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HdL Sales Tax Report for CY2020 Q4 Saleswww.hdlcompanies.com | 888.861.0220 Q4 2019* Q4 2020* Legend $0 $200,000 $400,000 $600,000 $800,000 $1,000,000 $1,200,000 SALES TAX BY MAJOR BUSINESS GROUP*Allocation aberrations have been adjusted to reflect sales activity General Consumer Goods County and State Pools Autos and Transportation Restaurants and Hotels Food and Drugs Building and Construction Fuel and Service Stations Business and Industry TOP 25 PRODUCERSCITY OF ENCINITAS HIGHLIGHTS Published by HdL Companies in Spring 2021 SALES TAX UPDATE CITY OF ENCINITAS 4Q 2020 (OCTOBER - DECEMBER) 7 Eleven 76 Best Buy BevMo BMW of Encinitas Cardiff Seaside Market Dick’s Sporting Goods Encinitas Ford Financial Services Vehicle Trust Hansen Surfboards Herman Cook Volkswagen Home Depot Home Goods Quick Shine Car Wash REI Ross Shell Shell Car Wash At Encinitas Ranch Target TJ Maxx Trader Joes Valero Vons Vuori Walmart Supercenter Encinitas’ receipts from October through December were 2.4% below the fourth sales period in 2019. However, tax payment deferrals offered by the State and a large retroactive correction has temporarily impacted actual receipts. Once estimated payments are incorporated into the data and reporting aberrations excluded, actual sales were up 6.1%. While this was the third quarter of economic impacts due to the pandemic, the City experienced another solid growth during the holiday shopping period from general consumer retailers, including sporting good stores. Also, similar to the state and county trends, new auto sales and building-construction activity were strong as buyers take advantage of low finance conditions and improved equity available. Gains from the countywide use tax pool continues to be a bright spot. With more online purchases being made and a greater number of out-of-state retailers collecting and remitting local sales tax, the City’s share jumped 40% compared to a year ago. As expected, with reduced commuter frequency and lower gas prices, gas stations remain heavily impacted, while restaurants that usually depend on indoor services like casual dining establishments continue to be hindered. Net of aberrations, taxable sales for all of San Diego County declined 1.9% over the comparable time period; the Southern California region was down 2.7%. TOTAL:$ 3,968,347 6.1%-1.9%-2.0% COUNTY STATE ENCINITAS 4Q2020 TOP NON-CONFIDENTIAL BUSINESS TYPES Q4 '20* EncinitasBusiness Type Change Change ChangeCountyHdL State -31.2%-32.2%-29.0% 231.5 Service Stations -39.4%-38.6%-34.7% 194.3 Casual Dining 5.2%7.3%9.2% 186.4 Grocery Stores 20.3%27.9%19.8% 166.7 Sporting Goods/Bike Stores -8.7%-9.0%-3.4% 155.1 Quick-Service Restaurants 1.1%1.1%0.3% 102.3 Home Furnishings -16.2%-21.1%-5.7% 97.9 Family Apparel -12.0%-14.7%-10.2% 91.2 Fast-Casual Restaurants -2.0%-3.7%8.7% 83.2 Convenience Stores/Liquor -25.0%-27.0%-24.4% 81.0 Electronics/Appliance Stores *Allocation aberrations have been adjusted to reflect sales activity *In thousands of dollars REVENUE BY BUSINESS GROUP Encinitas This Quarter* 24% Pools 12% Restaurants 13% Autos/Trans. 7% Building 3% Bus./Ind. 27% Cons.Goods 8% Food/Drug 6% Fuel *ADJUSTED FORECONOMIC DATA SALES TAX UPDATECITY OF ENCINITAS4Q 2020 STATEWIDE RESULTS The local one cent sales and use tax from sales occurring October through December, the holiday shopping season, was 1.9% lower than the same quarter one year ago after adjusting for accounting anomalies and back payments from previous periods. Lower receipts were primarily concentrated in the Bay Area and coastal southern regions while much of inland California, including the San Joaquin Valley, Inland Empire, and northern regions, exhibited solid gains. As expected, the larger place of sale categories which have been negatively impacted throughout the pandemic continue to be brick and mortar general consumer goods retailers like family apparel, department, and electronics/ appliance stores. With limited to zero allowed indoor dining (depending on a County’s Covid-19 tier assignment), restaurants and hotels suffered the largest losses especially in communities that strongly rely on tourism. Although the workforce has slowly begun to return to physical office environments, fuel and service stations revenues lagged the prior year performance. It does not appear that Governor Newsom’s second ‘shelter at home’ directive, initiated by the increase in Covid-19 cases had an impact on overall results. While some merchants chose to utilize the Governor’s executive order allowing for a 90-day deferral of sales tax remittance, it was substantially less than the similar opportunity companies utilized during the 1st and 2nd quarters of 2020. The outstanding payments for most California cities will be remitted before the end of the 2020-21 fiscal year. On the bright side, as consumer confidence stabilized post the national presidential election, customers were motivated to comfortably spend on high-end luxury automobiles, boats- motorcycles, RVs, and sporting goods/ equipment. The building-construction sector, with 1) increased price of goods – like lumber, 2) continued home improvement projects, and 3) advantageous fall/ winter weather conditions saw strong gains that remained consistent throughout the calendar year. Exponential growth from countywide use tax pools further helped offset the declines. Greater online shopping signifying a permanent shift of consumer habits to this more convenient experience was inevitable. On the horizon, mass deployment of the Covid-19 vaccine will help a greater number of businesses, restaurants and theme parks to reach reopen status. Recent approval of the American Rescue Plan Act of 2021 will further support greater consumer spending, albeit in targeted segments. Pent up demand for summer outdoor experiences and travel is likely and thereby household spending is temporarily reverted away from taxable goods when compared to recent activity.