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Manteca retail sales drop just 2.4%
California as a whole plunges 15% in 3Q comparisons
Shoes are put outside to entice customers at the Manteca Stadium Retail Center. - photo by Bulletin file photo
Manteca sales tax receipts dropped 2.4 percent in July, August and September of 2009 compared to the same three months in 2008.

The retail performance in Manteca contrasts sharply with California as a whole. The State Board of Equalization reported that third quarter taxable sales declined 15 percent in 2009 to 2008 levels. The 2009 taxable sales statewide in 2009 for July, August and September was $115.5 billion for a drop of $20.4 billion over the third quarter of 2008.

Manteca had $168,914,300 in taxable retail sales in the third quarter of 2009. That compares to $165,063,800 in taxable Manteca sales in the third quarter of 2008.

“We basically flat lined,” said Manteca municipal finance director Suzanne Mallory. “It is exactly where we projected it would be in our budget.”

That means the two biggest items that drove Manteca’s shrinking revenues - property tax and sales tax - have both stabilized.

“We have been pretty aggressive going after tax producers,” said City Manager Steve Pinkerton. “It shows the strength of Bass Pro Shops and the fact our auto dealers have stabilized and are improving.”

Pinkerton noted that JC Penney plugged in the hole left by the closure of Mervyn’s and that Best Buy replaced Circuit City. At the same time the opening of Costco in Manteca stopped $60 million in retail bleed of Manteca consumer dollars to the Modesto and Tracy stores and lured in consumer dollars from nearby communities. That means of the $600,000 retained that $330,000 or 55 percent of the one cent sales tax flows into the city’s general fund plus $300,000 in Measure M half cent sales tax to pay for police and fire services are going into Manteca’s municipal coffers. The other 45 percent or $270,000 of the one percent local general fund sales tax on the $600,000 goes back to Costco as part of a 10-year sales tax split capped at $3.7 million to entice the wholesale warehouse to build a Manteca store. The $3.7 million comes out of sales tax paid by shoppers buying items in the store.

Costco sales have been strong enough that the city’s obligation is expected to be reached about two to three years ahead of the 10-year target. Once the $3.7 million plateau is reached, 100 percent of all sales tax goes to the city.

Pinkerton added that the Dodge dealership ended up being absorbed by Cabral Chrysler Jeep Suzuki. Also the opening of J&M Equipment in the former Sexton Chevrolet site on Spreckels Avenue “will help down the road” when Manteca starts getting sales tax dollars from that operation. It is expected to ultimately be awash with what Manteca lost from Chevrolet sales.

The Bass Pro
sales tax deal
A split of future retail sales also helped Manteca land Bass Pro Shops.

The outdoors retailer was the target of a highly publicized courtship with Sacramento and was seriously looking at a site in Modest when Manteca - along with the private sector - started working quietly behind the scenes to lure Bass Pro Shops.

How Manteca landed what is turning out to be a platinum retail catch has everything to do with thinking out of the box. Bass Pro was looking for the best deal and project from developers. That meant the developer had to find a way to keep costs down to be competitive plus encompass an attractive design that met Bass Pro’s expectations.

Typically BassPro Shops - and their primary competition Cabellos - extract millions of dollars upfront from cities in order to locate in a community.

Poag & McEwen - developers of the Promenade Shops at Orchard Valley that Bass Pro Shops now anchors - struck a deal with the City Council.

At first, the majority of the council was reluctant. The idea of giving up 55 percent of the sales tax the lifestyle center that included Bass Pro Shops would generate capped at $1.1 million annually for 35 years made them uneasy. But as Mayor Willie Weatherford repeatedly pointed out, the city was giving up 55 percent of something it wouldn’t get if Bass Pro Shops and the rest of the lifestyle center did not locate in Manteca.

The deal struck means Manteca will give up no more than $38.5 million in future sales tax over a period of 35 years in exchange for leasing the parking lot for potential municipal uses. Critics have erroneously used a $60 million parking lot lease back number.

Critics pan the deal saying Manteca is giving up sales tax that would have supported the general fund. Pinkerton noted they miss the point that the bulk of it is sales tax Manteca never would have gotten without Bass Pro Shops and the 2.7 million visitors it drew to Manteca in 2009.

“We gave up a percentage of money that we wouldn’t have had if Bass Pro or Costco had not located here,” Pinkerton said.

The deal applies to all receipts from the Poag & McEwen center. But, as Bass Pro sales have demonstrated, the cap will ultimately be virtually covered annually by sales that Bass Pro draws in alone. That means virtually everything else in the center - the coming outlet stores, JC Penney, and Best Buy - will flow into Manteca municipal coffers.

Other cities have done similar deals but many, like Tracy invested the money up front in infrastructure to the tune of over $30 million to make the West Valley Mall possible. Tracy has since been critical of Manteca’s future sales tax split enticements

Tracy ironically put together a deal the same type that Manteca did get Macys to fill up empty space at the flagging West Valley Mall.

The impact - financially and psychologically - of Manteca’s Bass Bro Shops deal coupled with the Big League Dreams sports complex - has given Manteca a much more vibrant market. That is how Manteca peeled off a Dress Barn and a JoAnn Fabrics - two stores that closed in Tracy.

To understand the new world of retail, all you gave to do is look at Dress Barn. Chain retailers have switched from a strategy of blanketing markets to looking for locations that give them the most consumer drawing power. Dress Barn closed its Tracy store to move a location that was more central to the regional market.

Manteca has always had the location at the center of 700,000 plus regional consumers within a 15-minute drive to Stockton, Modesto and Tracy. It needed a major draw besides your typical national chain stores to attract consumers.