Eagle project not a sales tax boon
When Eagle River Station developers presented to the Eagle Planning and Zoning Commission in May a rosy outlook for sales tax revenue for the Town of Eagle that their shopping mall to the east of Eagle, they hid certain key elements of how the tax will be disbursed and neglected to take into account present market conditions that would in reality produce significantly different sales tax results for Eagle.
Chief among what their figures did not show is that they are asking for a 1 percent rebate of sales tax back to them to pay for infrastructure building and improvement.
The Eagle River Station sales tax presentation, compiled by BBC Research and Consulting of Denver some number of months before the meeting, did not take into account the current commercial size of the project, which is now 552,000 square feet, but based their figures on the old design of 615,000 square feet. Their figures did not factor in the cost sharing that Eagle River Station developers are asking the Town of Eagle to partner in, which would reduce Eagle’s take in the sales tax pot by half.
Their figures were based on Eagle River Station achieving $334/square foot of sales revenue, and did not take into account that the developer’s own bonding agent, D.A. Davidson, has recently reduced that figure to $296/square foot, an 11.4 percent reduction. The developer’s presentation and revenue projections also assume the Eagle River Station stores will run at full shopping power, even though Costco in Gypsum, a good regional example of the market, has missed its first-year projected shopping revenue by 30 percent according to sources heard on the street.
To establish more pertinent numbers to show sales tax revenue for Eagle via Eagle River Station, one might take an average of what their bonding agent, which based its figures on national trends for mall revenues says will be 11.4 percent less than what the developers project, and average that with Costco’s missed earnings of 30 percent and you come up with a realistic revenue projection that is 21 percent less than the Eagle River Station developers claim they will earn.
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Eagle River Station claims it will bring in $184,368,000 of total revenue. Subtract 21 percent and you get $145,650,720 in total revenue.
From that figure, take 5 percent of it for sales tax (Eagle River Station has an additional 1 percent of tax to it via their urban renewal authority) and you get $7,282,536 of total sales tax per year.
Eagle River Station is asking for itself three parts of the sales tax to the Town of Eagle’s two parts, but then is asking Eagle to give one part back for infrastructure cost sharing. So Eagle nets one part of $7,282,536, which is $1,456,507.
Because they are using old figures and are obscuring the fact that they are asking Eagle to fund in infrastructure development by rebating percentages of the sales tax back to them, the developers are able to portray to the general public that their shopping mall will be a cash cow for the town. The opposite is more likely to be true. A tax revenue of $1,456,507 will not go very far for Eagle, especially when you factor tearing up Chambers Avenue for a year to put larger water lines in to serve the Eagle River Station development, and also the additional financial burden to support the 581 new households of people planned within the development.