Carefree Truth
Issue #551, March 4, 2017
Mayor Peterson began by explaining that Carefree was incorporated in 1984. Consisting of 8.5 square miles with a current population of 3,600 and 2,700 dwelling units, it is approximately 70% built out and will have a population of 6,000 with 4,400 dwelling units once build out is reached. 98% of the land is zoned residential and 2% is zoned commercial, with an 80 acre mixed use Town Center.
Town government provides a "Basket of Services" to enhance the quality of life for Carefree residents, and is responsible for securing the funding to provide health, safety and welfare services such as police and fire protection, and street maintenance and repair on Carefree's 105 miles of public roads. The typical funding sources include Municipal Sales Tax (MST), State Shared Revenue (SSR) and Municipal Property Tax (MPT). Carefree does not assess a MPT, so is dependent on the first 2 sources for operational costs.
Town services cost $5,800,000 per year. Carefree's MST is derived from a combination of Construction Sales Tax (CST), Restaurant and Bar Sales Tax (R&BST) and Accommodations Sales Tax (AST), which account for approximately 56% of the municipal income. Between 2007 and 2015, the latest available figures, income from MST and SSR have both dropped.
The current financial model works well during periods of growth, but is at risk when growth is not occurring, leaving the community more reliant on the volatile sales tax revenue stream. Further reductions in SSR are anticipated. Once Carefree is built out, CST will disappear with the exception of re-modeling projects costing over $250,000.
Benefits for Carefree property owners under the current model include a relatively low property tax, typically $2,000 to $3,000 less per year than they would pay for a comparable home in neighboring Scottsdale and Phoenix, both of which assess a MPT. Carefree also provides Town paid for universal fire protection. Because Carefree contracts with Rural/Metro to provide full fire protection for all the buildings in Carefree, homeowners save an average of $800-$1,000 on their homeowners insurance. The individual Rural/Metro subscription service previously in effect ran another $800-$1,000 a year.
The Town's guiding principles are delivering the "Basket of Services" that residents desire, while funding Town services without assessing a property tax, and stimulating a vital environment within the Town commercial core, thereby increasing the sales tax revenue stream. The goal is to add $2,500,000 to $3,000,000 per year to revenue, or to reduce operating costs, to offset future revenue requirements.
The Long Range Financial Strategic Plan Options include: do nothing different, minimize expenses, build sales tax revenue, minimize expenses and build sales tax revenue, or assess a property tax. The Town's choice is to minimize expenses and build sales tax revenue. "How do we get there?" The plan involves targeting and strengthening sales tax generators, identifying and using catalysts to encourage private investments and growth which contribute to the tax base, and further defining and emphasizing Carefree's brand to cultivate and align tax generators with that identity.
The target trade area "wealth box" includes Carefree, Cave Creek, the Boulders, Desert Mountain, Whisper Rock, DC Ranch, Grayhawk and Troon North. These areas have a population of approximately 82,000, with an average annual household income of $151,000. 56% hold a college degree. In comparison, the commonly perceived "wealth box" includes Arcadia, the Biltmore area and Paradise Valley, with an approximate population of 60,000 and an average annual income of $134,000. 54% hold college degrees.
In order to create municipal revenue without an assessed property tax, a critical mass of viable tax generating businesses are required. The Financial Stability Strategy first involves strengthening existing tax generators. Bashas' recently spent approximately $2,000,000 remodeling their Carefree grocery store, and business there is booming. The Carefree Resort is currently in escrow, with re-branding and re-positioning planned. Chef Kevin Binkley's Cafe Bink has a new partner and an expanded menu. And Spanish Village has new owners who are eager to activate that lovely space again.
Bashas' is considering opening a General Store. The northeast corner of Carefree Highway and Cave Creek Road, a designated Special Planning Area (SPA) in the General Plan, is in escrow.
The second step involves targeting new tax generators. Paradise Valley has no retail stores but receives tax revenue from their many high end resorts, which can each generate $500,000 to $1,000,000 in Town revenue per year and add value to primarily residential communities. Many identify Carefree as a resort community, however, the Carefree Resort and Conference Center is the only resort within the Town's boundaries.
Carefree features spectacular views of mountain/desert vistas, and offers immediate access to open space preserves and lakes. Using the Paradise Valley model, world class resorts featuring a "Carefree lifestyle" with emersion programs for sustainable wellness of mind, body and soul could become part of the fabric of the high quality residential community. Carefree could potentially work with the owners of selected properties to create Special Planning Areas. Four additional areas comprise approximately 97 acres, 2% of the total Carefree landmass of 5,440 acres. The Town is investigating the sale of 40 acres of adjacent State land that could also be used for commercial purposes.
Restaurants can generate $30,000 to $1,000,000 in business. According to a market study done by Ed Lewis, Carefree experiences over $60,000,000 in leakage (those in the trade area eating at restaurants outside of Carefree). Many of the 82,000 people in the area eat out an average of 3 to 4 times a week, spending just over $700 per person.
According to PHOENIXBUSINESSJOURNAL.COM, restaurants are the new anchors for shopping centers. The Town has the existing infrastructure and suitable locations to support numerous well branded chef driven restaurants with concepts that supply the "wow" factor by incorporating unique ambience, impeccable service and quality food. These factors provide a broader appeal to the market area. One well branded restaurant creates a domino effect; others follow. The Town Hall administrative office site/building is a highly visible location between the Sundial and Cave Creek Road and could be considered for a restaurant. Spanish Village and the vacant parcels that bookend the gateway on Cave Creek Road are visible from the street and would assist in driving traffic into the Town Center. Highly visible anchors along Easy Street create foot traffic.
In order to refocus and refresh the brand, diverse productive sales tax producers are needed to enhance economic development in the Town Center and on undeveloped properties located at heavily trafficked intersections and roadways. In order to buffer surrounding homes, the Town may need to reassess zoning and fill appropriate commercial needs, as well as generate sales tax revenue. While the Town is prohibited by State Statute from spending public monies to enhance private businesses, the Town has spent approximately $8,000,000 over the past 10 years to enhance the public spaces in the Town Center and to maintain the public streets.
Carefree is also planning unique events which appeal to the target audience and have relevancy in the marketplace. Broader timelines and footprints with diverse activities will create greater appeal. The next Carefree Truth issue will cover Carefree Marketing Director Gina Kaegi's Marketing Strategy presentation, which was delivered towards the end of the workshop. The video of Gina Kaegi's presentation will be in that issue.
Click on the slides in the boxes below if you would like to watch the video of the meeting. Due to it's length, Herbert split the video into 3 parts. These are the Mayor's presentation.
Lyn Hitchon
Issue #551, March 4, 2017
Mayor Peterson began by explaining that Carefree was incorporated in 1984. Consisting of 8.5 square miles with a current population of 3,600 and 2,700 dwelling units, it is approximately 70% built out and will have a population of 6,000 with 4,400 dwelling units once build out is reached. 98% of the land is zoned residential and 2% is zoned commercial, with an 80 acre mixed use Town Center.
Town government provides a "Basket of Services" to enhance the quality of life for Carefree residents, and is responsible for securing the funding to provide health, safety and welfare services such as police and fire protection, and street maintenance and repair on Carefree's 105 miles of public roads. The typical funding sources include Municipal Sales Tax (MST), State Shared Revenue (SSR) and Municipal Property Tax (MPT). Carefree does not assess a MPT, so is dependent on the first 2 sources for operational costs.
Town services cost $5,800,000 per year. Carefree's MST is derived from a combination of Construction Sales Tax (CST), Restaurant and Bar Sales Tax (R&BST) and Accommodations Sales Tax (AST), which account for approximately 56% of the municipal income. Between 2007 and 2015, the latest available figures, income from MST and SSR have both dropped.
The current financial model works well during periods of growth, but is at risk when growth is not occurring, leaving the community more reliant on the volatile sales tax revenue stream. Further reductions in SSR are anticipated. Once Carefree is built out, CST will disappear with the exception of re-modeling projects costing over $250,000.
Benefits for Carefree property owners under the current model include a relatively low property tax, typically $2,000 to $3,000 less per year than they would pay for a comparable home in neighboring Scottsdale and Phoenix, both of which assess a MPT. Carefree also provides Town paid for universal fire protection. Because Carefree contracts with Rural/Metro to provide full fire protection for all the buildings in Carefree, homeowners save an average of $800-$1,000 on their homeowners insurance. The individual Rural/Metro subscription service previously in effect ran another $800-$1,000 a year.
The Town's guiding principles are delivering the "Basket of Services" that residents desire, while funding Town services without assessing a property tax, and stimulating a vital environment within the Town commercial core, thereby increasing the sales tax revenue stream. The goal is to add $2,500,000 to $3,000,000 per year to revenue, or to reduce operating costs, to offset future revenue requirements.
The Long Range Financial Strategic Plan Options include: do nothing different, minimize expenses, build sales tax revenue, minimize expenses and build sales tax revenue, or assess a property tax. The Town's choice is to minimize expenses and build sales tax revenue. "How do we get there?" The plan involves targeting and strengthening sales tax generators, identifying and using catalysts to encourage private investments and growth which contribute to the tax base, and further defining and emphasizing Carefree's brand to cultivate and align tax generators with that identity.
The target trade area "wealth box" includes Carefree, Cave Creek, the Boulders, Desert Mountain, Whisper Rock, DC Ranch, Grayhawk and Troon North. These areas have a population of approximately 82,000, with an average annual household income of $151,000. 56% hold a college degree. In comparison, the commonly perceived "wealth box" includes Arcadia, the Biltmore area and Paradise Valley, with an approximate population of 60,000 and an average annual income of $134,000. 54% hold college degrees.
In order to create municipal revenue without an assessed property tax, a critical mass of viable tax generating businesses are required. The Financial Stability Strategy first involves strengthening existing tax generators. Bashas' recently spent approximately $2,000,000 remodeling their Carefree grocery store, and business there is booming. The Carefree Resort is currently in escrow, with re-branding and re-positioning planned. Chef Kevin Binkley's Cafe Bink has a new partner and an expanded menu. And Spanish Village has new owners who are eager to activate that lovely space again.
Bashas' is considering opening a General Store. The northeast corner of Carefree Highway and Cave Creek Road, a designated Special Planning Area (SPA) in the General Plan, is in escrow.
The second step involves targeting new tax generators. Paradise Valley has no retail stores but receives tax revenue from their many high end resorts, which can each generate $500,000 to $1,000,000 in Town revenue per year and add value to primarily residential communities. Many identify Carefree as a resort community, however, the Carefree Resort and Conference Center is the only resort within the Town's boundaries.
Carefree features spectacular views of mountain/desert vistas, and offers immediate access to open space preserves and lakes. Using the Paradise Valley model, world class resorts featuring a "Carefree lifestyle" with emersion programs for sustainable wellness of mind, body and soul could become part of the fabric of the high quality residential community. Carefree could potentially work with the owners of selected properties to create Special Planning Areas. Four additional areas comprise approximately 97 acres, 2% of the total Carefree landmass of 5,440 acres. The Town is investigating the sale of 40 acres of adjacent State land that could also be used for commercial purposes.
Restaurants can generate $30,000 to $1,000,000 in business. According to a market study done by Ed Lewis, Carefree experiences over $60,000,000 in leakage (those in the trade area eating at restaurants outside of Carefree). Many of the 82,000 people in the area eat out an average of 3 to 4 times a week, spending just over $700 per person.
According to PHOENIXBUSINESSJOURNAL.COM, restaurants are the new anchors for shopping centers. The Town has the existing infrastructure and suitable locations to support numerous well branded chef driven restaurants with concepts that supply the "wow" factor by incorporating unique ambience, impeccable service and quality food. These factors provide a broader appeal to the market area. One well branded restaurant creates a domino effect; others follow. The Town Hall administrative office site/building is a highly visible location between the Sundial and Cave Creek Road and could be considered for a restaurant. Spanish Village and the vacant parcels that bookend the gateway on Cave Creek Road are visible from the street and would assist in driving traffic into the Town Center. Highly visible anchors along Easy Street create foot traffic.
In order to refocus and refresh the brand, diverse productive sales tax producers are needed to enhance economic development in the Town Center and on undeveloped properties located at heavily trafficked intersections and roadways. In order to buffer surrounding homes, the Town may need to reassess zoning and fill appropriate commercial needs, as well as generate sales tax revenue. While the Town is prohibited by State Statute from spending public monies to enhance private businesses, the Town has spent approximately $8,000,000 over the past 10 years to enhance the public spaces in the Town Center and to maintain the public streets.
Carefree is also planning unique events which appeal to the target audience and have relevancy in the marketplace. Broader timelines and footprints with diverse activities will create greater appeal. The next Carefree Truth issue will cover Carefree Marketing Director Gina Kaegi's Marketing Strategy presentation, which was delivered towards the end of the workshop. The video of Gina Kaegi's presentation will be in that issue.
Click on the slides in the boxes below if you would like to watch the video of the meeting. Due to it's length, Herbert split the video into 3 parts. These are the Mayor's presentation.
Lyn Hitchon
Prepared by Carefree Truth
Visit our website at www.carefreetruth2.com If you know anyone who would like to be added to the Carefree Truth email list, please have them contact me. Feel free to share Carefree Truth with others on your list.
Visit www.carefreeazbusinesses.com to see more info about businesses in Carefree. Please support our merchants.