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Model: |
Middle
Value Firm |
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1 |
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Assumptions
for All Models: |
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Projects are a 2 phase investment |
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The first phase begins
operation in January 2010, and is completed in 2011. |
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The second phase begins
in January 2015 and is completed in 2016. |
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The same tax abatement is
offered for both phases. |
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Land is sold, not
donated, to investing firm. Proceeds
go to City. |
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Project
Summary: |
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Capital Investment in Plant: |
$50,000,000 |
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Annual Local Expenditures by Firm: |
$3,000,000 |
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New Jobs: |
500 |
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Average Wage per Job: |
$44,000 |
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Average Value of Home Purchased: |
$251,433 |
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Total New Households in City and County: |
437 |
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City Revenue per Firm Employee Household: |
$0 |
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Additional Jobs in City and County: |
422 |
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Tax Abatement/s Offered: |
80% |
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Length of Tax Abatement/s: |
10
Years |
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Number of Abatements: |
2 |
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Value of Tax Abatements, Total: |
$12,926,497 |
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Value of All Incentives Offered: |
$12,926,497 |
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Value of All Incentives per Job: |
$25,853 |
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Value of Incentives in Hourly Pay: |
$0.83 |
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Returns for Jurisdictions: |
City |
County |
School |
Total, Local Jurisdictions |
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Revenues |
$53,464,659 |
$45,010,204 |
$56,273,313 |
$154,748,176 |
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Costs |
$29,554,855 |
$18,407,178 |
$6,854,975 |
$54,817,008 |
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Revenue Stream, Pre-Incentives |
$23,909,804 |
$26,603,026 |
$49,418,338 |
$99,931,167 |
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Value of Incentives Offered |
$2,919,906 |
$3,581,599 |
$4,081,656 |
$10,583,161 |
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Revenue Stream with Incentives |
$20,989,898 |
$23,021,427 |
$45,336,682 |
$89,348,006 |
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Returns for Jurisdictions, Discounted: |
City |
County |
School |
Total, Local Jurisdictions |
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Discount Rate |
4.89% |
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Discounted Cash Flow, Without Incentives |
$12,233,690 |
$13,841,980 |
$25,739,685 |
$51,815,355 |
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Benefit/Cost Ratio, Without Incentives |
1.74 |
2.34 |
8.08 |
2.70 |
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Discounted Cash Flow, With Incentives |
$10,238,295 |
$11,394,401 |
$22,950,378 |
$44,583,073 |
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Benefit/Cost Ratio, With Incentives |
1.62 |
2.10 |
7.31 |
2.46 |
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Lawrence Discounted Cash Flow |
Pre-Incentives |
Post-Incentives |
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Pre-Build and Years 1-5 |
$822,565 |
$233,834 |
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Years 6-10 |
$1,378,355 |
$398,941 |
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Years 11-15 |
$1,798,850 |
$1,371,600 |
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Years 16+ |
$8,233,920 |
$8,233,920 |
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Douglas County Discounted Cash Flow |
Pre-Incentives |
Post-Incentives |
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Pre-Build and Years 1-5 |
$1,245,188 |
$523,042 |
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Years 6-10 |
$1,772,839 |
$571,476 |
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Years 11-15 |
$1,940,707 |
$1,416,636 |
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Years 16+ |
$8,883,247 |
$8,883,247 |
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Appendix 1: Sources of Revenue and Costs as a Share of
Revenue |
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Revenue
Source |
City |
County |
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Property tax from Households |
18.3% |
33.1% |
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Property tax from Firm |
28.3% |
41.3% |
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Sales Taxes from Residents and Employees |
22.4% |
8.1% |
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Sales Taxes from Firm |
3.8% |
1.2% |
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Franchise Fees, Households |
4.9% |
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Franchise Fees, Firm |
2.6% |
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Other |
19.6% |
16.3% |
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Total, Revenues |
100.0% |
100.0% |
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Costs as Share of Revenue |
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Capital Costs, Households |
2.0% |
0.4% |
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Capital Costs, Firm |
5.5% |
4.7% |
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Operating Costs, Residents |
38.5% |
30.1% |
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Operating Costs, Indirect Employment |
18.4% |
12.0% |
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Operating Costs, Firm |
23.4% |
14.2% |
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Infrastructure on the Firm's Property |
0.0% |
0.0% |
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sub-total, costs |
87.9% |
61.4% |
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Abatements |
5.5% |
8.0% |
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Other Incentives |
0.0% |
0.0% |
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Total,
Costs as Share of Revenue |
93.4% |
69.3% |
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Sensitivity Analysis |
City Change in Benefits |
County Change in Benefits |
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Tax abatement increase of 1% |
($24,942) |
($12,068) |
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10 additional indirect jobs |
$13,905 |
$35,549 |
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10 additional direct jobs |
$74,660 |
$109,950 |
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$1,000,000 additional capital investment |
$118,650 |
$158,294 |
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$1,000 additional wages to direct employees |
$268,946 |
$239,317 |
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1 mill increase in property taxes |
$411,585 |
$477,138 |
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Summary of Tax Incentive Package |
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Incentive Valuation |
City |
County |
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Tax Abatements: |
$2,919,906 |
$3,581,599 |
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Buildings: |
$0 |
$0 |
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Roads, Sewer, Water, Other Infrastructure: |
$0 |
$0 |
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Land or Other Incentives: |
$0 |
$0 |
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Evaluation of Incentives Offered: |
City |
County |
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Total Value of All Incentives: |
$2,919,906 |
$3,581,599 |
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Incentives per Direct Job: |
$5,840 |
$7,163 |
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Incentives per Total Jobs: |
$3,167 |
$3,884 |
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Incentives per Dollar Capital
Investment: |
$0.06 |
$0.07 |
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