City of Morgan Hill Bikeways, Trails, Parks and Recreation Master Plan

Section 4: Existing Facilities Overview and Impacts | May 2017 Sports Market Business Strategy – Morgan Hill, CA PAGE 40

FISCAL IMPACT Fiscal impacts are tax revenues that result from the spending and income related to the activities at the existing Aquatics Center and Outdoor Sports Center. This analysis estimates fiscal impacts for the governmental units that levy taxes in the jurisdiction. The fiscal impacts are the public sector’s return on investment. Fiscal impacts provide a partial offset to the capital and operating expenditures required to support the facility. Although the incremental tax revenues cannot be expected to pay for a publicly-funded project in full, fiscal impacts are important because they improve the ability of the public sector to pay for the project. The overall economic impacts, including the fiscal impacts, provide a rationale for public participation in a project. Based on the spending estimates, Johnson Consulting projected the fiscal impacts from major categories of tax revenues that are directly affected by a visitor’s activities: general sales tax and hotel tax, as shown in Table 4-7. Note that while the total sales tax is 8.75 percent, the City of Morgan Hill will receive 1 percent of gross sales.

Table 4-7

Morgan Hill Aquatics Center and Outdoor Sports Center Applicable Tax Rates Rate Sales Tax* 8.75% Transient Occupancy Tax 10.00%

*Total Sales Tax is 8.75%. City of Morgan Hill receives 1% of gross sales

Source: City of Morgan Hill

The fiscal impacts represent only a fraction of the overall spending impact to the economy, as they are only the public sector’s increase in tax revenue resulting from the overall increased spending in the economy. Additionally, not included in the analysis are property tax estimates. Spending inside and outside the existing Aquatics Center and Outdoor Sports Center would increase some of the values of commercial establishments in the City of Morgan Hill, which result in increased property tax supported by the project.

VISITOR VS RESIDENT SPENDING

This analysis differentiates impacts from spending by people coming from out-of-town and by Morgan Hill residents, as defined below:

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