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City of Arvada Sales Tax Revenue Report

OverviewThe City’s sales tax collections are now 0.77% or $272,434 above our revised estimate of $35.258 million for the year through October sales. For the year, we expect to generate $43.346 million. We have two more months of sales taxes to be receipted for 2012. We have collected 5.80% more in 2012 than in 2011 through the same period. We have collected a total of $35.531 million in ten months of 2012 as compared to $33.582 million through October sales taxes in 2011.

When comparing just October 2011 to October 2012, there is a very positive story. In 2012, over 5.97% more was collected in the month over last year, $3.296 million in 2011 as compared to $3.493 million this October. In fact, October generated 1.03% more than what we had estimated for the month, $3.493 million as compared to $3.457 million.

The actual numbers for the above graph can be found in the “All Sales Tax Revenue” chart on Page 6 of this report.

Use tax types include: General, Building and Auto use tax. These taxes are paid in lieu of sales taxes when purchasing goods used in a business, building permit or a vehicle. General Use and Auto Use tax are collected by outside agencies, and thus, the receipts reflect only 10 months of collections. The City collects building use tax at the time of issuance of a building permit. As such, the numbers provided in this report reflect eleven months of collections, or collections through November.

As the graph below illustrates, we have generated a total of $994,544 in General Use Tax to date this year against a revised budget of $1.448 million. As we have been reporting for several months, receipts in this category will be short of the revised budget. This is after we lowered the original budget estimate of $1.548 million. We expect to be, at least, $350,000 short in this area.

The Auto Use and Building Use taxes will offset this shortfall. The Auto Use tax collection estimate was also revised last month. Even with the higher estimate of $5.097 million, we expect to generate more than $250,000 above this estimate.

October 2012 Taxes Receipted November 2012

$-

$500,000

$1,000,000

$1,500,000

$2,000,000

$2,500,000

$3,000,000

$3,500,000

$4,000,000

$4,500,000

$5,000,000

JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC

Monthly Collections

2010

2011

2012

2012 Revised Budget

$-

$1,000,000

$2,000,000

$3,000,000

$4,000,000

$5,000,000

$6,000,000

General Auto Building

Total Receipts Through November

2012 Rev Budget YTD 2012 YTD 2011

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Building Use tax, however, has been the biggest surprise. Through November the City issued 300 single-family housing permits. The last year the City permitted this many single-family housing permits was 2004. The Building Use tax rececipts reflect single-family housing, multi-housing and general renovation types of permits.

We had revised the building use tax revenue from $1.557 million to $2.283 million (See “Other Tax Collections” graph on Page 7). Through November a total of $2.389 million was collected. We do not expect to significantly exceed this total through the last month of the year.

As the “Other Tax Collections” graph on Page 7 illustrates, with the Use Taxes we also report Franchise Fees. As will be discussed below, revenue from utilities, particularly the types that help heat and cool environments, is lower than it has been. This is due to the weather. As shown, the secondary impact of more temperate weather is that we are also seeing a significant loss from utility franchise fees. In fact we have collected only 72% of our revised budgeted estimates, and it is nearly $900,000 short of budget. It is clear we will not be able to attain our estimates, and expect to be short of budget by nearly $500,000 in this one category of revenue.

Sales Tax Receipts DetailIt is important to review the sales tax detail to determine the source of the revenue. First, the following graph provides the allocation of the sales tax to the two areas: General and Public Safety or Tax Increment.

2007 2008 2009 2010 2011 2012 2012Budget

Voter-Approved Police Sales Tax $4,418,633 $4,509,510 $4,308,317 $4,339,080 $4,513,455 $4,817,958 $4,777,540General $28,822,849 $29,419,259 $28,096,968 $28,298,517 $29,068,372 $30,713,077 $30,481,061

$- $5,000,000

$10,000,000 $15,000,000 $20,000,000 $25,000,000 $30,000,000 $35,000,000 $40,000,000

Total Receipts Through November The graph compares the years’ 2007 – 2012 Budgets. We continue to examine the history from the onset of the Great Recession through today. Clearly, our sales tax collections have experienced robust growth last year and this year through October. We have now surpassed

our highest year of collections, which was 2008. This graph also illustrates that we have collected more than our Revised Budget Estimates. We will continue this analysis over time until the country addresses its long-term fiscal issues. The international economy is experiencing major changes in economic interdependency. Until we are through this period, which may take years, the national economy will require oversight. How all this macro change impacts the local economy is an interesting study.

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Types of BusinessesThe “All Sales Tax by Category” graph on Page 6 provides detail of the significant number of types of businesses we analyze. For the purposes of this summary, we combine the following areas: Restaurants/Fast Food/and Fast Food Casual; Grocery and Health Food/Specialty; and Public Utilities and Telephone. We also combine Liquor Stores, Drug Stores, Auto Care, Office Supplies and Furniture into “All Others.”

JAN-OCT2010

JAN-OCT2011

JAN-OCT2012

% CHANGE 2011/2012

Clothing Stores $839,650 $860,279 $865,702 0.63%Restaurants/Fast Food/Fast Casual 3,675,927 3,807,683 4,117,287 8.13%General Department 5,931,896 6,211,936 6,526,169 5.06%Grocery/Health 5,679,205 5,771,738 6,487,191 12.40%Utilities/Telephone Equipment 5,354,342 5,298,614 5,353,160 1.03%Retail Hardware 2,510,616 2,416,348 2,602,306 7.70%Auto Care 1,396,038 1,456,103 1,543,546 6.01%Drug Stores 311,793 333,293 328,470 -1.45%All Others 3,659,464 7,426,588 7,707,204 3.78%Total $32,658,931 $33,588,582 $35,531,035 5.80%

Information by LocationThe following is a compilation of area shopping centers. Page 7 contains a graph (Sales Tax Revenue by Area) which provides additional information.

LOCATIONJAN-OCT

2009JAN-OCT

2010JAN-OCT

2011JAN-OCT

20122011/2012

% CHANGE2011 -2012

$ CHANGE

80th Sheridan/Wadsworth $4,532,004 $4,492,650 $3,863,569 $4,419,899 14.40% $556,330

64th Eastside Sheridan/Wadsworth 1,343,539 1,278,823 1,324,707 1,347,838 1.75% 23,131

88th/ Wadsworth N/A N/A 497,633 608,912 22.36% 112,279

64th Westside Ward/McIntyre/Indiana 3,699,920 3,678,986 3,887,681 4,104,490 5.58% 216,809

City Center/Olde Town $9,693,604 $9,849,282 $10,040,770 $10,721,408 6.78% $680,638

All areas of our city are seeing increased sales for the year. As the “Sales Tax Revenue by Area” chart on Page 7 illustrates, the Arvada Urban Renewal Area referred to as “Ralston Fields/Target Center” is the only area of town that is showing lower revenues than last year. There is some shifting between stores and eating establishments in the various areas. This is to be expected as new businesses begin and users try new options. Overall, there is solid growth in the locations and types of businesses.

The table above includes rebates and late fees; thus, the total tax collections. Also, these numbers have been adjusted to “smooth” the collections from one major business. This business makes 13 payments, and the payment has already been made, but historically, it usually is paid in the July/August payments. Thus, these numbers do not match the Oracle receipts.

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As we did last year, we are adding the special analysis for the Olde Town Monthly Sales tax collections. This area of town now has a 12.90% growth rate over the first 10 months of 2011. While we have larger growth rates in three areas of the city, this is due to grocery store changes and significant new business. In the Olde Town, the growth is coming from new businesses, but small business, a brewery, restaurants and small gift shops. It is an area of the City whose growth is the reflection of a growing “place.” It is becoming a place with a variety of businesses that draws the entire demographics of the City – young professionals, families and longer-established residents.

Use TaxesThere are three types of use taxes: General, Auto and Building. The first two are collected one month in arrears; this means we have only 10 months’ worth of collections. Building Use Tax is collected here at the City with the issuance of a building permit; thus the following graph provides 11 months of information. The graph provides information for six years. As stated in the introduction, the only concern is General Use tax. We have fallen to pre-Great Recession levels. Businesses pay this tax when they are adding interior things to their buildings (shelves, etc.) or for supplies for which they have not paid tax. Generally, one would see this as an indicator of increasing business. This is somewhat a concern.

$0$10,000$20,000$30,000$40,000

$50,000$60,000$70,000$80,000$90,000

JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC

Olde Town Monthly Sales Tax Collections

2009

2010

2011

2012

JAN-OCT 2007 JAN-OCT 2008 JAN-OCT 2009 JAN-OCT 2010 JAN-OCT 2011 JAN-OCT 2012 2012 REVISEDBUDGET

General $958,895 $1,285,844 $1,093,968 $1,145,082 $1,282,367 $2,389,234 $1,448,000Auto $4,546,185 $4,335,339 $3,852,714 $3,817,071 $4,180,555 $4,642,869 $5,097,294Building $1,694,737 $1,670,671 $2,188,438 $1,937,627 $1,920,805 $994,544 $2,283,308

$- $1,000,000 $2,000,000 $3,000,000 $4,000,000 $5,000,000 $6,000,000 $7,000,000 $8,000,000 $9,000,000

$10,000,000

Monthly Use Tax Collection Through October

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SummaryAfter ten months of receipts, it is possible to state that the City’s sales tax revised estimates will be achieved. We will surpass the 2011 revenue in sales taxes by, at least, 5%, and hopefully collect more than 1% above our revised estimates. As illustrated, the challenges come from weather-dependent revenue: sales and franchise revenue from electric and national gas use. Of course, more temperate weather and lower utility costs are significant positives for every resident and business. In fact, the City also will have savings on the expenditure side from the same weather influences. These lower revenues will be offset from higher care, food, restaurant and additional discretionary spending. Overall, we should end the year well on the revenue side in almost all categories.

The use taxes for building, as stated earlier, have been extraordinary. Within our city limits, home building has not only started again, but has been aggressive. These revenues, along with the revenue generated from new car sales, will help offset the lower business spending. This latter issue is one to carefully watch over the next few months as the private sector reacts to the national economy.

Please call with any questions.

Report Prepared By:Victoria A. RunkleFinance Director

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ALL SALES TAX REVENUEOCTOBER 2012 SALES / NOVEMBER 2012 RECEIPTS

AS OF DECEMBER 6, 2012

General/Sales Police TI & T2 Total All Funds Total All Funds Total All Funds Total All Funds 2012 Actual 2012 vs 2011Sales/Receipts* Funds 01/26 Fund 21,22 2012 Actual 2012 Budget 2012 REVISED Budget 2011 Actual 012 REVISED Bud ActualJan/Feb 2,834,152$ 444,046$ 3,278,198 3,237,444$ 3,370,005$ 3,106,192$ -2.72% 5.54%Feb/Mar 2,786,632$ 437,859$ 3,224,491 3,113,773$ 3,241,270$ 3,058,870$ -0.52% 5.41%Mar/Apr 3,130,557$ 492,679$ 3,623,236 3,484,930$ 3,627,624$ 3,426,845$ -0.12% 5.73%Apr/May 2,985,352$ 467,944$ 3,453,296 3,288,598$ 3,423,254$ 3,308,172$ 0.88% 4.39%May/June 3,061,666$ 479,735$ 3,541,401 3,441,555$ 3,582,474$ 3,308,917$ -1.15% 7.03%June/July 3,324,067$ 522,200$ 3,846,267 3,580,323$ 3,726,924$ 3,593,524$ 3.20% 7.03%July/Aug 3,061,745$ 479,415$ 3,541,160 3,348,276$ 3,485,375$ 3,353,428$ 1.60% 5.60%Aug/Sept 3,368,737$ 528,082$ 3,896,819 3,584,647$ 3,731,425$ 3,630,085$ 4.43% 7.35%Sept/Oct 3,139,949$ 493,303$ 3,633,252 3,470,971$ 3,613,094$ 3,500,400$ 0.56% 3.80%Oct/Nov 3,020,220$ 472,696$ 3,492,916 3,321,166$ 3,457,155$ 3,296,150$ 1.03% 5.97%Nov/Dec 0 3,348,459$ 3,485,566$ 3,338,263$ Dec/Jan 0 4,421,613$ 4,602,662$ 4,559,375$

THROUGH YTD 30,713,077$ 4,817,958$ 35,531,035 33,871,683$ 35,258,601$ 33,582,582$ 0.77% 5.80%

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101520253035404550

Jan/Feb Feb/Mar Mar/Apr Apr/May May/June June/July July/Aug Aug/Sept Sept/Oct Oct/Nov Nov/Dec Dec/Jan

x 10

0000

2012 Actual 2012 Budget 2011 Actual

ALL SALES TAX BY CATEGORY OCTOBER 2012 SALES / NOVEMBER 2012 RECEIPTS

AS OF DECEMBER 6, 2012

Source of Sales Tax Total Sales Total Sales % Chg. Total Sales YTD Total Sales YTD Total Sales YTD %Oct-12 Oct-11 Oct 12-11 YTD-2012 YTD-2011 YTD 12-11

Clothing Stores 99,231$ 94,607$ 4.89% 865,702 860,279$ 0.63%Fast Food Rests. 135,665$ 140,511$ -3.45% 1,390,822 1,324,213$ 5.03%Fast Casual Restaurants 61,563$ 57,105$ 7.81% 596,998 510,324$ 16.98%General Dept. Stores 630,136$ 611,988$ 2.97% 6,526,169 6,211,936$ 5.06%Grocery Chain Stores 636,160$ 567,849$ 12.03% 6,317,965 5,619,055$ 12.44%Health/Specialty Foods 18,588$ 15,321$ 21.33% 169,226 152,683$ 10.83%Public Utilities, Cable TV 282,742$ 261,707$ 8.04% 3,179,300 3,229,981$ -1.57%Restaurant / Lounges 214,106$ 206,413$ 3.73% 2,129,467 1,973,146$ 7.92%Retail Hardware 245,971$ 242,616$ 1.38% 2,602,306 2,416,348$ 7.70%Tele Equip/Service 218,477$ 215,029$ 1.60% 2,173,860 2,068,633$ 5.09%Liquor Stores 90,851$ 87,106$ 4.30% 911,627 829,277$ 9.93%Drug Stores/Pharmacies 32,948$ 34,284$ -3.90% 328,470 333,293$ -1.45%Auto Care / Leasing 184,707$ 163,844$ 12.73% 1,543,546 1,456,103$ 6.01%Office Sups./Equiq./Computer 52,422$ 58,208$ -9.94% 639,232 689,744$ -7.32%Furn./Appliance/Flooring 76,093$ 67,958$ 11.97% 822,971 747,734$ 10.06%All Others 513,259$ 484,503$ 5.94% 5,333,374 5,183,518$ 2.89%

TOTAL 3,492,920$ 3,309,047$ 5.56% 35,531,035 33,606,267$ 5.73%

00001316783911,953

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SALES TAX REVENUE BY AREA OCTOBER 2012 SALES / NOVEMBER 2012 RECEIPTS

AS OF DECEMBER 6, 2012

Oct-12 Oct-11 % Change 2012 YTD 2011 YTD % ChangeArea Sales Tax Sales Tax Oct 12-11 Sales Tax Sales Tax YTD 12-11

64th & Indiana 73,117$ 38,454$ 90.14% 529,145$ 364,612$ 45.13%

64th & McIntyre 198,574$ 195,845$ 1.39% 1,947,876$ 1,885,723$ 3.30%

64th & Sheridan 112,256$ 114,931$ -2.33% 1,137,333$ 1,128,241$ 0.81%

64th & Wadsworth 21,820$ 20,273$ 7.63% 210,505$ 196,466$ 7.15%

64th & Ward 158,821$ 157,331$ 0.95% 1,627,469$ 1,608,383$ 1.19%

77th & Wadsworth 61,042$ 61,523$ -0.78% 613,151$ 591,463$ 3.67%

80th & Sheridan 119,012$ 117,985$ 0.87% 1,172,386$ 1,159,255$ 1.13%

80th & Wadsworth 317,145$ 278,082$ 14.05% 3,247,513$ 2,661,073$ 22.04%

88th & Wadsworth 56,438$ 55,534$ 1.63% 608,912$ 497,633$ 22.36%

City Center 997,694$ 954,449$ 4.53% 10,123,126$ 9,510,838$ 6.44%

Olde Town 64,025$ 58,955$ 8.60% 598,282$ 529,932$ 12.90%

AURA / Ralston Fields 9,590$ 10,132$ -5.35% 108,091$ 111,664$ -3.20%

AURA / Triangle 191,637$ 190,189$ 0.76% 1,924,387$ 1,874,191$ 2.68%

TOTAL 2,381,173$ 2,253,681$ 9.23% 23,848,176$ 22,119,475$ 8.26%

OTHER TAX COLLECTIONS OCTOBER 2012 SALES / NOVEMBER 2012 RECEIPTS

AS OF DECEMBER 6, 2012

Funds 01, 21, 22

YTD Revenue Original Budget

2012REVISED 2012

BUDGET YTD 2012 YTD 2011

YTD % 2012 Revised

Budget to Actual

Revised to Actual Dollar

DifferenceUse Tax 1,548,000$ 1,448,000$ 994,544$ 1,282,367$ 68.68% (453,456)$ Admissions 179,597$ 179,597$ 148,198$ 126,386$ 82.52% (31,399)$ Auto Use 4,881,500$ 5,097,294$ 4,642,869$ 4,180,555$ 91.08% (454,425)$ Building Use 1,557,700$ 2,283,308$ 2,389,234$ 1,920,805$ 104.64% 105,926$ Franchise Fee - Utility 3,274,000$ 3,209,000$ 2,316,672$ 2,257,429$ 72.19% (892,328)$ Franchise Fee - Cable 1,075,000$ 1,075,000$ 806,821$ 766,823$ 75.05% (268,179)$ Franchise Fee - Tele. 190,000$ 190,000$ 164,642$ 183,015$ 86.65% (25,358)$ HUTF 3,940,000$ 3,940,000$ 3,211,749$ 3,197,981$ 81.17% (728,251)$

-$ TOTAL 16,645,797$ 17,422,199$ 14,674,728$ 13,915,362$ 84.23% (2,747,471)$

$- $500,000

$1,000,000 $1,500,000 $2,000,000 $2,500,000 $3,000,000 $3,500,000 $4,000,000 $4,500,000 $5,000,000

Use Tax Admissions Auto Use BuildingUse

FranchiseFee - Utility

FranchiseFee - Cable

FranchiseFee - Tele.

HUTF

YTD 2012 YTD 2011

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Finance Department • 8001 Ralston Road • Arvada, Colorado 80002(720) 898-7120 • www.arvada.org

Contributors:

Patrick Brown, Revenue ManagerCarol Larimer, Financial Systems Analyst

Arlene Martinez, Executive Assistant