Utility User, Property, and Sales Taxes
Development Impact/Exaction Fees
Economic Incentives and Special Zones
Cost Ratings denote which cities the Survey finds to be the most and least expensive. Each city receives a rating from $ to $$$$$ depending on the following criteria:
- Business taxes
- Electric and utility taxes
- Property taxes
- Sales taxes
- State corporate income taxes
- Telephone taxes
Please remember that cost ratings are based on an aggregate of these criteria; they do not guarantee anything about any single one of the six criteria. Furthermore, please keep in mind that the ratings are not necessarily applicable to all firms. Each individual company should calculate how various tax rates will impact its particular operations.
When calculating ratings, we consider how each individual city compares to the median value of all cities from the previous year. This method prevents changes in one city from affecting the ratings of other cities whose policies may not have changed. It also allows more accurate analysis of how cities change over time.
City and county population figures are based on the United States Census population estimates unless the cities or counties provided the data themselves.
The crime index is based on the Modified Crime Index total figures reported by the FBI in their annual publication, Crime in the United States. Data includes both violent crime (murder, forcible rape, robbery, and aggravated assault) and property crime (burglary, arson, larceny, and motor vehicle theft).
Taxable Retail Sales are based on data published by the California State Board of Equalization.
The Survey includes fees for the following business categories:
- General office
- Professional office
- Retail
- Wholesale
- Manufacturing
- Personal Service
- Commercial Property
- Residential Property
For complete definitions of each category, please see the glossary. The Survey does not include fees for businesses in other categories (e.g. contractors, vehicle-based operations). Please contact individual cities for these unique rates.
The rate comparison calculates hypothetical costs for a typical medium-sized business in each category. While these figures represent annual fees, they do not include one-time costs in the initial tax year and do not account for possible waivers or incentives. In calculating the annual tax of these typical businesses, the Survey uses the following set of assumptions:
- $10 million in gross receipts
- 100 employees; assumed to include 10 partners, 40 other professionals, and 50 nonprofessionals
- Payroll costs of $4 million, with the following exceptions:
- $7 million for Professional Office
- $2 million for Wholesale and Residential Property
- Additional operating costs of $1 million
- Net profits of $1 million
- Average merchandise value equaling one-half of gross receipts
- Occupancy of 20,000 sq. ft., with the following exceptions:
- 100,000 sq. ft. for Wholesale
- 500,000 sq. ft. for Commercial Property
- 740,000 sq. ft. for Residential Property
- 100 units for Commercial Property (roughly equivalent to $10 million in annual rental receipts)
- 925 units for Residential Property (roughly equivalent to $10 million in annual rental receipts)
The percentage under the rate comparison represents the dollar amount of the annual tax as a percentage of $10 million. The profile also includes a dollar amount per $1,000 of gross receipts.
Utility User, Property, and Sales Taxes
The Survey publishes utility user rates for electric, telephone, cellular, cable, gas, and water taxes. Utility user taxes generally apply to net billings, excluding other taxes. Telephone taxes sometimes exempt interstate or nonlocal intrastate billing; this exemption has been noted in most cases. Cellular taxes apply to base charges only, excluding per-call charges.
Property tax rates are based on the highest commercial ad valorem rate (the city’s Tax Rate Area with the highest aggregate valuation). Actual rates may vary, but this figure indicates the approximated actual rate. When cities have separate tax rates for land, the rate shown is the total of the property and land rates. All rates are expressed as a percentage of the property’s full market value.
Sales tax rates reflect the cumulative rate charges within a municipality, including all state, county, and city rates.
Development Impact/Exaction Fees
This section lists special entitlement fees and exemptions for development projects, which include:
- Development impact fees
- Public facilities fees
- Traffic impact and trip fees
- Signalization fees
- Major thoroughfare or bridge fees
- Art in public places fees
- Other special fees
For complete definitions of each category, please see the glossary. These fees do not include routine plan check, permitting, inspection, or engineering fees. Fees specified in specific plans for defined areas may not be shown in some cases. Contact information (either a website or phone number) is included on each profile so that you can inquire about specific fees that may be applicable to your project.
The absence of published fees does not ensure that costs will be low. Actual special entitlement fees may exceed published fees. We strongly advise you to contact localities for detailed requirements for your project or professionals who understand the project approval process in a given city.
Economic Incentives and Special Zones
The Survey identifies economic incentive opportunities in each city. Cities may negotiate these incentive tools on a case-by-case basis.
The Survey also lists five types of special zones, which include:
- Business Improvement Districts (BIDs)
- State Enterprise Zones
- Foreign Trade Zones
- Other Special Business and Incentive Zones
- Redevelopment Project Areas
For complete definitions of each type of zone, please see the glossary.
We identify transportation amenities using the following criteria and definitions:
Limited access freeways – any limited access freeways within the city limits, as well as any freeways that provide reasonable access within a 5-mile radius.
Passenger and cargo airports – we use the Geographic Information System (GIS) program Maptitude to measure relative distance. We also use 2006 FAA data that classifies passenger hubs as small, medium, or large and the 57 U.S. cargo airports with the largest 2003 landed weight.
Bus and rail transit service – we obtained most of our information from the American Public Transportation Authority (APTA) website, which provides links to major city and regional transportation agencies. For all other cities, we examined city websites to determine if the city operates bus or rail services.
Port facilities – we limited ports to Corporate Members of the American Association of Port Authorities (AAPA). A port facility only serves the city in which it operates.
Rail freight service – we only used Class I rail freight providers that represent any freight railroad with operating revenue of $289.4 million or more. Class I railways operate nationally, as opposed to Class II railways which operate regionally and Class III railways which only operate locally.
Local taxes, fees, and economic development programs are subject to change, and some fees and incentives are certain to be adjusted, added, or deleted before our next update. We encourage local government officials to contact us with any updates or corrections.
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