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HomeMy WebLinkAboutAGMT - Hinderliter Del LLamas & Associates (Econ Solutions) (RvNRA Market Analysis (Resident vs Non-Resident) Hd1.9 120 S. State College Blvd. Mobile 714.879.5000 Suite 200 www.hdlcompanies.com ECO N Sol utions Brea,CA 92821 Proposal Scope of Work Provide the City of Seal Beach with a report providing the estimated breakdown of resident vs. non- resident sales tax revenue for both the Bradley Burns Sales & Use Tax and a Transaction Use Tax. The estimate will use a variety of different approaches catered to specific economic segments. The analysis uses sales tax data, budget projections, and per capita analysis to apply customized methodologies to each economic segment to prepare an estimate for revenue generated by non-residents within a community.An executive summary is prepared and provides an estimated percentage of revenue generated by both residents and non-residents for the Bradley Burns Sales & Use Tax and a Transaction Use Tax. Many cities have used this type of report from HdL in conjunction with a sales tax increase ballot measures in recent years or just to better understand the impact provided from non-residents in sale tax generation for a community. Compensation & Delivery of Work Product The compensation for the Analysis of the Resident vs. Non-Resident Estimate mentioned above would be charged at a flat rate of $9,000 for the report to be delivered within weeks from execution of the proposal. Or The compensation for the Anal s of the Resident vs. Non-Resident Estimate mentioned above would be charged at a flat rate of$10, 0 for the report to be delivered in an expeditated timeframe within 6 weeks from execution of the pro osal. Representative The consultant representing HdL shall be Barry Foster, Principal/Managing Director. The representative for City of Seal Beach shall be Barbara Arenado, Finance Director. Accepted by HdL: Accepted by City of Seal Beach: 344-1 Barry Foster, Principal/Managing Director Barbara Arenado, Finance Director Date Hdti Development Driven by Data Wsamtritoti ,.,. .. ,„,, +rw ,:.: .thy + .a. h y x,.d �7e ... v ti t3.Y , . r rr, _�� y?r h 3. Development Driven by Data City of Encinitas Resident/Non- Resident Analysis ECONSolutions by HdL 120 S. State College Blvd., Ste 200 HdL© COSol U Q S Brea, CA 92821 www.hdlcompanies.com December 2023 City of Encinitas—RvNR Analysis 1 Overview Encinitas is a beach city located along six miles of the Pacific Coastline within San Diego County in Southern California. The City is easily accessible, via Interstate 5 Freeway and is adjacent to many neighboring beach cities including Solana Beach,Carlsbad,Oceanside,Vista,San Marcos,and Escondido.The City of Encinitas has an approximate population of 61,809,with a significant increase to 166,718 people from the trade area within a 15-Minute drivetime. Being home to some of the most beautiful beaches such as Moonlight State Beach, Swami's Beach, Cardiff State Beach and Grandview Surf Beach in Southern California, Encinitas is famous for the excellent surfing conditions at all the beaches and has earned recognition from the National Geographic, listed as one of the Top 20 'Best Surf Towns'. Having a great mix of city lifestyles with great beach vibes, Encinitas is the perfect spot to host local surfing competitions and events such as the Blake Dresner Surf Contest,Solento Surf Festival as well as the World Junior Surfing Championships. City of Encinitas is also a business hub for auto dealerships, restaurants & hotels as well as general consumer goods. Auto dealerships include Ford, Volkswagen and Cardiff Classics Auto Sales. In March 2023, BMW relocated to the City of Carlsbad and the space will be replaced by Tesla in 41 2024. Restaurants include fine dining restaurants such as Pacific Coast Grill and Chart House as well as many causal and unique food places. Major retailers include Home Depot, Kohls, Target, Walmart Supercenter, as well as popular general merchandise stores such as TJ Maxx, Ross,Vuori and Athleta. Many of the businesses within Encinitas attract non-residents to shop, dine and stay in the city, benefiting Encinitas' economy. Below is a summary of the market analytics,for the City of Encinitas and trade area within a 15-minute drive. City of Encinitas 15-Minute Drive Time Population 61,809 166,718 Households 24,316 65,581 Average HH Income $175,792 $180,038 Daytime Population 54,248 149,075 There are 3,729 business establishments in the City of Encinitas,with an employed population of 31,822.Many of the residents are in specialized industries such as Education Services, Professional Services as well as Wholesale Retail (Source: SiteSeer Demographics). The industry with the highest employment percentage is Education Services as 22% of the total workforce in the City of Encinitas work in the Educational Services industry. LEGOLAND Califo' Lake San \ , Marcos\ ` Legend p, " \VIARA City of Encinitas > w . G Encinitas Downtown Del Dro — 15 minutes'Drive Time LE. - ,tamo! Grassla • Cnty Pre. E { RANCHO BERNARDO ji ;: Rancho c-..z Santa F- 4S RANCH I Fai .inks Black Sola :Beach • nch Mountain Open Space Pk NO' OLD POWAY RANCHO D PENASOUITOS Poway L ARMEL VALLEY RANCHO HdL° www.hdlcompanies.com•714.879.5000 December 2023 City of Encinitas—RvNR Analysis 2 Non-Resident Spending Summary The City has requested an estimate of the approximate amount of sales and use tax revenue generated by residents verses non-residents. Hereafter, individuals and businesses residing and located within the city are collectively be referred to as residents. While individuals and businesses residing and located outside of the city will collectively be referred to as non-residents. The table below summarizes the results of the analysis based on actual sales tax revenue in 2022 (Calendar Year)and a TUT revenue estimate for 2023-2024(Fiscal Year).It is showing 38.6%of the 1%Bradley Burns Sales Tax is estimated to be paid by non-residents.Such a tax is based on where the sale is negotiated or the place where the order is taken. Because Transactions and Use Taxes (TUT) are charged in accordance with where purchased goods are delivered or placed into use, HdL's estimate for the percentage of a 1%TUT that would be paid by non-residents is lower at 24.4%due to the businesses that primarily market and sell their goods and services to buyers and businesses outside the city's jurisdictional boundaries. Below is the percentage of sales tax estimated from non-residents. Bradley Burns 1% Transactions& Use Economic Segment Sales&Use Tax Tax(TUT) Autos&Transportation 71.8% 3.8% Building&Construction 31.2% 28.7% Business&Industry 36.3% 34.8% Food & Drugs 41.2% 41.2% Fuel&Service Stations 31.5% 31.6% General Consumer Goods 28.6% 27.3% Restaurants&Hotels 27.5% 25.2% Estimated Average Non-Resident 38.6% 24.4% Generated Revenue Estimated%of Sales Tax Revenue Generated from Non-Residents The figures shown above were obtained utilizing a variety of methodologies customized to each economic segment.These methodologies consider the mix of businesses located in the City, per capita sales within the City of Encinitas verses the per capita sales across San Diego County, as well as factoring average income population and trade area daytime- population for the designated trade areas previously described as a percentage of those categories within the City. The findings for each economic segment that led to the conclusions are listed below. HdL° www.hdlcompanies.com•714.879.5000 December 2023 City of Encinitas—RvNR Analysis 3 Autos &Transportation The Autos & Transportation sector made up 19.1% of the Bradley Burns Sales Tax revenue for the City of Encinitas in 2022. The amount of per capita sales attributed to the City of Encinitas is 19% higher than San Diego per capita sales level,suggesting that residents and non-residents are spending in the City and purchasing within all the sub-categories of this economic segment. An estimated 71.8%of the sector's 1% Bradley Burns Sales Tax revenue is generated from non-residents. A large majority of TUT revenue is generated by residents and local businesses when they purchase and register a vehicle at an address within the City of Encinitas. TUT would also be generated from sales of auto supplies, repairs,tires,and related items which would include transactions to non-residents.As a result,the percentage of a potential TUT revenue generated by non-residents is estimated much lower at 3.8%. Building & Construction (B&C)/ Business& Industry (B&I) The Building&Construction and Business & Industry sectors together generated 13.4%of Encinitas'total 1% Bradley Burns Sales Tax in 2022.Most sales within these sectors rely on Business-to-Business transactions.The methodology used to estimate revenue from non-residents relies on adjustments to both segments'top sales tax producers,which were used as a relative sampling of sales tax generation within these industry groups.The top 10 businesses in the Building & Construction(B&C) industry group accounted for 97% of the revenue generated in 2022 within the sector, while 59% of the revenue generated within the Business & Industry group(B&I)was attributed to its top 20 sales tax producers. The per capita sales level for Building & Construction is around the same level as the San Diego county per capita sales level, suggesting that some non-residents are purchasing building materials in the city. This is supported when reviewing the Consumer Demand & Market Supply Assessment,the B&C segment indicates that the businesses catering to this sector supplied 35%more than consumer demand. Business&Industry on the other hand, produces lower per capita sales than San Diego countywide per capita level. However, the analysis of the the Consumer Demand & Market Supply Assessment indicates the establishments catering to businesses in this sector supplied more than consumer demand, suggesting that non- residents are spending in the city in this category but not in a large scale. In summary, an estimated 31.2% of the Building & Construction and 36.3% of the Business & Industry groups 1% Bradley Burns Sales Tax is generated by non- residents. Applying the same approximate non-resident sales methodology used for the 1%Bradley Burns Sales Tax to a potential TUT for Building&Construction and Business&Industry,it is estimated that 28.7%(B&C)and 34.8% (B&I)of revenue would be attributed to non-resident spending within these sectors, respectively. Food & Drugs The Food&Drugs sector made up 8.5%of the Bradley Burns Sales Tax revenue for the City of Encinitas in 2022. Analysis of Food & Drugs segment indicates that Encinitas produces significantly higher per capita sales, 69% more than San Diego countywide per capita sales level at grocery and drug stores, suggesting that non- residents are purchasing food and drugs in the City of Encinitas. Meanwhile,reviewing the Grocery segment in the Consumer Demand & Market Supply Assessment indicates the establishments catering to businesses in this sector supplied 11% less than consumer demand.The combined information suggest that the businesses in this sector are producing for non—residents but might not be fulfilling the consumer demand entirely. HdL° www.hdlcompanies.com•714.879.5000 December 2023 City of Encinitas—RvNR Analysis 4 An estimated 41.2%of the sector's revenue is generated from non-residents for the Bradley Burns Sales Tax and any potential TUT that would be imposed.Additionally, please note that only 20%to 30%of grocery store sales are taxable. Fuel & Service Stations The Fuel & Service Station sector brought in 11.4% of the Bradley Burns Sales Tax revenue for the City of Encinitas in 2022. Analysis of the Fuel &Service Stations indicates that Encinitas produce significantly higher per capita sales from the service stations, 45% more than San Diego countywide level, suggesting that non- residents that are visiting and commuting to work are purchasing auto fuel in Encinitas. An estimated percentage of non-resident sales for the 1%Bradley Burns Sales Tax is 31.5%,and the estimated percentage of non-resident sales for any potential TUT is 31.6%. General Consumer Goods The General Consumer Goods sector made up 26.9% of the Bradley Burns Sales Tax revenue for the City of Encinitas in 2022. Analysis of the General Consumer Goods segment indicates that the City of Encinitas produces significantly higher per capita sales, 40% more than San Diego countywide per capita sales level, suggesting that non-residents are purchasing goods in Encinitas, helping boost sales levels and sales tax revenue.This is supported when reviewing the Consumer Demand & Market Supply Assessment,the General Business segment indicates that the establishments catering to businesses in this sector supplied in average, $13 millions more than the consumer demand. The combined information suggests that businesses in this sector are focused on providing for non-residents.An estimated 28.6%of the sector's 1% Bradley Burns Sales Tax revenue is generated from non-residents.Applying the same methodology used for the 1%Bradley Burns Sales Tax estimate to a potential TUT, it is estimated that 27.3%of the revenue would be generated from non- residents from the potential TUT. Restaurants & Hotels The Restaurants & Hotels sector brought in 20.6% of the Bradley Burns Sales Tax revenue for the City of Encinitas in 2022.Analysis of the Restaurants&Hotels sector shows that the City of Encinitas produces higher per capita sales, 37% more than San Diego countywide per capita sales level, suggesting that visitors and commuting employees are staying and dining in Encinitas and are helping boost up sales levels and sales tax revenue. This is supported by a review of the Consumer Demand & Market Supply Assessment as the Restaurant&Hotel segment indicates that the establishments catering to the businesses in this sector supplied 23% more than the consumer demand from the city. The combined information suggests that the retailers catering to businesses in this sector are focused on providing for non-residents.An estimated 1%Bradley Burns Sales Tax revenue generated by non-residents in this sector is 27.5%. Receipts in this group are generally very close to 1:1 ratio between the Bradley Burns and a potential TUT tax. With that said, 25.2% of the revenue would be estimated from non-residents from the potential TUT. HdL© www.hdlcompanies.com•714.879.5000 December 2023 City of Encinitas—RvNR Analysis 5 Conclusion Local tax is the general term for sales and use taxes imposed under the Bradley Burns Uniform Sales and Use Tax Law. Please keep in mind that while per capita sales comparison is one of the methods that is being used to measure the'the City vs County'trends,HdL also uses a methodology that is based on characteristics unique to each economic segment as well as examining the demographics and the Consumer Demand and Market Supply Assessment for a drive-time trade area. City of Encinitas produces higher per capita sales than San Diego countywide per capita sales in economic sectors including Auto&Transportation, Food&Drugs, Fuel &Service Stations, General Consumer Goods and Restaurants and Hotels. Together with the analysis of the Consumer Demand & Market Supply Assessment reflecting that businesses within Encinitas are supplying more than consumer demand in majority of the economic sectors, convey that non-residents are spending in the City of Encinitas and are contributing to the sales tax revenue. In conclusion, this is a snapshot in time based on data for an annual period, and the estimated amount of sales tax generated by non-residents for the 1% Bradley Burns Sales Tax is 38.6%,while an estimated potential TUT is 24.4%for non-residents. HdL° _ www.hdlcompanies.com•714.879.5000 H P120 S. State College Blvd. Mobile 714.879.5000 Suite 200 www.hdlcompanies.com ECONSolutions Brea, CA 92821 March 5, 2024 City of Seal Beach Barbara Arenado, Finance Director 211 Eighth Street Seal Beach,CA 90740 Barbara: HdL has found it helpful in properly educating the public about the impact of a possible sales tax measure for a city to know the estimated breakdown of residents vs. non-residents in your community's sales tax generation. HdL is the leading sales tax consultant in California, and we have done Resident vs. Non- Resident Analysis (RvNRA) reports for more than 60 cities in California in the past six-years including Arcadia, Beverly Hills, Brentwood, Buena Park, Citrus Heights, Camarillo, Corona, Encinitas, Goleta, Hermosa Beach, Huntington Beach, Lodi, Long Beach, Menifee, Marina, Malibu, Montebello, Monterey, Morgan Hill, Napa, Pacific Grove, Pleasanton, Rancho Cucamonga, South Lake Tahoe, Solana Beach, Torrance and Walnut Creek,just to name a few. Additionally,we are currently engaged to do RvRNA's for the cities of Palm Springs and San Marcos. Attached is a proposal for our Resident/Non-Resident Analysis report.Also attached is an example of what the Resident vs. Non-Resident Analysis work product will look like. Feel free to contact me with any questions at 951-233-0414 or via email at bfoster@hdlcompanies.com. Sincerely Barry Foster, Principal/Managing Director HdL° Development Driven by Data HdL© 120 S. State College Blvd. Mobile 714.879.5000 Suite 200 www.hdlcompanies.com ECONSolutions Brea, CA 92821 Proposal Scope of Work Provide the City of Seal Beach with a report providing the estimated breakdown of resident vs. non- resident sales tax revenue for both the Bradley Burns Sales & Use Tax and a Transaction Use Tax. The estimate will use a variety of different approaches catered to specific economic segments. The analysis uses sales tax data, budget projections, and per capita analysis to apply customized methodologies to each economic segment to prepare an estimate for revenue generated by non-residents within a community.An executive summary is prepared and provides an estimated percentage of revenue generated by both residents and non-residents for the Bradley Burns Sales & Use Tax and a Transaction Use Tax. Many cities have used this type of report from HdL in conjunction with a sales tax increase ballot measures in recent years or just to better understand the impact provided from non-residents in sale tax generation for a community. Compensation & Delivery of Work Product The compensation for the Analysis of the Resident vs. Non-Resident Estimate mentioned above would be charged at a flat rate of $9,000 for the report to be delivered within 8 weeks from execution of the proposal. Or The compensation for the Analysis of the Resident vs. Non-Resident Estimate mentioned above would be charged at a flat rate of$10,000 for the report to be delivered in an expeditated timeframe within 6 weeks from execution of the proposal. Representative The consultant representing HdL shall be Barry Foster, Principal/Managing Director. The representative for City of Seal Beach shall be Barbara Arenado, Finance Director. Accepted by HdL: Accepted by City of Seal Beach: 1Jfiy`�1� Barry Foster, Principal/Managing Director Barbara Arenado,Finance Director Date HdLa Development Driven by Data dK ti. :: 4 4^I y�rW0,..,f.ye, 3 �u A1C tab'..:. Development Driven by Data City of Encinitas Resident/Non - Resident Analysis ECONSolutions by HdL 120 S. State College Blvd., Ste 200 HdL© ECO N Sol utions Brea, CA92821 www.hdlcompanies.com December 2023 City of Encinitas—RvNR Analysis 1 Overview Encinitas is a beach city located along six miles of the Pacific Coastline within San Diego County in Southern California. The City is easily accessible, via Interstate 5 Freeway and is adjacent to many neighboring beach cities including Solana Beach,Carlsbad,Oceanside,Vista,San Marcos,and Escondido.The City of Encinitas has an approximate population of 61,809,with a significant increase to 166,718 people from the trade area within a 15-Minute drivetime. Being home to some of the most beautiful beaches such as Moonlight State Beach, Swami's Beach, Cardiff State Beach and Grandview Surf Beach in Southern California, Encinitas is famous for the excellent surfing conditions at all the beaches and has earned recognition from the National Geographic, listed as one of the Top 20 'Best Surf Towns'. Having a great mix of city lifestyles with great beach vibes, Encinitas is the perfect spot to host local surfing competitions and events such as the Blake Dresner Surf Contest,Solento Surf Festival as well as the World Junior Surfing Championships. City of Encinitas is also a business hub for auto dealerships, restaurants &hotels as well as general consumer goods. Auto dealerships include Ford, Volkswagen and Cardiff Classics Auto Sales. In March 2023, BMW relocated to the City of Carlsbad and the space will be replaced by Tesla in Q1 2024. Restaurants include fine dining restaurants such as Pacific Coast Grill and Chart House as well as many causal and unique food places. Major retailers include Home Depot, Kohls, Target, Walmart Supercenter, as well as popular general merchandise stores such as TJ Maxx, Ross,Vuori and Athleta. Many of the businesses within Encinitas attract non-residents to shop, dine and stay in the city, benefiting Encinitas' economy. Below is a summary of the market analytics,for the City of Encinitas and trade area within a 15-minute drive. City of Encinitas 15-Minute Drive Time Population 61,809 166,718 Households 24,316 _ 65,581 Average HH Income $175,792 $180,038 Daytime Population 54,248 149,075 There are 3,729 business establishments in the City of Encinitas,with an employed population of 31,822.Many of the residents are in specialized industries such as Education Services, Professional Services as well as Wholesale Retail (Source: SiteSeer Demographics). The industry with the highest employment percentage is Education Services as 22% of the total workforce in the City of Encinitas work in the Educational Services industry. LEGOLAND Calif, ' n ‘.�'\ Lake San Marcos Legend AVIARA City of Encinitas G Encinitas Downtown Del Mot — 15 minutes'Drive Time ARIA ram0' 9 Grassia Cnty Pre I r. 4 itas RANCHO BERNARDO Rolm Rancho Santa I e AS RANCH I air.-•nks Black So'..L Beach • nch Mountain Open Space Pk RANCHO OLD POWAY PENASOUITOS Poway D. • ARMEL VALLEY RANCHO HdL° www.hdlcompanies.com•714.879.5000 December 2023 City of Encinitas—RvNR Analysis 2 Non-Resident Spending Summary The City has requested an estimate of the approximate amount of sales and use tax revenue generated by residents verses non-residents. Hereafter, individuals and businesses residing and located within the city are collectively be referred to as residents. While individuals and businesses residing and located outside of the city will collectively be referred to as non-residents. The table below summarizes the results of the analysis based on actual sales tax revenue in 2022 (Calendar Year)and a TUT revenue estimate for 2023-2024(Fiscal Year).It is showing 38.6%of the 1%Bradley Burns Sales Tax is estimated to be paid by non-residents.Such a tax is based on where the sale is negotiated or the place where the order is taken. Because Transactions and Use Taxes (TUT) are charged in accordance with where purchased goods are delivered or placed into use, HdL's estimate for the percentage of a 1%TUT that would be paid by non-residents is lower at 24.4%due to the businesses that primarily market and sell their goods and services to buyers and businesses outside the city's jurisdictional boundaries. Below is the percentage of sales tax estimated from non-residents. Bradley Burns 1% Transactions& Use Economic Segment Sales&Use Tax Tax(TUT) Autos&Transportation 71.8% 3.8% Building&Construction 31.2% 28.7% Business&Industry 36.3% 34.8% Food& Drugs 41.2% 41.2% Fuel&Service Stations 31.5% 31.6% General Consumer Goods 28.6% 27.3% Restaurants& Hotels 27.5% 25.2% Estimated Average Non-Resident Generated Revenue 38.6% 24.4% Estimated%of Sales Tax Revenue Generated from Non-Residents The figures shown above were obtained utilizing a variety of methodologies customized to each economic segment.These methodologies consider the mix of businesses located in the City, per capita sales within the City of Encinitas verses the per capita sales across San Diego County, as well as factoring average income population and trade area daytime- population for the designated trade areas previously described as a percentage of those categories within the City. The findings for each economic segment that led to the conclusions are listed below. HdL° !_ www.hdlcompanies.com•714.879.5000 December 2023 City of Encinitas—RvNR Analysis 3 Autos &Transportation The Autos & Transportation sector made up 19.1% of the Bradley Burns Sales Tax revenue for the City of Encinitas in 2022. The amount of per capita sales attributed to the City of Encinitas is 19% higher than San Diego per capita sales level,suggesting that residents and non-residents are spending in the City and purchasing within all the sub-categories of this economic segment. An estimated 71.8%of the sector's 1% Bradley Burns Sales Tax revenue is generated from non-residents. A large majority of TUT revenue is generated by residents and local businesses when they purchase and register a vehicle at an address within the City of Encinitas. TUT would also be generated from sales of auto supplies, repairs,tires,and related items which would include transactions to non-residents.As a result,the percentage of a potential TUT revenue generated by non-residents is estimated much lower at 3.8%. Building & Construction (B&C)/ Business& Industry (B&I) The Building &Construction and Business & Industry sectors together generated 13.4%of Encinitas'total 1% Bradley Burns Sales Tax in 2022.Most sales within these sectors rely on Business-to-Business transactions.The methodology used to estimate revenue from non-residents relies on adjustments to both segments'top sales tax producers,which were used as a relative sampling of sales tax generation within these industry groups.The top 10 businesses in the Building & Construction(B&C) industry group accounted for 97% of the revenue generated in 2022 within the sector, while 59% of the revenue generated within the Business & Industry group(B&I)was attributed to its top 20 sales tax producers. The per capita sales level for Building & Construction is around the same level as the San Diego county per capita sales level, suggesting that some non-residents are purchasing building materials in the city. This is supported when reviewing the Consumer Demand & Market Supply Assessment,the B&C segment indicates that the businesses catering to this sector supplied 35%more than consumer demand. Business&Industry on the other hand, produces lower per capita sales than San Diego countywide per capita level. However, the analysis of the the Consumer Demand & Market Supply Assessment indicates the establishments catering to businesses in this sector supplied more than consumer demand, suggesting that non- residents are spending in the city in this category but not in a large scale. In summary, an estimated 31.2% of the Building & Construction and 36.3% of the Business & Industry groups 1% Bradley Burns Sales Tax is generated by non- residents. Applying the same approximate non-resident sales methodology used for the 1% Bradley Burns Sales Tax to a potential TUT for Building&Construction and Business&Industry, it is estimated that 28.7%(B&C)and 34.8% (B&I)of revenue would be attributed to non-resident spending within these sectors, respectively. Food & Drugs The Food&Drugs sector made up 8.5%of the Bradley Burns Sales Tax revenue for the City of Encinitas in 2022. Analysis of Food & Drugs segment indicates that Encinitas produces significantly higher per capita sales, 69% more than San Diego countywide per capita sales level at grocery and drug stores, suggesting that non- residents are purchasing food and drugs in the City of Encinitas. Meanwhile,reviewing the Grocery segment in the Consumer Demand & Market Supply Assessment indicates the establishments catering to businesses in this sector supplied 11% less than consumer demand.The combined information suggest that the businesses in this sector are producing for non—residents but might not be fulfilling the consumer demand entirely. HdL° www.hdlcompanies.com•714.879.5000 December 2023 City of Encinitas—RvNR Analysis 4 An estimated 41.2%of the sector's revenue is generated from non-residents for the Bradley Burns Sales Tax and any potential TUT that would be imposed.Additionally, please note that only 20%to 30%of grocery store sales are taxable. Fuel & Service Stations The Fuel & Service Station sector brought in 11.4% of the Bradley Burns Sales Tax revenue for the City of Encinitas in 2022. Analysis of the Fuel &Service Stations indicates that Encinitas produce significantly higher per capita sales from the service stations, 45% more than San Diego countywide level, suggesting that non- residents that are visiting and commuting to work are purchasing auto fuel in Encinitas. An estimated percentage of non-resident sales for the 1%Bradley Burns Sales Tax is 31.5%,and the estimated percentage of non-resident sales for any potential TUT is 31.6%. General Consumer Goods The General Consumer Goods sector made up 26.9% of the Bradley Burns Sales Tax revenue for the City of Encinitas in 2022. Analysis of the General Consumer Goods segment indicates that the City of Encinitas produces significantly higher per capita sales, 40% more than San Diego countywide per capita sales level, suggesting that non-residents are purchasing goods in Encinitas, helping boost sales levels and sales tax revenue.This is supported when reviewing the Consumer Demand & Market Supply Assessment,the General Business segment indicates that the establishments catering to businesses in this sector supplied in average, $13 millions more than the consumer demand. The combined information suggests that businesses in this sector are focused on providing for non-residents.An estimated 28.6%of the sector's 1% Bradley Burns Sales Tax revenue is generated from non-residents.Applying the same methodology used for the 1%Bradley Burns Sales Tax estimate to a potential TUT,it is estimated that 27.3%of the revenue would be generated from non- residents from the potential TUT. Restaurants & Hotels The Restaurants & Hotels sector brought in 20.6% of the Bradley Burns Sales Tax revenue for the City of Encinitas in 2022.Analysis of the Restaurants& Hotels sector shows that the City of Encinitas produces higher per capita sales, 37% more than San Diego countywide per capita sales level, suggesting that visitors and commuting employees are staying and dining in Encinitas and are helping boost up sales levels and sales tax revenue. This is supported by a review of the Consumer Demand & Market Supply Assessment as the Restaurant&Hotel segment indicates that the establishments catering to the businesses in this sector supplied 23% more than the consumer demand from the city. The combined information suggests that the retailers catering to businesses in this sector are focused on providing for non-residents.An estimated 1%Bradley Burns Sales Tax revenue generated by non-residents in this sector is 27.5%. Receipts in this group are generally very close to 1:1 ratio between the Bradley Burns and a potential TUT tax. With that said, 25.2% of the revenue would be estimated from non-residents from the potential TUT. HdL° www.hdlcompanies.com•714.879.5000 December 2023 City of Encinitas—RvNR Analysis 5 Conclusion Local tax is the general term for sales and use taxes imposed under the Bradley Burns Uniform Sales and Use Tax Law. Please keep in mind that while per capita sales comparison is one of the methods that is being used to measure the'the City vs County'trends,HdL also uses a methodology that is based on characteristics unique to each economic segment as well as examining the demographics and the Consumer Demand and Market Supply Assessment for a drive-time trade area. City of Encinitas produces higher per capita sales than San Diego countywide per capita sales in economic sectors including Auto&Transportation, Food&Drugs, Fuel &Service Stations, General Consumer Goods and Restaurants and Hotels. Together with the analysis of the Consumer Demand & Market Supply Assessment reflecting that businesses within Encinitas are supplying more than consumer demand in majority of the economic sectors, convey that non-residents are spending in the City of Encinitas and are contributing to the sales tax revenue. In conclusion, this is a snapshot in time based on data for an annual period, and the estimated amount of sales tax generated by non-residents for the 1% Bradley Burns Sales Tax is 38.6%,while an estimated potential TUT is 24.4%for non-residents. 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PRODUCER CONTACT WS Certificates Woodruff Sawyer PHONE • 2 Park Plaza, Suite 500 (NC.No.Ext): 844-872-6329 FAX No): Irvine CA 92614 ADDRESS: certificates@woodruffsawyer.com T INSURER(S)AFFORDING COVERAGE _ NAIC U INSURER A:Berkley National Insurance Company 38911 INSURED HDLCOMP-01 INSURER B:Hudson Excess Insurance Company 14484 Hinderliter de Llamas&Associates HdL Software, LLC. INSURERC: _ 120 S. State College Blvd, Suite 200 INSURERD: Brea, CA 92821 INSURERE: INSURER F: COVERAGES CERTIFICATE NUMBER:1407367872 REVISION NUMBER: THIS IS TO CERTIFY THAT THE POLICIES OF INSURANCE LISTED BELOW HAVE BEEN ISSUED TO THE INSURED NAMED ABOVE FOR THE POLICY PERIOD INDICATED. NOTWITHSTANDING ANY REQUIREMENT, TERM OR CONDITION OF ANY CONTRACT OR OTHER DOCUMENT WITH RESPECT TO WHICH THIS CERTIFICATE MAY BE ISSUED OR MAY PERTAIN, THE INSURANCE AFFORDED BY THE POLICIES DESCRIBED HEREIN IS SUBJECT TO ALL THE TERMS, EXCLUSIONS AND CONDITIONS OF SUCH POLICIES.LIMITS SHOWN MAY HAVE BEEN REDUCED BY PAID CLAIMS. INSR TYPE OF INSURANCE ADDL SUBR POLICY EFF POLICY EXP • LIMITS LTR IN W SD VD POLICY NUMBER IMM/DDIYYYY) (MM/DD/YYYY) A X COMMERCIAL GENERAL LIABILITY TCP702275410 5/26/2023 5/26/2024 EACH OCCURRENCE $1,000,000 CLAIMS-MADE X 1 OCCUR DAMAGE TO RENTED PREMISES(Ea occurrence) $1,000,000 MED EXP(My one person) $15,000 PERSONAL&ADV INJURY $1,000,000 GEN'L AGGREGATE LIMIT APPLIES PER: GENERAL AGGREGATE $2,000,000 X POLICY JECOT- LOC PRODUCTS-COMP/OP AGG $2,000,000 OTHER: $ A AUTOMOBILE LIABILITY TCP702275410 5/26/2023 5/26/2024 COMBINED SINGLE LIMIT $1,000,000 (Ea acddent) X ANY AUTO BODILY INJURY(Per person) $ OWNED SCHEDULED BODILY INJURY(Per accident) $ AUTOS ONLY AUTOS HIRED NON-OWNED PROPERTY DAMAGE AUTOS ONLY AUTOS ONLY (Per accident) A X UMBRELLA LIAB X OCCUR TCP702275410 5/26/2023 5/26/2024 EACH OCCURRENCE $5,000,000 EXCESS LIAB CLAIMS-MADE AGGREGATE $5,000,000 i DED I X RETENTION$Nnnr $ WORKERS COMPENSATION PER OTH- AND EMPLOYERS'LIABILITY Y/N STATUTE ER ANYPROPRIETORIPARTNER/EXECUTIVE N/A E.L.EACH ACCIDENT $ OFFICER/MEMBER EXCLUDED? (Mandatory In NH) E.L.DISEASE-EA EMPLOYEE $ If yes,describe under DESCRIPTION OF OPERATIONS below E.L.DISEASE-POLICY LIMIT $ B Professional Liability EET 14167 01 5/26/2023 5/26/2024 Prof Liab Agg $2,000,000 B Cyber Liability EET 14167 01 5/26/2023 5/26/2024 Cyber Limit $2,000,000 B Tech E&O EET 14167 01 5/26/2023 5/26/2024 Tech E&O Limit $2,000,000 DESCRIPTION OF OPERATIONS/LOCATIONS I VEHICLES (ACORD 101,Additional Remarks Schedule,may be attached If more space is required) Retroactive Date for Professional Liability-2/15/2013. Line Of Coverage:Crime Policy#82556901 Effective Date 5/25/2023-5/26/2024 Carrier:Federal Insurance Company NAIC#20281 Crime Limit:$1,000,000 See Attached... CERTIFICATE HOLDER CANCELLATION SHOULD ANY OF THE ABOVE DESCRIBED POLICIES BE CANCELLED BEFORE THE EXPIRATION DATE THEREOF, NOTICE WILL BE DELIVERED IN ACCORDANCE WITH THE POLICY PROVISIONS. City of Seal Beach 211 Eighth Street Seal Beach CA 90740 AUTHORIZED REPRESENTATIVE ©1988-2015 ACORD CORPORATION. All rights reserved. ACORD 25(2016/03) The ACORD name and logo are registered marks of ACORD AC® CERTIFICATE OF LIABILITY INSURANCE DATE(MMIDDYYYY) 03I08/2024 THIS CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION ONLY AND CONFERS NO RIGHTS UPON THE CERTIFICATE HOLDER. THIS CERTIFICATE DOES NOT AFFIRMATIVELY OR NEGATIVELY AMEND, EXTEND OR ALTER THE COVERAGE AFFORDED BY THE POLICIES BELOW. THIS CERTIFICATE OF INSURANCE DOES NOT CONSTITUTE A CONTRACT BETWEEN THE ISSUING INSURER(S), AUTHORIZED REPRESENTATIVE OR PRODUCER,AND THE CERTIFICATE HOLDER. IMPORTANT: If the certificate holder is an ADDITIONAL INSURED,the policy(ies)must have ADDITIONAL INSURED provisions or be endorsed. If SUBROGATION IS WAIVED, subject to the terms and conditions of the policy, certain policies may require an endorsement. A statement on this certificate does not confer rights to the certificate holder in lieu of such endorsement(s). PRODUCER CONTACT Marsh Affinity ty PHONE Marsh Affinity (A/C,No,Ext): 800-743-8130 FAX No): a division of Marsh USA LLC. E-MAIL ADPTotalSource@marsh.com PO BOX 14404 ADDRESS: Des Moines,IA 50306-9686 INSURER(S)AFFORDING COVERAGE NAIC# INSURER A: AIU Insurance Company 19399 INSURED INSURER B: ADP TotalSource DE IV,Inc. INSURER C: 5800 Windward Parkway INSURER D: Alpharetta,GA 30005 L/C/F: INSURER E: Hinderliter de Llamas&Associates INSURER F: 120 S STATE COLLEGE BLVD Suite 200 Brea,CA 928210000 COVERAGES CERTIFICATE NUMBER: REVISION NUMBER: THIS IS TO CERTIFY THAT THE POLICIES OF INSURANCE LISTED BELOW HAVE BEEN ISSUED TO THE INSURED NAMED ABOVE FOR THE POLICY PERIOD INDICATED. NOTWITHSTANDING ANY REQUIREMENT, TERM OR CONDITION OF ANY CONTRACT OR OTHER DOCUMENT WITH RESPECT TO WHICH THIS CERTIFICATE MAY BE ISSUED OR MAY PERTAIN, THE INSURANCE AFFORDED BY THE POLICIES DESCRIBED HEREIN IS SUBJECT TO ALL THE TERMS, EXCLUSIONS AND CONDITIONS OF SUCH POLICIES. LIMITS SHOWN MAY HAVE BEEN REDUCED BY PAID CLAIMS. INSR TYPE OF INSURANCE ADDLSUBR POLICY NUMBER POLICY EFF POLICY EXP LIMITS LTR INSR WVD (MM/DD/YYYY) (MM/DD/YYYY) COMMERCIAL GENERAL LIABILITY EACH OCCURRENCE $ CLAIMS-MADE OCCUR DAMAGE TO RENTED PREMISES(Ea occurrence) MED EXP(Any one person) $ PERSONAL&ADV INJURY $ GEN'L AGGREGATE LIMIT APPLIES PER: GENERAL AGGREGATE $ POLICY PE� LOC PRODUCTS-COMP/OP AGG $ OTHER: $ AUTOMOBILE LIABILITY COMBINED SINGLE LIMIT $ (Ea accident) ANY AUTO BODILY INJURY(Per person) $ OWNED SCHEDULED BODILY INJURY(Per accident) $ _AUTOS ONLY AUTOS HIRED NON-OWNED PROPERTY DAMAGE $ AUTOS ONLY _AUTOS ONLY (Per accident) UMBRELLA LIAB OCCUR EACH OCCURRENCE $ EXCESS LIAB CLAIMS-MADE AGGREGATE $ DED RETENTION$ WORKERS COMPENSATION PER OTH- ANDEMPLOYERS'LIABILITY YIN X STATUTE ER ANYPROPRIETOR/PARTNER/EXECUTIVE E.L.EACH ACCIDENT $ 2,000,000 OFFICER/MEMBER EXCLUDED? N/A X WC 034279274 CA 07/01/2023 07/01/2024 A (Mandatory in NH) E.L.DISEASE-EA EMPLOYEE $ 2,000,000 If yes,describe under DESCRIPTION OF OPERATIONS below E.L.DISEASE-POLICY LIMIT $ 2,000,000 DESCRIPTION OF OPERATIONS I LOCATIONS I VEHICLES(ACORD 101,Additional Remarks Schedule,may be attached if more space is required) All worksite employees working for Hinderliter de Llamas&Associates paid under ADP TOTALSOURCE, INC.'s payroll,are covered under the above stated policy.WAIVER OF SUBROGATION IN FAVOR OF City of Seal Beach AS RESPECTS OF JOB PERFORMED BY Hinderliter de Llamas&Associates AS REQUIRED BY WRITTEN CONTRACT. CERTIFICATE HOLDER CANCELLATION City of Seal Beach 211 Eighth Street SHOULD ANY OF THE ABOVE DESCRIBED POLICIES BE CANCELLED BEFORE Seal Beach,CA 90740 THE EXPIRATION DATE THEREOF, NOTICE WILL BE DELIVERED IN ACCORDANCE WITH THE POLICY PROVISIONS. AUTHORIZED REPRESENTATIVE CVO ACORD 25(2016/03) ©1988-2015 ACORD CORPO ION. All rights reserved. The ACORD name and logo are registered marks of ACORD WORKERS COMPENSATION AND EMPLOYERS LIABILITY INSURANCE POLICY WC 43 03 06 (Ed.4-84) WAIVER OF OUR RIGHT TO RECOVER FROM OTHERS ENDORSEMENT-CALIFORNIA We have the right to recover our payments from anyone liable for an injury covered by this policy.We will not enforce our right against the person or organization named in the Schedule. (This agreement applies only to the extent that you perform work under a written contract that requires you to obtain this agreement from us.) You must maintain payroll records accurately segregating the remuneration of your employees while engaged in the work described in the Schedule. The additional premium for this endorsement shall be_% of the California workers' compensation premium otherwise due on such remuneration. Schedule WAIVER OF SUBROGATION IN FAVOR OF City of Seal Beach AS RESPECTS OF JOB PERFORMED BY Hinderliter de Llamas&Associates AS REQUIRED BY WRITTEN CONTRACT. Person or Organization City of Seal Beach 211 Eighth Street Seal Beach, CA 90740 Job Description Notes: 1. This endorsement may be used to waive the company's right of subrogation against named third parties who may be responsible for an injury. 2. The sentence in( )is optional with the company. It limits the endorsement to apply to specific jobs of the insured,and only to the extent that the insured is required to obtain this waiver. This endorsement changes the policy to which it is attached and is effective on the date issued unless otherwise stated. (The information below is required only when this endorsement is issued subsequent to preparation of the policy.) Endorsement Effective 07/01/2023 Policy No.WC 034279274 CA Endorsement No. Insured Insurance Company AIU Insurance Company ADP TotalSource DE IV,Inc. 5800 Windward Parkway Alpharetta,GA 30005 UC/F: Hinderliter de Llamas&Associates 120 S STATE COLLEGE BLVD r Suite 200 Brea,CA 928210000 Countersigned by ©1998 by the Workers'Compensation Insurance Rating Bureau of California.All rights reserved. From the WCIRB's California Workers' Compensation Insurance Forms Manual©2001. AGENCY CUSTOMER ID: HDLCOMP-01 LOC#: ® AC OR ADDITIONAL REMARKS SCHEDULE Page 1 of AGENCY NAMED INSURED Woodruff Sawyer Hinderliter de Llamas&Associates HdL Software,LLC. POLICY NUMBER 120 S.State College Blvd,Suite 200 Brea,CA 92821 CARRIER NAIC CODE EFFECTIVE DATE: ADDITIONAL REMARKS THIS ADDITIONAL REMARKS FORM IS A SCHEDULE TO ACORD FORM, FORM NUMBER: 25 FORM TITLE: CERTIFICATE OF LIABILITY INSURANCE Notice of Cancellation applies with respects General Liability to the extent provided in the attached form. ACORD 101 (2008/01) ©2008 ACORD CORPORATION. All rights reserved. The ACORD name and logo are registered marks of ACORD POLICY NUMBER: TCP702275410 COMMERCIAL GENERAL LIABILITY CG 02 24 10 93 THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY. EARLIER NOTICE OF CANCELLATION PROVIDED BY US This endorsement modifies insurance provided under the following: COMMERCIAL GENERAL LIABILITY COVERAGE PART LIQUOR LIABILITY COVERAGE PART POLLUTION LIABILITY COVERAGE PART PRODUCTS/COMPLETED OPERATIONS LIABILITY COVERAGE PART SCHEDULE Number of Days' Notice 30 (If no entry appears above, information required to complete this Schedule will be shown in the Declarations as applicable to this endorsement.) For any statutorily permitted reason other than nonpayment of premium, the number of days required for notice of cancellation, as provided in paragraph 2. of either the CANCELLATION Common Policy Condition or as amended by an applicable state cancellation endorsement, is increased to the number of days shown in the Schedule above. City of Seal Beach 211 Eighth Street Seal Beach CA 90740 CG 02 24 10 93 Copyright, Insurance Services Office, Inc., 1992 Page 1 of 1 0 Request for Taxpayer Form Give Form to the (Rev.October2018) Identification Number and Certification requester.Do not Department of the Treasury send to the IRS. Internal Revenue Service ►Go to www.Irs.gov/FormW9 for instructions and the latest information. 1 Name(as shown on your income tax return).Name is required on this line;do not leave this line blank. Hinderliter,de Llamas and Associates 2 Business name/disregarded entity name,it different from above `ts 3 Check appropriate box for federal tax classification of theperson whose name is entered on line 1.Check onlyone of the 4 Exemptions(codes applyonlyto � P� en following seven boxes. certain entities,not individuals;see instructions on page 3): o ❑ Individual/sole proprietor or ❑ C Corporation ❑� S Corporation ❑ Partnership ❑Trust/estate single-member LLC Exempt payee code(if any) 5 j, ❑ Limited liability company.Enter the tax classification(C=C corporation,S=S corporation,P=Partnership)► `p 'r Note:Check the appropriate box in the line above for the tax classification of the single-member owner, Do not check Exemption from FATCA reporting E a LLC if the LLC is classified as a single-member LLC that is disregarded from the owner unless the owner of the LLC is 'C 5- another LLC that is not disregarded from the owner for U.S.federal tax purposes.Otherwise,a single-member LLC that code(if any) is disregarded from the owner should check the appropriate box for the tax classification of its owner. y ❑ Other(see instructions)► (Applies to accounts main:tuned outside the U.S.) N 5 Address(number,street,and apt or s t8e no.)See inst rations. .Requester's name and address(optional) 120 S State College Blvd.,Suite 200 City of Seal Beach 6 City,state,and ZIP code 211 Eighth Street, Brea,CA 92821 Seal Beach,CA 90740 7 List account number(s)here(optional) MI Taxpayer Identification Number(TIN) Enter your TIN in the appropriate box.The TIN provided must match the name given on line 1 to avoid I Social security number backup withholding.For individuals,this is generally your social security number(SSN).However,for a resident alien,sole proprietor,or disregarded entity,see the Instructions for Part I,later.For other — — entities,it is your employer identification number(EIN).If you do not have a number,see How to get a TIN,later. or Note:If the account is in more than one name,see the instructions for line 1.Also see What Name and I Employer identification number Number To Give the Requester for guidelines on whose number to enter. 3 3 - 0 0 0 8 5 0 7 Part II Certification Under penalties of perjury,I certify that: 1.The number shown on this form is my correct taxpayer identification number(or I am waiting for a number to be issued to me);and 2.I am not subject to backup withholding because:(a)l am exempt from backup withholding,or(b)I have not been notified by the Internal Revenue Service(IRS)that I am subject to backup withholding as a result of a failure to report all interest or dividends,or(c)the IRS has notified me that I am no longer subject to backup withholding;and 3.I am a U.S.citizen or other U.S.person(defined below);and 4.The FATCA code(s)entered on this form(if any)indicating that lam exempt from FATCA reporting is correct. Certification instructions.You must cross out item 2 above if you have been notified by the IRS that you are currently subject to backup withholding because you have failed to report all interest and dividends on your tax return.For real estate transactions,item 2 does not apply.For mortgage interest paid, acquisition or abandonment of secured property,cancellation of debt,contributions to an individual retirement arrangement(IRA),and generally,payments other than interest and dividends,you are not required to sign the certification,but you must provide your correct TIN.See the instructions for Part II,later. Sign signature of • Here U.S.person P. it - Date► 03/08/2024 General Instruct'a ne •Form 1099-DIV(dividends, including those from stocks or mutual funds) Section references are to the Internal Revenue Code unless otherwise •Form 1099-MISC(various types of income,prizes,awards,or gross noted. proceeds) Future developments.For the latest information about developments •Form 1099-B(stock or mutual fund sales and certain other related to Form W-9 and its instructions,such as legislation enacted transactions by brokers) after they were published,go to www.irs.gov/FormW9. •Form 1099-S(proceeds from real estate transactions) Purpose of Form •Form 1099-K(merchant card and third party network transactions) An individual or entity(Form W-9 requester)who is required to file an •Form 1098(home mortgage interest),1098-E(student loan interest), information return with the IRS must obtain your correct taxpayer 1098-T(tuition) identification number(TIN)which may be your social security number •Form 1099-C(canceled debt) (SSN),individual taxpayer identification number(ITIN),adoption •Form 1099-A(acquisition or abandonment of secured property) taxpayer identification number(ATIN),or employer identification number (EIN),to report on an information return the amount paid to you,or other Use Form W-9 only if you are a U.S.person(including a resident amount reportable on an information return.Examples of information alien),to provide your correct TIN. returns include,but are not limited to,the following. If you do not return Form W-9 to the requester with a TIN,you might •Form 1099-INT(interest earned or paid) be subject to backup withholding.See What Is backup withholding, later. Cat.No.10231X Form W-9(Rev.10-2018)