Kingsport Spirit

I was recently asked about the fiscal impact of a typical housing development on Kingsport’s sales tax revenue. Let’s consider a recent development with 77 single-family homes and 16 condos, totaling 93 units. Assuming a median price of $350,000 per home, a buyer would need an income of approximately $80,628 to afford this with a 5% down payment. Given the development is sold out, we know that enough buyers qualified.

Households typically spend 32% of their income on consumer goods like food, furnishings, clothing, personal care, and pharmacy—whether online or in-store. This amounts to $25,801 annually per household. At a sales tax rate of 9.75%, this generates $2,518 in sales tax per housing unit.

For 93 units, that’s $233,950 in new sales tax revenue annually for the city. By comparison, a typical casual dining restaurant, like Chili’s or Olive Garden, generates about $292,500 in local sales tax annually. So, a new subdivision generates as much sales tax as a new restaurant.

Over the past five years, Kingsport’s sales tax revenue has grown by 29%. While we often equate economic success with new stores, it’s important to recognize that housing developments also boost local sales through increased consumer spending at existing businesses.

As consumers seek communities with diverse retail and dining options, Kingsport strikes the balance of offering convenience without the scale of larger cities or the isolation of rural areas.

To understand the evolving retail and restaurant landscape, observe how businesses are adapting to new consumer behaviors—how many customers are picking up online orders in-store versus waiting to be seated? How many are opting for delivery or drive-thru pickup? These shifts, along with package deliveries to neighbors’ homes, provide insight into changing shopping habits—and all contribute to new sales tax revenue for the city.

In the past, having stores within city limits was the only way to generate sales tax revenue in Tennessee. However, with the rise of online sales tax, the focus has shifted toward new housing as a key economic driver. As this trend continues, it will become increasingly important to attract people to live in your city, not just shop there.