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Megaplex Not The Solution to City’s Financial Woes That Some Say

Alameda City Hall likes to talk about how the new cineplex and parking garage will drive more sales tax revenue for the city. They present it as some sort of financial savior for Alameda’s woes. However, movie theatre tickets are not taxable, so the Alameda cineplex itself won’t generate sales tax revenue for the city. Alameda residents are just going to have to start eating out more at restaurants to generate taxable sales.

Consider the math:

Forget the impending $4 million City of Alameda budget deficit, and just focus on the roughly $1.5 million in sales tax revenue we’ll lose when auto-row disappears. Alameda’s share of the California sales tax is 1% – to recover the $1.5 million in sales tax revenue would require roughly $150 million in additional taxable retail sales in Alameda. If one assumes – optimistically, given the dearth of white-linen restaurants in Alameda – that the average per-person expenditure for meals in Alameda is $25, it would require an additional 6 million $25 meals to be purchased each year in Alameda.

That would require every household in Alameda (about 31,644) to dine out at a restaurant every other day of the year and spend $25 each time. Or in other words, each household would need to spend $4,739 per year on dining in restaurants to generate sales tax for the City of Alameda. For a household earning the median income of roughly $60,000 per year, that amounts to spending 7% of their income committed to dining at restaurants, each year. (That per-household spending requirement climbs to $17,379/year, or 29% of median income, if you add back in the $4 million deficit.)

To generate 6 million new meals tied to movie theatre visits in the megaplex would require filling up all 1042 seats in the theatres 5,758 times, each year, or 15 times each day of the year. Year after year. In addition to spending on meals, each Alameda household would have to spend $1,801 per year on movie tickets, bringing the total to $6,540, or 11% of median income.

Of course, these numbers are highly unlikely. Which just shows what a false proposition the cineplex and parking garage have been from the start.

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