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HdL Sales Tax Report for CY2021 Q4 Saleswww.hdlcompanies.com | 888.861.0220 Q4 2020* Q4 2021* 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 Fuel and Service Stations Food and Drugs Building and Construction Business and Industry TOP 25 PRODUCERSCITY OF ENCINITAS HIGHLIGHTS Published by HdL Companies in Spring 2022 SALES TAX UPDATE CITY OF ENCINITAS 4Q 2021 (OCTOBER - DECEMBER) 7 Eleven 76 Alila Marea Beach Resort Encinitas Best Buy BevMo BMW of Encinitas Chevron Dick’s Sporting Goods Encinitas Ford Financial Services Vehicle Trust Hansen Surfboards Herman Cook Volkswagen Home Depot Home Goods Pacific Coast Grill Quick Shine Car Wash REI Shell Shell Car Wash At Encinitas Ranch Target TJ Maxx Valero Vons Vuori Walmart Supercenter Encinitas’ receipts from October through December were 22.4% above the fourth sales period in 2020. Excluding reporting aberrations, actual sales were up 8.9%. This strong percentage gain signifies the continued rebound from the pandemic impacts of a year ago, especially during the normal ‘holiday shopping period’. A possible misallocation that exaggerated the prior year results from general consumer goods is temporarily hiding the sensational holiday returns from multiple retailers including sporting goods, family apparel, home furnishings, and specialty stores. Strong demand and limited inventory for vehicles caused elevated pricing for auto buyers. With minimal mask requirements, continued pent up demand to eat out and new eateries available, receipts from casual and quick-service restaurants were only surpassed by amounts reported during the summer in the City’s history. An increased number of commuters brought about a lack of supply having upward pressure on gas prices resulted in stellar gains from service stations. However, one-time revenue experienced in the comparison period pulled business- industry lower, partially offsetting the gains. Net of aberrations, taxable sales for all of San Diego County grew 14.7% over the comparable time period; the Southern California region was up 17.4%. TOTAL:$ 4,478,826 8.9% 14.7% 15.6% COUNTY STATE ENCINITAS 4Q2021 TOP NON-CONFIDENTIAL BUSINESS TYPES Q4 '21* EncinitasBusiness Type Change Change ChangeCountyHdL State 53.8%52.6%56.7% 370.4 Service Stations 66.4%70.4%39.5% 313.2 Casual Dining 1.5%2.8%13.3% 189.4 Sporting Goods/Bike Stores 0.6%-0.4%-3.6% 179.7 Grocery Stores 12.1%14.9%7.1% 168.5 Quick-Service Restaurants 18.7%19.5%35.9% 119.1 Specialty Stores 6.5%2.5%6.1% 118.5 Home Furnishings 27.2%34.8%10.0% 110.6 Family Apparel 16.7%23.0%13.2% 108.9 Fast-Casual Restaurants 2.1%2.1%-3.0% 93.8 Convenience Stores/Liquor *Allocation aberrations have been adjusted to reflect sales activity *In thousands of dollars REVENUE BY BUSINESS GROUP Encinitas This Calendar Year* 19% Pools 16% Restaurants 15% Autos/Trans. 7% Building 3% Bus./Ind. 24% Cons.Goods 7% Food/Drug 9% Fuel *ADJUSTED FORECONOMIC DATA SALES TAX UPDATECITY OF ENCINITAS4Q 2021 STATEWIDE RESULTS California’s local one cent sales and use tax receipts for sales during the months of October through December were 15% higher than the same quarter one year ago after adjusting for accounting anomalies. A holiday shopping quarter, the most consequential sales period of the year, and the strong result was a boon to local agencies across the State. Consumers spent freely as the economy continued its rebound from the pandemic and as robust labor demand reduced unemployment and drove up wages. Brick and mortar retailers did exceptionally well as many shoppers returned to physical stores rather than shopping online as the COVID crisis waned. This was especially true for traditional department stores that have long been among the weakest categories in retail. Discount department stores, particularly those selling gas, family and women’s apparel and jewelry merchants also experienced strong sales. Many retailers are now generating revenue that is nearly as much, or even higher, than pre-pandemic levels. Sales by new and used car dealers were also much higher than a year ago. The inventory shortage has resulted in higher prices that have more than offset the decline in unit volume in terms of revenue generation for most dealerships. Restaurants and hotels were only moderately lower than last quarter, with both periods being the highest in the State’s history. Increased menu prices coupled with robust demand to dine out are largely responsible for these gains. These are impressive results for a sector that does not yet include the positive impact that will occur later this year as international travel steadily increases at major airports. Conference business, an important revenue component for many hotels, is also still in the early stages of recovery. Building material suppliers and contractors were steady as growing residential and commercial property values boosted demand, particularly in the Southern California, Sacramento and San Joaquin Valley regions. Although anticipated interest rate increases by the Federal Reserve could dampen the short-term outlook for this sector, industry experts believe limited selling activity will inspire increased upgrades and improvements by existing owners. With demand remaining tight and calls for more affordable housing throughout the state, the long-term outlook remains positive. The fourth quarter, the final sales period of calendar year 2021, exhibited a 20% rebound in tax receipts compared to calendar year 2020. General consumer goods, restaurants, fuel and auto-transportation industries were the largest contributors to this improvement. However, the future growth rate for statewide sales tax revenue is expected to slow markedly. Retail activity has now moved past the easy year-over-year comparison quarters in 2021 versus the depths of the pandemic bottom the year before. Additional headwinds going into 2022 include surging inflation, a dramatic jump in the global price of crude oil due to Russia’s war in Ukraine and corresponding monetary tightening by the Federal Reserve. This is expected to result in weakening consumer sentiment and continued, but decelerating, sales tax growth into 2023.