13
Source: D.K. Shifflet & Associates, LTD., 2005
ADE calculation based upon estimated number of visitors to Solano County and projected total Solano
County visitor spending ground transportation & motor fuel and air transportation in 2004 (Table 9).
15
Number of Solano visitors that visited Benicia is based upon the ratio Benicia lodging establishments and
houses those in all of Solano County, as well as the ratio of cars counted on I-780 relative to the all Solano
County roadways under CalTrans’ jurisdiction.
14
APPLIED DEVELOPMENT ECONOMICS
PAGE 43
TABLE 22
Benicia Visitor Retail Spending Demand (2005)
Retail Group
Total
Apparel Store Group
Women's Apparel
Men's Apparel
Family Clothing
Shoe Stores
General Merchandise Group
Department Stores/Other General Merch.
Drug & Proprietary Stores
Specialty Retail Group
Gifts & Novelties
Sporting Goods
Florists
Photographic Equipment
Records & Music
Books & Stationery
Office Supplies/Computer Equipment
Jewelry
Misc. Specialty Retail
Food, Eating and Drinking Group
Grocery Stores
Specialty Food Stores
Liquor Stores
Eating Places
Building Materials And
Home Furnishings Group
Furniture & Home Furnishings
Household Appliances & Electronics
Used Merchandise
Nurseries & Garden Supply Stores
Lumber & Other Building Materials
Home Centers and Hardware Stores
Paint & Wallpaper
Automotive Group
New Cars & RVs
Used Car Dealers
Gasoline Service Stations
Mobile Homes & Trailers
Auto Parts & Accessories
Boats & Motorcycles
Benicia Visitor
Retail Demand
$24,720,204
$1,450,037
$322,514
$115,499
$721,559
$290,465
$4,932,779
$3,967,545
$965,235
$1,651,983
$122,521
$198,165
$49,760
$26,035
$89,412
$150,262
$222,357
$135,209
$658,261
$10,124,141
$1,608,760
$49,133
$79,559
$8,386,688
$0
$0
$0
$0
$0
$0
$0
$0
$6,561,264
$0
$0
$6,561,264
$0
$0
$0
Source: ADE, retail model developed from 1997 US Retail Census and 2002
Bureau of Labor Statistics Household Expenditure Surveys.
APPLIED DEVELOPMENT ECONOMICS
PAGE 44
As the planned hotels in this project are completed and reach
full capacity, the number of visitors to Benicia is expected to
increase. Completion of the first hotel, once it is operating at
full capacity, is expected to attract 109,500 visitors annually.
Once the second hotel is constructed and operating at full
capacity, the combination of both hotels is projected to
attract 208,050 visitors per year.16
Table 23 details the projected growth in demand resulting
from these new visitors.
TABLE 23
Growth in Benicia Visitor Retail Spending Demand
2005
2007
2010
2015
2025
2031
$24,720,204 $26,225,665 $32,863,062 $49,432,622 $75,770,112 $90,473,476
Source: ADE, retail model developed from 1997 US Retail Census and 2002 Bureau of Labor
Statistics Household Expenditure Surveys. Adjusted for inflation at an annual rate of 3
percent.
BENICIA RETAIL SALES
In order to determine the level of demand, or market,
available for new or expanding business, retail demand must
be analyzed in conjunction with existing sales. When actual
retail sales are subtracted from spending demand, the
difference is referred to as ―leakage,‖ which can be positive or
negative. A positive retail leakage indicates demand that is
being met by businesses outside the City. Negative leakage
indicates a retail category that is capturing all of the local
demand, as well as attracting spending from outside the City.
For the purposes of this analysis, retail leakage represents the
potential market demand available for new expanding
businesses. Table 24 shows the existing retail sales and
leakage in Benicia.
16
This assumes 380 rooms at 1.5 persons per room 365 nights per year.
APPLIED DEVELOPMENT ECONOMICS
PAGE 45
TABLE 24
Existing Retail Sales and Leakage (2005)
Retail Group
Total
Apparel and General Merchandise Stores*
Specialty Retail Group
Gifts & Novelties
Sporting Goods
Jewelry
Misc. Specialty Retail*
Food, Eating and Drinking Group
Grocery Stores
Specialty Food and Liquor Stores*
Eating Places
Building Materials And
Home Furnishings Group
Furniture & Home Furnishings*
Used Merchandise
Home Centers and Hardware Stores*
Automotive Group
Dealers & Stores (excl. partes &
accessories)*
Gasoline Service Stations
Auto Parts & Accessories
Existing Sales
Leakage
$261,721,510
$11,254,849
$37,880,285
$883,688
$856,056
$356,156
$35,784,385
$62,352,347
$19,370,700
$9,252,425
$33,729,222
$28,128,334
$58,821,284
$-18,512,096
$552,904
$1,597,137
$1,309,153
$-21,971,290
$21,526,001
$22,453,857
$-5,821,266
$4,893,410
$98,044,175
$13,511,834
$348,800
$84,183,541
$52,189,854
$-71,530,986
$736,196
$333,854
$-72,601,037
$37,824,132
$2,780,100
$57,468,409
$46,087,554
$3,322,200
$-17,803,149
$-1,841,128
Source: ADE, retail model developed from 1997 US Retail Census and 2002 Bureau of Labor
Statistics Household Expenditure Surveys.
Retail categories marked with asterisks (*) are aggregated categories due to confidentiality
requirements.
COMMERCIAL DEVELOPMENT
OPPORTUNITIES
Using the sales leakage estimates as a starting point, we have
identified a tenant mix for the retail portion of the project
that can capture available demand not currently met by
existing stores in Benicia. This would include a combination
of family clothing and drug outlets, combined with business
oriented retail such as office supplies and computers. Along
with the theaters, health club and restaurants these stores,
along with sporting goods and records would make a viable
commercial center, serving workers in the area, visitors at the
hotels and off the highways, and residents of Benicia. Table
25 shows the projected demand for the retail portion of the
development. This demand is comprised of existing sales
leakage and projected growth in demand from the various
APPLIED DEVELOPMENT ECONOMICS
PAGE 46
segments of shopping populations discussed above. Current
demand in 2007 is estimated at $22.5 million, and would
triple by the full buildout of the project.
Table 25
Demand Projection for Store Types Relevant to the Proposed Project
Store Type
Family Clothing
Drug & Proprietary Stores
Office Supplies/Computer Equipment
Sporting Goods
Records & Music
Household Appliances & Electronics
Total
2007
$9,264,799
4,580,652
2,169,282
1,728,161
1,060,492
3,718,946
$22,522,334
2010
$10,510,052
5,413,182
2,472,003
1,994,648
1,204,209
4,221,182
$25,815,276
2015
$13,400,366
7,559,065
3,185,383
2,646,860
1,538,921
5,424,619
$33,755,214
2025
$19,940,810
12,225,831
4,801,010
4,094,602
2,296,550
8,300,899
$51,659,701
2031
$25,405,234
16,017,032
6,104,941
5,324,736
2,923,161
10,857,340
$66,632,444
Source: ADE Inc.
Using the average sales per square foot of building space as
shown in Table 26, we can estimate the supportable retail
building space over the buildout period of the project (Table
27). In the near term (2010-2015), the demand reaches about
75 to 80 percent of average levels, but this is within an
acceptable range of sales margin for these types of businesses.
Table 26
Projected Sales Per Sq. Ft.
Store Type
Family Clothing
Drug & Proprietary Stores
Office Supplies/Computer Equipment
Sporting Goods
Records & Music
Household Appliances & Electronics
2005
$300.00
$366.00
$250.00
$241.00
$226.00
$320.00
2007
$318.27
$388.29
$265.23
$255.68
$239.76
$339.49
2010
$347.78
$424.29
$289.82
$279.39
$262.00
$370.97
2015
$403.17
$491.87
$335.98
$323.88
$303.73
$430.05
2025
$541.83
$661.04
$451.53
$435.27
$408.18
$577.96
2031
$646.98
$789.31
$539.15
$519.74
$487.39
$690.11
Source: ADE Inc.
Table 27
Supportable Sq.Ft.
Store Type
Family Clothing
Drug & Proprietary Stores
Office Supplies/Computer Equipment
Sporting Goods
Records & Music
Household Appliances & Electronics
Total
2007
29,110
11,797
8,179
6,759
4,423
10,955
71,223
2010
30,220
12,758
8,529
7,139
4,596
11,379
74,622
2015
33,237
15,368
9,481
8,172
5,067
12,614
83,939
2025
36,802
18,495
10,633
9,407
5,626
14,363
95,326
2031
39,268
20,292
11,323
10,245
5,998
15,733
102,859
Source: ADE Inc.
APPLIED DEVELOPMENT ECONOMICS
PAGE 47
Table 28 shows the anticipated development absorption
schedule for both the retail and non-retail components of the
commercial development and Table 29 shows the resulting
taxable sales projections.
Table 28
Anticipated Commercial Development Absorption in the Proposed Project
(Cumulative)
Business Establishment
2007
Retail
Family Clothing
Drug & Proprietary Stores
Office Supplies/Computer Equipment
Sporting Goods
Records & Music
Household Appliances & Electronics
Subtotal
Non-Retail Commercial
Health and Fitness Club
Movie Theater
Service Station
Bank
Subtotal
2008
2009
2010
2011
2012
30,000
30,000
30,000
30,000
30,000
10,000
5,000
15,000
60,000
10,000
5,000
15,000
60,000
10,000
5,000
15,000
60,000
10,000
5,000
15,000
60,000
10,000
5,000
15,000
60,000
30,000
25,000
15,000
10,000
5,000
15,000
100,000
60,000
60,000
60,000
60,000
7,000
60,000
60,000
60,000
67,000
60,000
60,000
7,000
12,000
139,000
60,000
60,000
7,000
12,000
139,000
Source: ADE Inc.
Table 29
Projected Sales
Business Establishment
Retail
Family Clothing
Drug & Proprietary Stores
Office Supplies/Computer Equipment
Sporting Goods
Records & Music
Household Appliances & Electronics
Subtotal
Non-Retail
Health and Fitness Club
Movie Theater
Service Station
Bank
Subtotal
2007
2010
$9,264,799
$10,510,052
$1,728,161
$1,060,492
$3,718,946
$15,772,399
2015
2025
2031
$1,994,648
$1,204,209
$4,221,182
$17,930,092
$13,400,366
$7,559,065
$3,185,383
$2,646,860
$1,538,921
$5,424,619
$33,755,214
$19,940,810
$12,225,831
$4,801,010
$4,094,602
$2,296,550
$8,300,899
$51,659,701
$24,261,652
$16,017,032
$6,104,941
$5,324,736
$2,923,161
$10,857,340
$65,488,862
$636,540
$695,564
$10,549,394
$80,635
$806,350
$12,229,639
$108,367
$1,083,667
$16,435,612
$129,395
$1,293,955
$19,624,981
$636,540
$11,244,959
$13,116,624
$17,627,646
$21,048,331
Source: ADE Inc.
APPLIED DEVELOPMENT ECONOMICS
PAGE 48
A similar analysis was conducted for the restaurants and other
eating places included in the commercial portion of the
project. Table 30 indicates the demand projection and the
resulting sales figures. It is anticipated that the sit down
restaurants would develop along with the movie theater and
other retail early in the development program, and tat the fast
food would go in with the service station complex later on.
Table 30
Market Demand and Projected Sales for Eating Places
Projected Demand
Sq.ft. in the Project
Sales per sq.ft.
Total Projected Sales
2007
$5,605,281
20,000
$397.84
5,605,281
2010
$8,609,904
28,000
$434.73
8,609,904
2015
$17,332,988
28,000
$503.97
17,332,988
2025
$32,522,372
28,000
$677.29
23,705,210
2031
$45,494,857
28,000
$808.72
28,305,260
Source: ADE Inc.
SALES TAX PROJECTIONS
In addition to the commercial portion of the project, the
office, industrial and lodging development will also generate
some sales tax, based on the experience of existing such
businesses in Benicia. Table 31 indicates the taxable sales
projections from these uses.
Table 31
Projected Taxable Sales for Non-Commercial portions of the Project
Land Use
Industrial Tilt Up
Industrial Flex
Office
Lodging
Total
Sales Per
Sq.Ft.
$23.13
$29.52
$63.95
$8.33
2007
$869,961
$1,331,250
$1,202,304
$0
$3,403,516
2010
$4,020,673
$6,152,600
$6,310,147
$966,062
$17,449,481
2015
2025
$11,668,413 $44,925,911
$17,855,488 $68,747,485
$30,080,145 $40,425,200
$2,687,833
$3,612,222
$62,291,879 $157,710,819
2031
$100,801,753
$154,251,024
$48,269,803
$4,313,183
$307,635,762
Source: ADE Inc.
The combined taxable sales projections from each
component of the proposed project are summarized in Table
32. The last line in the table calculates the sales tax for the
City of Benicia. These figures have been used in Table 5
above to show the sales tax contribution of the project to the
City budget.
APPLIED DEVELOPMENT ECONOMICS
PAGE 49
Table 32
Summary of Taxable Sales
Land Use
2007
$15,772,399
$5,605,281
$636,540
$2,201,212
$1,202,304
$0
$25,417,736
$254,177
Retail Center
Eating Places
Health Club,Theater, Gas Station
Industrial
Office
Lodging
GRAND TOTAL
Sales Tax @ 1%
2010
$17,930,092
$8,609,904
$11,244,959
$10,173,272
$6,310,147
$966,062
$55,234,434
$552,344
2015
$33,755,214
$17,332,988
$13,116,624
$29,523,901
$30,080,145
$2,687,833
$126,496,705
$1,264,967
2025
$51,659,701
$23,705,210
$17,627,646
$113,673,397
$40,425,200
$3,612,222
$250,703,376
$2,507,034
2031
$65,488,862
$28,305,260
$21,048,331
$255,052,776
$48,269,803
$4,313,183
$422,478,215
$4,224,782
Source: ADE Inc.
CONCLUSION
The type of commercial center proposed for the Benicia
Business Park project is very different than any existing retail
centers in Benicia and is particularly distinct from the
entertainment and shopping environment found in
Downtown Benicia. Whereas Downtown features Bed and
Breakfast hotels, small intimate restaurants and small scale,
quaint shopping opportunities, the commercial center in the
proposed project is intended to be a business oriented
development, with conference hotel, business and highway
commercial services, and a retail mix that serve the business
community as well as movie goers. There are currently no
movie theaters in Benicia, so this present a unique
opportunity to enhance the entertainment opportunities for
Benicia residents as well as visitors. In addition, with proper
marketing and promotion by the Chamber of Commerce and
City economic development staff, the hotels’ visitors would
likely find their way Downtown and patronize restaurants and
shops leading down to the waterfront. The project presents
an opportunity to increase retail sales Citywide by attracting
additional business travelers and other visitors to Benicia.
Based on this analysis, we find no evidence to suggest that the
proposed project would create conditions leading to urban
decay anywhere in Benicia. On the contrary the project has a
strong potential to enhance commercial businesses
throughout the City.
APPLIED DEVELOPMENT ECONOMICS
PAGE 50
ECONOMIC MULTIPLIER EFFECTS
This section discusses the non-fiscal economic effects
resulting from the Benicia Business Park project. The impacts
are divided into two major groupings—those economic
effects generated during the construction phase and recurring
effects that ongoing activities at the project site will generate
as new businesses open.
These economic effects will occur in a number of ways. First,
the construction phase of the project will create construction
jobs and generate demand for material and services. Once
completed, the project will generate economic effects in two
ways – the new jobs provided through the retail, industrial,
and office space, and the household spending activity by new
employees of the businesses in the project. The jobs, business
revenue, and personal income generated during these phases
are known as the direct effects.
In addition to direct effects, the project will also generate
multiplier benefits. These multipliers are defined as indirect and
induced effects. Using an input-output model and other data
sources, this section identifies these multiplier effects. These
multipliers represent ancillary economic activity generated by
the new businesses and their employees.
The indirect effects result from supplier purchases made by
businesses. For example, indirect effects created by a
manufacturing facility would include purchases of machinery,
raw materials, transportation services, business services, and
building maintenance. Basically, the indirect effects account
for all of the commodities and services that a business needs
to purchase in order to operate. The induced effects are
generated by the employees as they purchase local services
and retail goods for their families.
ANNUAL ECONOMIC EFFECTS
The economic effects for the Benicia Business Park will occur
both on an ongoing basis as the land uses phase in, and for
the duration of the project’s construction. These economic
effects will occur in a variety of areas. For this analysis, the
APPLIED DEVELOPMENT ECONOMICS
PAGE 51
economic effects being analyzed include employment,
economic output (business revenue), and labor income.
EMPLOYMENT EFFECTS
Employment simply refers to the new jobs that the various
activities in the Benicia Business Park will generate. Direct
jobs include the construction employment, and the jobs
generated by the retail and business park uses as they come
on line. The indirect jobs result from supplier purchases,
while the induced jobs come from household spending by
employees.
The commercial portion of the project would require about
216 workers onsite during the 8-year construction period.
The multiplier effects of this activity would generate another
115 jobs through indirect and induced impacts. The industrial
development would require 25 years or more to develop and
would create 242 construction jobs annually during that
period. Total jobs would be nearly 400 annually during the
twenty-five year construction period. While these jobs are
temporary, the extended construction period for the project
means that the economic benefits of this construction activity
will continue to accrue over a long period of time.
As discussed in the project description, onsite employment is
estimated to be 1,857 for the commercial portion of the
project and 5,823 for the industrial portion, for a total of
7,680 jobs. The economic multiplier effects would increase
this total to 11,579 throughout Solano County.
INDUSTRY OUTPUT EFFECTS
Economic output represents the value of all the overall
economic activity that a land use or industry activity generates
on an annual basis. This total output value includes the value
of all supplier purchases and business costs (inputs); and
labor income, property income, and other components that
add value to a commodity or service and generate revenue as
a result (outputs).
APPLIED DEVELOPMENT ECONOMICS
PAGE 52
TABLE 33
Direct and Indirect Economic Benefits of the Proposed Project ($2005)
Construction Phase (Commercial Uses)
Economic Impact
Direct Effects
Indirect
Effects
Economic Output
$3,453,092
$7,541,560
216
32
83
331
$9,605,717
$1,290,034
$2,583,833
$13,479,584
Construction Phase (Industrial Uses)
Economic Effect
Direct Effects
Economic Output
Indirect
Effects
Induced
Effects
$3,071,134
$4,823,461
32
53
216
$5,749,868
$1,218,877
$1,652,578
$8,621,323
$33,896,425
$46,965,780
356
518
2,731
$55,697,784
$12,156,517
$16,091,062
$83,945,361
Indirect
Effects
Total
$197,602,866
$150,942,984
3,145
1,461
1,648
6,254
$180,914,944
$61,176,915
$50,578,910
$292,670,779
Total Annual Operations (Excluding Construction)
Economic Effect
Direct Effects
Indirect
Effects
Economic Output
Employment (Jobs)
Labor Income
Induced
Effects
$222,126,625
$737,760,851
Employment (Jobs)
Labor Income
Total
1,857
Annual Operations of Industrial Uses
Economic Effect
Direct Effects
Economic Output
Induced
Effects
$18,966,636
$141,264,420
Employment (Jobs)
Labor Income
Total
131
Annual Operations of Commercial Uses
Economic Effect
Direct Effects
Indirect
Effects
Economic Output
$29,194,653
$11,072,042
Employment (Jobs)
Labor Income
Total
$18,200,000
Employment (Jobs)
Labor Income
Induced
Effects
$879,025,271
5,002
$236,612,728
APPLIED DEVELOPMENT ECONOMICS
$231,499,291
1,817
$73,333,432
Induced
Effects
$1,086,306,685
Total
$197,908,764 $1,308,433,310
2,166
8,985
$66,669,972
$376,616,140
PAGE 53
As with the other economic measures, the value of the overall
economic contribution made by the business park will
increase as the buildings are completed and new businesses
move in. As shown in Table 33, once completed the
economic output of the Benicia Business Park will total about
$1.5 billion annually, and generate multiplier effects worth
more than an additional $700 million to the Solano County
economy (see Figure 6 as well). Altogether, this would
represent $2.2 billion per year in added economic activity,
plus another $75 million per year during the height of the
construction phase. For comparison, Solano County as a
whole produced an estimated $17.4 billion in economic
output in 2002.
INCOME EFFECTS
One of the significant economic effects generated by the
Benicia Business Park is labor income. The labor income
derives from all construction and operational phases of the
project. As with the employment figures discussed above, the
construction income is temporary, although extensive, while
the income from operational activities is permanent. For
purposes of this analysis, labor income is defined as a
combination of employee wage and salary compensation and
proprietor income, which includes self-employment income.
It should be noted that labor income is one component of
industry output.
The total direct labor income that results from construction
activity in the average year would be in excess of $20 million,
and at full buildout, the businesses onsite would create more
than $390 million in wages and salaries. The multiplier effects
would increase this ongoing benefit to $625 million
throughout the county (see Table 33).
APPLIED DEVELOPMENT ECONOMICS
PAGE 54
Figure 6
Components of $1.3 billion in Economic
Benefit ($2005)
Direct Economic Output
Direct Labor Income
Indirect Economic Output
Indirect Labor Income
Induced Economic Output
Induced Labor Income
Notes:
Economic output in Figure 6 includes all business sales and economic activity other than labor income.
Direct economic output and income is generated by businesses within the project.
Indirect output and income is generated by business-to-business transactions.
Induced output and income is generated by employee household spending.
APPLIED DEVELOPMENT ECONOMICS
PAGE 55
CONCLUSION
The project, which is the last large piece of undeveloped land
in the City, creates an important opportunity for the City to
expand its economic base, with significant fiscal benefits as a
result. Throughout California, cities are striving to boost
economic development in order to balance their tax base and
meet the significant costs for services required by residential
development. The tax revenues created by the proposed
project would not only pay the direct cost of services required
for the project, but would also generate more than $40
million in surplus revenues for the City over a twenty-five
year period, after paying all expenses for City services for the
project. These funds would be available to help sustain
community services and the quality of life for residents of
Benicia. As the report points out, the property tax allocation
system penalizes slow-growing cities by shifting property
taxes to jurisdictions where the assessed value is growing
more rapidly. Therefore, Benicia must continue to see new
development even to maintain its existing property tax share.
The proposed project provides a critical opportunity for the
City to maintain and enhance its fiscal balance.
The retail competitiveness analysis confirms that the project
will provide a net benefit of commercial opportunities for the
City without detracting from its Downtown or other
commercial districts. Indeed, the additional visitors and
workers the project will attract will add to the customer base
for Downtown businesses.
In addition to creating a stream of net tax revenues for the
City, the project has the ability to catalyze the improvement
of services in the industrial area of Benicia, including
provision of a new fire station and enhancement of police
services in the area. The project would also pay more than
$23 million (2005 dollars) in development impact fees, which
would be used by the City to improve infrastructure and
public facilities in the community.
The project will have a substantial benefit for the city and
county economy, providing nearly 7,700 jobs on-site and
6,500 additional jobs throughout Solano County in support
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businesses and services. These jobs would result from
ongoing business activity at the proposed Benicia Business
Park, and will add $2.2 billion per year in total economic
activity once the project is fully developed. In addition to this,
the construction activity itself would sustain more than 700
jobs over the first eight years and about 400 jobs over the
remaining 18-year development period. This economic
activity will increase incomes for Benicia residents and
citizens throughout the county, as well as improve the fiscal
picture for County government along with the City.
It is important for the City to create the opportunity for
economic development in order to stimulate adequate rates
of business development and job growth. Without the land
and facilities included in the proposed project, the City will
have greater difficulty retaining existing businesses that wish
to expand, as well as attracting new businesses to the
community. There are numerous quality-of-life benefits, in
addition to the economic benefits, of providing a thriving
local job base for Benicia residents, including reducing their
need to commute to other job centers, as well as generating
and keeping vital tax dollars at home in Benicia.
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APPENDIX A: CITY BUDGET EXCERPTS, 2005-2007
PROPOSED BUDGET
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APPENDIX B: METHODOLOGY FOR THE ECONOMIC
IMPACTS ANALYSIS
To estimate the multiplier effects resulting from the Benicia
Business Park, ADE used the IMPLAN input-output model.
This model can estimate economic impacts resulting from
changes in industrial output, employment, income, and value
added. The economic impacts for the non-residential uses
were based on the employment estimates for the retail and
business park uses. The analysis calculated the impacts
resulting from each of these industry groups separately.
The application used to interpret the data and generate the
impact calculations is IMPLAN Impro Professional 2.0. This
input-output model calculates impacts and buyer-supplier
relationships for 528 individual industry and commodity
categories and is widely used among professionals in the field
of community economics. The industry classification system
used in the IMPLAN model roughly approximates, but still
differs significantly from, the commonly used Standard
Industry Classification (SIC) and North American Industry
Classification System (NAICS). The input-output matrices
that form the main database come from the 2000 Bureau of
Labor Statistics dataset, and the analysis used an individual
county-specific dataset for Solano County.
The economic impacts estimated by the model fall into one
of three categories—direct, indirect, and induced. These
impacts are calculated on the basis of annual impacts. In this
analysis, direct impacts represent the estimated jobs, labor
income, and industry output that result directly from
construction activity, retail and business park business
activity, and household commodity demand. Indirect impacts
represent the estimated effects that result from demand for
commodities and services provided by suppliers. Examples of
supplier industries include business services, industrial
machinery, and other equipment. Induced impacts represent
the potential effects resulting from household spending at
local businesses by the workers. These impacts generally
affect retail businesses, health services, and personal services
providers.
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