Queen Creek revenue hangs tough during lockdown

Despite being prepared for the worst, revenue for the Town of Queen Creek was strong this past fiscal year, despite the COVID-19 pandemic and accompanying lockdown in the spring.

But with cases continuing to rise and the specter of future lockdowns looming, the town is faced with and uncertain future.

“We are just looking at the numbers that we have and assessing our performance, but we understand there’s a lot of uncertainty still,” said Kristin Stone, revenue analyst for Queen Creek during a presentation to the town’s Economic Development committee. “So, we’re definitely taking that forward to update our projections this winter to determine if we need to make any adjustments and then we’ll also use those and use all the information [from the previous fiscal year] for projecting out our next fiscal year and some of the fiscal years going forward.”

While the pandemic and lockdown dropped like a bomb on the national economy, Arizona held its own and Queen Creek did better than expected.

“We have definitely been keeping a close eye on our revenues over the past eight or so months, especially after we revised our revenue projections in March and April to take into consideration some of the impacts of COVID-19,” Ms. Stone said.

National factors that helped the state and Queen Creek included a generally strong stock market, historically low mortgage rates and federal stimulus dollars.

“We’ve definitely recognized that some economic sectors are being impacted differently by this pandemic, for example online sales, those are booming. A lot of people are spending their money online these days versus the leisure and hospitality sector, which is definitely being impacted pretty negatively. And we’ve also seen a greater loss of lower wage jobs, a lot of those in the service industries and leisure and hospitality, and so experts are definitely taking a look at how this will impact things going forward.”

In terms of unemployment, Queen Creek bounced back relatively quickly from the impact of the spring lockdown. In January 2020, unemployment in the town stood at 3.6%, but by April, the jobless rate had risen to 12.3%. By August, the rate had dropped to 4.9%.

“I took a look at preliminary numbers for September and they’re around 5% to 5.4%, so still lower than a couple of previous months, which are just fluctuating a little bit month to month,” Ms. Stone said.

Unlike the Great Recession, fewer jobs were lost in the spring lockdown in the state and recovery is expected to be faster.

“In the Great Recession, there were about 314,000 jobs lost and it took 101 months to recover those jobs versus for the COVID recession, we’ve lost 295,000 but they’re projecting a job recovery period of about 16 to 24 months,” Ms. Stone said.

Nationally, statewide and in the Valley, various industries actually created jobs. But there was one constant: the hospitality and leisure sector was and remains hard hit by the COVID-19 recession.

“That’s definitely where a lot of people are spending their time and attention on figuring out what can be done to support those in that industry specifically,” Ms. Stone said.

Even in the COVID recession, housing remains a strong market due to population growth and lockdown concerns. This is true across the Valley, including Queen Creek.

“I think there was a lot of uncertainty when this started on how this might impact the construction and housing markets, but that recovered almost immediately to levels actually higher than we were seeing,” Ms. Stone said, adding that median single-family housing prices recovered and housing starts did better than expected.

When Queen Creek was adjusting revenue in March, Ms. Stoner said the town had projected single-family home permits but needed to adjust those because officials didn’t really have a good idea of what or how COVID would impact construction activity within the town. For fiscal year 2021, new housing start projections are around 700 and expected to grow steadily from there and recover.

The number already is growing. Queen Creek issued 742 building permits since the start of the new fiscal year in July through Oct. 31, Ms. Stone said.

“So the construction activity in the town in terms of residential construction and permits has been very strong and very consistent through 2021 so far, she said. “So, we are currently adjusting our single-family home permit projections in preparation for any adjustments in the mid-year or for a new budget for fiscal year 2022. So definitely already above that 700 number is a good sign.

While housing permits have been adjusted down for this fiscal year, they proved resilient for fiscal year 2020, even with the lockdown.

“We had originally projected about 1,350 permits and we didn’t adjust that because we were already right around that number when COVID-19 hit, so we didn’t feel like we needed to adjust that downward,” Ms. Stone said. “At the end of fiscal year 2020 we ended up with 1,750 permits.”

Ms. Stone attributes that to low mortgage rates and more people moving into the town because of comparatively affordable housing in Queen Creek.

Retail revenue also surprisingly did well given the lockdown.

“We saw that new Queen Creek retail businesses that opened in fiscal year 2020 generated about $400,000 in sales tax revenue,” Ms. Stone said. “So that $400,000 definitely helped offset any potential losses there were within that
retail category.”

As for brick-and-mortar businesses, specialty retailers such as pet stores, beauty-related stores and hobby-related stores were up 16% year-over-year. Automotive-related stores were up 12% year-over-year, home improvement and hardware stores were up 10% and general retailers were up 8%.

“The only store type that was down was apparel-related stores, which were down 12%, but a lot of those stores were actually closed during the pandemic because they weren’t labeled as essential businesses.”

The bottom line is Queen Creek’s revenue was better than expected in the year of the lockdown because of:

• High median-income households
• Population growth in and around Queen Creek
• More individuals shopping closer to home because they are working from home
• New businesses continue to open in Queen Creek
Legislation allows Queen Creek to capture sales tax from e-commerce
• Strong, new construction activity