Recommendation to Accept the Quarterly Sales Tax Report for the Period Ending September 30, 2014 Collected During the Period April 1, 2014 to June 30, 2014.  (Finance 2410) (Continued from January 20, 2015)
Six A recommendation to accept the quarterly sales tax report for the period ending September 30th, 2014, collected during the period April 1st, 2014 through June 30th, 2014. Good evening once more. This is another report. Excuse me. All of a sudden, my ear just went. Hmm. This is another report that was carried over from a previous meeting. Well, we report to you on a quarterly basis the sales tax revenues. Now. The. It is our fourth largest revenue source and it is important that there is attention given to the various elements and various impacts upon sales tax revenues. We should also be aware of the lag sales occurring in the one quarter are not our revenues received in the next quarter. So when we talk about this, we're talking if we're talking revenues there, they come later than the actual sales and we need to be aware of that as we talk about it. Most. There we have hired HDL companies to receive confidential data from the Franchise Tax Board and to provide HDL provides various analyzes to the city. These analyzes include the year over year change by major industry group historical trends over time by major industry group historical trend for the city as a whole. Historic trends by geographic areas and the geographic areas I just want to footnote were originally chosen by the City Council and we keep adding as we see new shopping areas, new areas developing. So we may want to revisit those at some point and decide if those are really things that we want to track. The surplus gap comparison. This really shows you how much sales tax dollars alameda alameda and spend in alameda versus what gets spent in other cities. It's referred to as the leakage report. It also has county wide comparisons, statewide comparisons and a general economic analysis of the nation, the state and our local east bay. This is a one of the analysis that we receive is called the 13 quarter trend. And it shows that over the 13 quarters since the most recent 13 quarters, we are trending up and that's good news. But it also tells us that when there is an economic downturn, this is a very sensitive and very volatile piece of revenue and we need to pay attention when that starts to happen. This. The next slide tells us about the per capita sales. This is the sales tax revenue per pop, per piece of population per person in the city of Alameda. And we still have the lowest sales tax revenue per capita as other major cities in our county. And we recently changed the county, the cities that we were looking at in order to be more comparative with those that we felt had similar population sizes as well as similar shopping, not just our neighbors geographically. So we are now looking at Oakland while they have. You know, bigger population. It still is interesting to look at. Per capita what they are generating and sales tax revenue. And as you can see, Alameda is still at the very bottom. So I'm going to ask a clarifying question. In the past, have you included Piedmont? No. This is one of the first times that we've included. Did we include people I can't know? Piedmont is not included. We have. Not now. I said in the past, that was my question. We haven't in the past looked at Piedmont, but we have started getting some of that data so we can start including Piedmont as a comparison if we wish to. But it's not. Wasn't high on our list of comparatives. Thank you. Madam Chair. May I make a comment? Actually, the two cities that we're looking at revising is Albany and Richmond, and the cities that we're thinking about supplanting it with is. Um. Um. Elsa Prieto. No, not. No. Sorry. Walnut Creek. Yeah. And Pleasanton. And Pleasanton. So comparable sized cities. Comparable. More comparable median income. Because Albany is much smaller than than we are. I mean, yeah, substantially smaller. And Richmond's demographic is much different than ours. Okay, so we can have a discussion on that. Right now, I just want to leave it to our clarifying questions. Thank you. So just to reiterate that the quarterly sales tax is a lagging indicator, but it's worth tracking because it is one of our four largest revenues. And we can as you look at the written report, you see that there are geographic reports and industry reports and some other charts that are included. So we can alter those to some extent. We do have a limit on the quantity of items that we can report, but we can alter them. So I wanted to point that out to you this evening so that if you choose to look want to look at different comparisons, we can start that process. And that concludes my presentation. I'd be happy to answer any questions that you might have. And we have no speakers. Correct. All right. Member Ashcroft, did you want to start or. Thank you, Ms.. Boyer, for all the presentations you're going to do for us this evening. So I you and I'm looking at the staff report now on page two. The and again, there is a lag in the actual collection of these. The reporting follows the the actual collections. So the South Shore Center, I was surprised to see a drop of 2% over the past year because it seems like so many businesses have been added. But is this just a matter of not having the most up to date information? So remember that these are the sales that took place in the period ending September. No other way from April to June. April to June. Okay. So is that really a high sales season? It's not the holiday shopping season. Exactly. Or back to school are back. Those are the two real high points at a retail establishment that's mostly what you have at South Shore is retail rather than anything else. Okay. Generally, I see this as very positive. I realize that it is not only cyclical, it's dependent on the economy. And when consumers are feeling more confident, they are more confident about spending. And there is also. It's in this report. I believe the the fact that brick and mortar stores now have competition from the e-commerce. And yet there is a mechanism by which, yes, we are recovering. We share in what's called the county pool. So what when a a. When there is an online sale and there is no brick and mortar presence in our in our city, the sales tax accrues to the county pool, and that's shared among all of the cities in Alameda County. So we get a share of that pool and that is increasing over time. And then thank you. Which which is important for us to capture that. And then with regard to now, I'm on exhibit one and there's the per capita sales tax surplus gap comparison that you referred to. And I did also note the footnote at the bottom of this graph, the last sentence that says this The information is provided only as a starting point in identifying potential sources of sales tax loss and should not automatically be interpreted as an expansion or levering leveraging opportunity without more detailed analysis and assessment. And the the one example that just comes to mind, because it's been discussed in the community is somewhere on this table, I do believe, is the fact that we lagged in the gas station sales of gasoline in the city. And so we've recently added a gas station as you come in from the tube. And even though I certainly remember many discussions by this body previously, it apparently didn't get out to the whole community because mostly I'm hearing complaints from people about why are we looking at a gas station as we come out of the tube? And I think there's two answers to that. One of them is Sean Roskam in of Catullus promises me that that screaming from landscaping and possibly a fence even is going to help to obscure that view a little and make it a little more palatable as you come through the tube. But on the other hand, that's what sales tax generation looks like. We just did a couple of weeks ago the ribbon cutting at the new Safeway out at Marina Village, which is quite lovely. And already I understand we're not seeing it in this report, but that the sales tax numbers from Target that's been up and running now for more than a year and some of the other retailers, I'm sure that Safeway is going to do a great business because it's the first grocery store that far out on the island. But this this comes with, you know, it is development. We've heard some negative things said about development, but this is part of what development looks like. To comments one grocery stores don't generate a great deal of sales tax. Most of what they sell is not taxable. It it it's hard to tell you exactly what percentage because each store varies by what they have to offer sales tax on gasoline because the price is dropping where that's going down. So it's very cyclical right now and not something that is going to really boost our sales tax revenues over the next three or four quarters, I would say. Thank you. I smell. A question. Thank you for the report. And stepping us through. It is good to have the allies to help guide. But I wanted to go back to the $313,000 that was recovered a basically to the positive of Alameda. Is that going to to stay because that business is here and now reporting here so will will get their sales tax not necessarily that number will get their sales tax. Or is that sales tax spread over a number of years and are in arrears? I'm not sure of the answer because I will have to do some research and give you an answer later. Because if I look at the total quarter. Um, and I don't know how that how that figure balances, but if that figure, if that $313,000 is part of the $460,000 from Harbor Bay Parkway, is that correct? On this is page two. Yeah, I'm not I'm not certain. But to see how that. Yes. To see how that. If that's a one time or. Is it. Ongoing or is it a we expected to see some of that continue out to. If you could clarify that in the next quarterly. Yeah, I can clarify it. And then I can tell you that typically when they find an error, they give us all of they go back as far as the beginning of the year. They give us that money and then make sure that it stays corrected from that point on. And how much are we going to get? I don't know at this point. Not going to look all the time when we were on the other end of that. Yes. Where a significant amount of money went the other way. That's true. So I think if we can make sure that we flagged that in the next report. Yes. See where it lies. That's all I have. Thank you. Member de SAC. Right. Well, thank you very much. Thank you very much. Uh, interim finance director Ms.. Borja. Really appreciate the presentation. You know, I think from the big picture of things, the reason why we sales tax is important certainly is it's one of the revenue sources by which we finance the quality of life that we all hope to have here in Alameda. So it's important. And unlike a number of other revenue centers, the sales tax is one which you can more or less plan around in terms of how you design and strategize with regard to your built environment, but also plan with regards to, you know, what kind of business attraction, business retention this is expansion strategies . So there is there is a lot of wiggle room when it comes to sales tax generation. So for that reason, it's a right place of focus. When I look at the sales tax bar chart that you had where you have like is this as an industry and in general consumer goods and then restaurants and hotels. The bar chart where you had kind of the dash colors versus the solid colors. What's really interesting is when you look at business and industry, it's great to see that it went from $500,000 in sales taxes to a roughly slightly over $600,000. But, you know, to staff's credit, we all understand that when it comes to business sales taxes, that, you know, it is highly volatile. More sales taxes, as it is, is a volatile revenue source business as as business. The business sales tax is that much more volatile business can leave or they can maybe change their their place from which they conduct the sales. So so I think rightfully, city staff is recognizing that while our sales taxes in general have increased, what has been driving that is perhaps a business to business sales tax. So on the expenditure side, just because we have sales taxes go up by what, 200,000, $300,000 on the on the revenue side, on the expenditure side, I know that staff isn't going to bake into cake 200 to $300000 more in expenses. So so I think, you know, staff is certainly on the ball there. I think there's a lot of opportunities that I think we as City of Alameda further contemplate how to utilize our economic development manager, Darrell Doan. There's a lot of places that I think we should be excited about. So. So it is true. We're an island. And by virtue of being an island, our sales tax per per capita numbers are going to be lower than many other places. But there are places where where we can mobilize. I mean, just by bringing right speed, for example, if we have right speed, make sure that when they sell a truck, make sure that we that the sales tax comes to us. And it's and as we plan Alameda point, maybe we should look for the you know make sure to prioritize those kind of businesses. And I'm sure that city staff is as is Jennifer Ott. And as we make our early discussions with prospective and developer Alameda Partners, I'm sure they'll keep that in mind as well. But, you know, there are strategies that we can do also that are on a smaller scale when it comes to sales tax retention. You know, we've we have a lot of vacant spaces in Alameda and with with some of those vacant spaces, perhaps we can, you know, have Darrell Doan and city manager staff think about, you know , what kind of pop up strategies that we might employ, pop up retail and do that. In a intentional manner. And finally, one of the things that we need to also do is, you know, figure out ways to get, you know, residents to make sure that that they spend here and in town, you know, and when they can , you know, maybe, you know, the special dress or the special suit, you know, maybe they'll go to San Francisco or Walnut Creek for that. But perhaps for a lot of a lot of other items, you know, that they're purchasing elsewhere, they'll do so here. One final point on on grocery stores, because grocery stores are an important part of a shopping center for obvious reasons. And while they are not a sales tax generating generally, maybe 30% of their sales is is taxable. Grocery stores are important in that they drive foot traffic. They drive customers to come. And that's why when you look at all the different shopping centers that we have, practically everyone has an anchor. Anchor store is anchored by by the grocery store. So so it is an important part of an overall economic development strategy, even if even if they're not as high tech generating as a target . But final point, it's great to have target here. We need that kind of sales tax. But we also need to think and I think we're on we're moving in that direction. We think about, you know, things like the business to business sales taxes. We need to think about small scale pop up strategies. So I look at this as data that is a beginning point for a wide range of strategies, and that means a lot of exciting times with our Darrell Dunn. And we do include him when HDL comes to review the quarterly information, Darrell and his staff are included in those discussions and they have an opportunity to ask lots of questions and to secure more data. So it's an ongoing process. Thank you. And Brody. Just a couple quick questions. Again, thank you for the report. And, you know, doing all the reports today, it's a lot of work to generate this information and gather at all. So on the the geographic area, you know, where would somebody at home or someone like me sitting up here find the sales tax revenue for target Alameda landing. Is that is that so link or I'm sorry all other areas. It's in all other areas currently but we have added Alameda landing and you'll see that in the next report. And then even if you take out the 85,000 year over year for for Target, you know, we still had some good increases. What's going on with like north of Lincoln and Webster? Do you know that was one that actually had a deal? I don't know. I would have to do some research on that. Generally, when we get this data, it's accumulated from other data. And so you have to really dig through the. All of the information in order to pin the exact where the changes occurring and why. And then on the I guess it was exhibit one, the the graph. It's per capita. So that's the total per capita. So a place like San Leandro, which has a higher tax rate, you know, would by virtue of that, have a higher per capita. If they have a higher sales tax rate. Right. So it might be helpful in the future, you know, kind of compare what the sales with the sales rates on the yeah. If if they have a general sales tax rate, they may have a sales tax rate that is to support a specific bond issue and therefore should not be reported in this. But I can check and make sure. Yes. Just so you know, we're comparing apples to apples. Yeah. So cars. Cause they do sell cars. Customers have a higher tax rate. So and I think that's an important point because when the car dealerships left Alameda ten years ago, it was a precipitous drop. Yeah, you can see it on the the green line or whatever. There you go. Yeah. Thank you. Member de SAC. Oh, I. Just wanted to quickly say to that. My understanding is Peet's Coffee is interested in Webster Street. Did I read that correctly? Yes, you did. Well, that is exciting news. I just was, especially for it. Sales tax generation and foot traffic generation activity. Thank you. We've been working on them for about 18 to 24 months. Great. Awesome, wonderful. Thank you. Clarification question. Member Ashcroft. Thank you. I'm wondering if staff could just clarify. Councilmember O.D. asked where we would find the target sales tax numbers. And I think the answer is, even when those reporting periods come up, we won't. And I don't think we'll see. CVS and some others could bring that to. Us in order to get access to the Franchise Tax Board data, we have to treat it as confidential information. It is not even resident on our computers, so that's why we hire HTL. They we give them permission to get our data. We do not have nor can we release any information about specific taxpayers. That's what we have to agree to in order to get the detailed information. We can tell you in general, big categories like service sectors, or we can tell you by geographic areas. But and if we have something that's Alameda landing, you know, all the stores that are there, you have to make some assumptions. Know that was the question. Are we going to be able to identify Alameda landing in the future? Yes, we we have already asked for that, right? Yes, you have. Thank you. And I appreciate the report. Thank. Thank you. So in regards to sales tax, I know there are many elements that do shop on our historical districts and our historical districts and sales taxes, sales tax. So you can also continue to shop and Park Street, Webster Street. Of course, we have South Shore. And for me, in regards to whether we have another gas station, we have gas stations on Webster already. We do have other gas stations. And I will encourage people to shop all of our districts to our historical districts. And so personally, I am concerned about the building of more retail. Retail provides low paying jobs. And as we saw earlier today, many people are concerned about low paying jobs. That would be nice to have and to attract and some there were quite a few people that referred to car sales and maybe that's not going to be coming back. However, I think entertainment quite often is more of a win win in regards to our meetings are very supportive of, from what I have seen, entertainment, restaurants, things like that that are of other ways of bringing in sales tax revenue. So thank you very much. Yes, sir. We'll have a motion. Please move that we accept the quarterly sales tax report I second. Okay. All those in favor I oppose abstentions. Motion carries unanimously. All right, next item.