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Model: |
Middle
Value Firm |
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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: |
$217,105 |
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Total New Households in City and County: |
411 |
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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: |
$12,104,371 |
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Value of All Incentives Offered: |
$12,104,371 |
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Value of All Incentives per Job: |
$24,209 |
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Returns for Jurisdictions: |
City |
County |
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Revenues |
$37,861,852 |
$30,944,494 |
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Costs |
$29,336,487 |
$20,122,410 |
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Revenue Stream, Pre-Incentives |
$8,525,365 |
$10,822,084 |
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Value of Incentives Offered |
$2,734,200 |
$3,353,809 |
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Revenue Stream with Incentives |
$5,791,165 |
$7,468,275 |
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Returns for Jurisdictions, Discounted: |
City |
County |
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Discount Rate |
6.25% |
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Discounted Cash Flow, Before Incentives |
$3,255,096 |
$4,759,040 |
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Benefit/Cost Ratio, Before Incentives |
1.22 |
1.47 |
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Discounted Cash Flow, After Incentives |
$1,567,224 |
$2,688,672 |
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Benefit/Cost Ratio, After Incentives |
1.10 |
1.22 |
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Lawrence Discounted Cash Flow |
Pre-Incentives |
Post-Incentives |
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Years 1-5 |
($304,568) |
($708,074) |
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Years 6-10 |
($49,577) |
($829,883) |
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Years 11-15 |
$843,922 |
$458,050 |
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Years 16+ |
$2,620,694 |
$2,620,694 |
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Douglas County Discounted Cash Flow |
Pre-Incentives |
Post-Incentives |
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Years 1-5 |
$352,397 |
($142,549) |
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Years 6-10 |
$534,733 |
($422,402) |
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Years 11-15 |
$905,340 |
$438,434 |
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Years 16+ |
$2,811,420 |
$2,811,420 |
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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 |
11.5% |
21.7% |
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Property tax from Firm |
31.1% |
46.7% |
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Sales Taxes from Residents and Employees |
27.7% |
10.3% |
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Sales Taxes from Firm |
4.5% |
1.4% |
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Franchise Fees, Households |
5.6% |
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Franchise Fees, Firm |
3.0% |
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Other |
16.6% |
19.9% |
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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 |
2.7% |
0.5% |
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Capital Costs, Firm |
7.8% |
6.9% |
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Operating Costs, Residents |
31.8% |
30.2% |
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Operating Costs, Indirect Employment |
15.4% |
12.6% |
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Operating Costs, Firm |
19.6% |
14.9% |
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Infrastructure on the Firm's Property |
0.0% |
0.0% |
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sub-total, costs |
77.3% |
64.9% |
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Abatements |
7.2% |
10.8% |
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Other Incentives |
0.0% |
0.0% |
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| Total,
Costs as Share of Revenue |
84.5% |
75.8% |
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Sensitivity Analysis |
City Change in Benefits |
County Change in Benefits |
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10 additional indirect jobs |
($51,324) |
($50,143) |
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Tax abatement increase of 1% |
($21,098) |
($25,880) |
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10 additional direct jobs |
$6,293 |
$11,182 |
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$1,000,000 additional capital investment |
$74,133 |
$90,139 |
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$1,000 additional wages to direct employees |
$151,550 |
$95,738 |
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1 mill increase in property taxes |
$212,689 |
$230,063 |
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