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FISCAL IMPACTS OF
AN 244 CARIOCA PEORIA AVE & SARIVAL
ANNEXATION INTO THE CITY OF GLENDALE
OCTOBER 2022
11209 N. Tatum Boulevard, Suite 225 * Phoenix, AZ 85028 * 602-765-2400 tel * 602-765-2407 fax
1
Introduction
The following summary presents the fiscal impacts of annexation for the Carioca Peoria Ave and Sarival
annexation, which includes 10.8 gross acres at the SEC of Peoria Avenue and Sarival Avenue. At the
present time there are plans for a fuel station and a 7,000 square foot convenience store at the
southeast corner of the site. Based on the amount of remaining developable land, and the mix of
development in a typical commercial corner of this size, it is assumed that the site could support a total
of 38,100 square feet at build out. The assumptions regarding construction costs, taxable sales per
square foot, and average wages are based on published sources and are intended as a general estimate
of the possible fiscal impacts of this project.
The point of this exercise is to frame what this size of site developed with commercial uses could bring
to the city in terms of the number and quality of jobs as well as the fiscal impacts. Note that there are
often tradeoffs between high quality jobs and revenue generation at the city level.
Project Assumptions
Figure 1 below shows the square feet by type of use and the assumptions regarding taxable sales and
leases. For the purpose of this analysis, it is assumed that the convenience store would be owner-
occupied, and the remaining space would be 50 percent leased and 50 percent owner occupied. For the
retail/service space, it is assumed that 30 percent of the space would be services and would not
generate sales taxes.
Figure 2 presents the impact results for 38,100 square feet of retail and restaurant space in terms of
capital investment, jobs and wage levels, annual fiscal impacts (revenues less expenditures for city
operating funds), one-time fees (construction sales tax, development impact fees, estimated permit
fees) and overall ranking. This fiscal impact includes 0.29 lane miles of new street frontage along Sarival
Avenue (assuming 770 linear feet and 2 lanes) that would be taken into the city for maintenance. There
would be no new lane miles on Peoria Avenue, which is in the City of Surprise.
FIGURE 1
DEVELOPMENT ASSUMPTIONS
Square
Percent Taxable Sales
Annual
Percent
Building Type
Feet/Units
Taxable Retail
Per Sq Ft
Lease
Leased
Total
38,100
Restaurant
9,525
100%
$500
$17.52
50%
Convenience Store
7,000
100%
$300
na
0%
Gas Station
na
0%
$0
na
0%
Retail/Services
22,479
70%
$200
$17.52
50%
Sources: Lease rates - Cushman & Wakefield Q3 2022 Retail Market Reports; Construction cost -
Gordian Square Foot Costs, 2022.
2
FIGURE 2
IMPACTS OF POTENTIAL CARIOCA PEORIA AVE AND SARIVAL
•
Capital investment is represented by building construction costs estimated at $6.4 million, although
given the rapid increases in construction material and labor costs, this should be viewed as an order
of magnitude estimate. Construction activity results in one-time sales taxes for the city as well as
on-going property taxes.
•
Jobs and average wages are important not only in terms of the number of jobs created, but also the
quality of jobs as represented by average wages. To the extent that workers live in Glendale, these
jobs can translate into taxable spending and property ownership. Typical retail and restaurant
operations create a sizeable number of jobs, but at lower wage levels. It is estimated that the
proposed retail center could support about 100 jobs at an average wage of $32,100.
Fiscal Results
•
One-time fees are related to construction and are generally proportional to the construction cost
because construction sales taxes make up the largest share of one-time fees. Development impact
fees (DIF) reflect rates for commercial development in West Glendale. One-time fees also include
estimated planning and permitting fees that are generally proportional to construction costs. Total
one-time fees for the Carioca Peoria Ave and Sarival are estimated at $270,000 (Figure 3).
•
The annual fiscal impacts represent the net value of these different types of uses to the city in
terms of revenues less expenditures. These annual fiscal impacts are intended to be order of
magnitude only. There are a variety of factors imbedded in the assumptions that will affect the
magnitude of fiscal impacts for different types of uses including the level of capital investment and
taxable sales. The proposed 38,100 square foot retail center that is anticipated for this site could
result in an average net impact to the city of $250,000 per year, excluding one-time revenues.
•
The overall ranking compares the level of revenues versus expenditures for the proposed retail
center to other land uses such as light industrial, warehouse and residential development that have
been included in other recent annexation impact studies. The Carioca Peoria Ave and Sarival
Project
Square
Feet
Building
Construction
(millions)
Jobs
Average
Wage
One-Time
Fees*
Annual
Revenues less
Expenditures
Overall
Ranking
Peoria and Sarival
Retail Center
38,100
$6.4
100
$32,100
$270,000
$250,000
High
*One Time Fees include construction sales tax, estimated planning and permitting fees and development impact fees
in West Glendale.
3
annexation could produce a relatively strong net impact at build out in terms of the ratio of
revenues to expenditures, given the anticipated level of taxable sales, however the magnitude of
the impact is moderate given the overall size of the proposed development.
FIGURE 3
ANNUAL FISCAL IMPACTS FOR CARIOCA PEORIA AVE AND SARIVAL
Summary
These results frame the possibilities for how the Carioca Peoria Ave and Sarival annexation could impact
the city from a fiscal perspective, based on the types of uses described in the site plan, and assumptions
about the additional commercial development that could occur on the site. This project is much smaller
in scale than some of the recent industrial projects in this area, but the level of potential taxable sales
results in revenues significantly exceeding expenditures. The annual net impacts (revenues less
expenditures) are estimated at $250,000 per year, including $310,000 in annual revenues and $60,000 in
annual expenditures. Estimated annual revenues exceed expenditures by 420 percent. The actual fiscal
impacts may vary depending on the assessed value, taxable sales and leases, and other project details.
$310,000
$60,000
$250,000
$0
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
$350,000
Revenues
Expenditures
Net Benefit