Fiscal and Economic Analysis of Homer Town Square Proposed Development Alternatives

Abstract

This report presents a fiscal and economic analysis of potential development within the Homer Town Square area. We first consider current land use patterns and tax revenues. We then estimate the fiscal and economic effects of a development scenario provided by Christopher Beck and Associates. Fiscal effects are measured by property and sales tax revenue. Economic effects are measured by employment within Homer. Finally, we report empirical results from a broad national sample of similar efforts to promote economic development and quality of life through improvements to downtown areas and commercial centers.

The “existing trends” scenario attempts to account for trends and events that are likely occur in the absence of specific new development initiatives in the study area. The “town square” scenario accounts for changes that will happen with the focused development of a town square development initiative. The difference between the two scenarios in a variable of interest – such as property taxes -- is the effect that we can reasonably attribute to the town square development itself.

Commercial taxable sales within the study area increase over 5 years to become about 50% higher in 2008 under the town square scenario, yielding about $1.2 million in additional sales tax revenue to Homer and an additional $680,000 of additional sales tax revenue to the Kenai Peninsula Borough. Property taxes from the study area increase by 2008 to a level 35% higher than under existing trends, yielding an additional $79,000 in property tax revenue to the city and an additional $133,000 in property tax revenues to the borough, college, and hospital.