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City asks: Why aren’t more stores in Orchard Valley?

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POSTED July 18, 2013 12:58 a.m.

The Bass Pro Shop, AMC Showplace Theatres and Red Robin restaurant located in Manteca’s Promenade Shops at Orchard Valley are all among the top performers of their respective chains.

So why can’t Poag & McEwen fill vacant retail space at the 700,000-square-foot center where Bass Pro in October 2008 was the first store and had more than 5,000 people waiting for the doors to open?

It’s a question Manteca’s elected leaders would like answered.

And according to Councilman Steve DeBrum and city economic specialist Don Smail low-key discussions with three major players of the shopping center at Union Road and the 120 Bypass provided three different takes.

Smail indicated that Steve Craig  — the principal of Craig Reality that owns or manages outlet store centers throughout the West — Orchard Valley is “dying on the vine”. Poag & McEwen partnered with Craig Realty after the lifestyle center concept hit a brick wall with the start of the Great Recession. The goal was to use the nearly 3 million annual visitors to Bass Pro Shop that travel from as far away as 100 or more miles to create a complementary outlet mall in the in-line store space.

So far that effort has yield only three outlets — Guess, Vans, and the Banana Republic. The goal was to secure three dozen.

Smail said Craig believes the problem is with the stores as they aren’t orientated facing parking spaces such as at other outlet complexes. He also was critical of the city’s progress on a large electronic LED advertising sign that has been in the works for more than a year.

Josh Poag of Poag & McEwen is much more upbeat about the complex especially given the strong numbers of the top three performers. The loss of Best Buy last year didn’t concern the shopping center firm too much given it was part of a strategic move by Best Buy to reduce costs by closing stores in close proximity in the same market as they reformulated their marketing strategy. There are Best Buy stores in Tracy, Modesto and Stockton .

Poag is enthusiastic about plans for a Yosemite Visitors Center that the shopping center promoters believe dovetails perfectly into having Bass Pro Shop as anchor plus an emerging outlet mall. Poag & McEwen plans to install a public restroom complex that is critical for the development of such a center. The City of Manteca and the Manteca Visitors Center are working with the Yosemite National Park management to make  the visitors center happen.

Lee Associates, the firm just retained to market the available pads designed for restaurants, is bullish on the potential.

Orchard Valley’s four main tenants — Bass Pro, AMC Showplace, JC Penney, and Best Buy  opened just before the Great Recession hit. The in-line store space didn’t start becoming available until the housing market started collapsing.

Even so, Smail noted that just a mile down the road the Stadium Retail Center is almost 100 percent occupied with four of the stores there ranked among the top performers for their respective chains in all of Northern California. They are helped somewhat  by the nearby Big League Dreams Sports complex that is that organization’s most successful sports venue drawing over 450,000 paid spectators a year.

Smail told the City Council municipal, staff plans to have further discussions with the private sector entities to understand what the issues are and find out what — if anything — the city can do to help improve the chances of luring additional retailers.

It had been reported several months ago that four more Orchard Valley tenants are on the way with two opening before the upcoming Christmas shopping season and two in the spring of 2014.

While the city doesn’t have any money on the table per se, Manteca does have a vested  interest in the center’s success.



How the sales tax split works

That’s due to a sales tax deal that was brokered to get a Bass Pro Shop to locate in Manteca and not San Jose or Modesto. Bass Pro is now moving forward with a store in San Jose that is expected to open within the next two years.

It isn’t sales tax sharing as much as it is splitting sales tax that the city not only didn’t have but wouldn’t get unless they had a Bass Pro Shop. Then City Manager Bob Adams noted Manteca was “giving up (55 percent) of what we don’t have. If we didn’t have a Bass Pro Shop, we’d get none of that revenue.”

The specialty store has literally drawn sales tax out of the pockets of residents in Fresno, San Jose, Modesto, Walnut Creek, Hanford, Sacramento, San Francisco, Oakland and Palo Alto — to name a few communities — to help fund not just Manteca municipal services but to augment the city’s police and fire services through the half cent Measure M public safety sales tax. The half cent public safety sales tax generated at the center is not subject to the split deal.

It is sales tax Manteca would never have seen without the high profile Bass Pro Shop. It is estimated more than 95 percent of all Bass Pro transactions are to non-Manteca residents.

The deal has the city returning 55 percent of the sales tax generated by the mall — with pre-established caps — in any given year. That excludes, however, Measure K and the half cent public safety tax that Manteca retains 100 percent of all receipts.

In exchange the city got use the parking lot for park-and-ride lots, an emergency response staging area with helicopter landing capabilities, and for recreational activities. That now includes pursuing a bus staging area for Yosemite-bound buses.

The lease for the 1,922 parking spaces is for 35 years.

The developer is responsible for maintenance of all of the leased spaces at its sole expense. The developer also carries insurance covering the city.

Should mall sales in a particular year exceed projections, Manteca keeps 100 percent of all sales tax receipts above the 55% mall/45% city split. If it is less, the city’s annual payment is capped at 55 percent of the amount collected. If after 35 years the scheduled payments do not amount to $18.5 million, any remaining amount due by the city is forgiven.

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