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ORCHARD VALLEY READY TO BLOOM?
Deal still working well for Manteca
BEST BUY BUILDING1 12-24-16
Fitness Evolution is opening next year in the former Best Buy space at Orchard Valley. - photo by HIME ROMERO/The Bulletin

Bass Pro Shops opening in October 2008 was seen as a watershed event for the Manteca economy.
More than 7,000 people lined up for the opening ceremonies. Cars were parked miles away. By the time the four-day opening was over nearly 60,000 people walked thru the giant sequoia leading from the lobby to the sales floor.
JC Penney and Best Buy were opening in the following months. Store space was being built for smaller retailers with the expectation they would soon be filled.
While the economy was sputtering no one had any inkling that the housing crisis would drag it down to the point that it would earn the moniker “The Great Recession.” The smaller stores did not come.
In time Poag & McEwen shifted gears believing an outlet mall approach would work. That had limited success.
In time the recession and the changing electronics market would force Best Buy to close. Although the Manteca location was performing fairly well there were three Best Buy stores within 20 miles. Best Buy had to cut costs to stay afloat.
Just as spending slowed down, online retailing started changing the face of brick and mortar retail.
Today space is still vacant where developers envisioned another 20 plus stores. Free standing pads expected to have restaurants built on them are still vacant.
The 30,000-square-foot Best Buy is being remodeled into a Fitness Evolution Health Club. Another restaurant is getting ready to open.
While many residents are frustrated that the store spaces are empty and some city council members have questioned just how serious Poag & McEwen is about attracting new tenants, The Promenade Shops at Orchard Valley is far from a ghost center.

Bass Pro Shops still
packs them in
Bass Pro Shops still packs them in. The 16-screen movie complex and nearby restaurants on many nights are packed. JC Penney has a steady stream of customers. Getting a room at the Hampton Inn is next to impossible at times.
Poag & McEwen shared with the city earlier this year that they were shifting strategy looking at giving restaurant pads more visibility to 120 Bypass and Union Road traffic, securing a health club and working in another hotel.
While the lack of in-line store tenants and restaurants is a drag on Poag & McEwen’s bottom line it isn’t for the city.
To land the center and to help Poag & McEwen land the mega-regional draw tenant that Bass Pro Shops has proved to be even after additional stores were opened in Rocklin and San Jose, the City of Manteca struck a deal with the developer and not directly with Bass Pro Shops.

Deal insulates Manteca
from paying the piper
should things go south
Manteca is renting the 1,922 parking spaces for 35 years from Poag & McEwen.
The terms of that agreement calls for Poag & McEwen to get 55 percent of the local sales tax collected — excluding the public safety tax (Measure M) and county transportation tax (Measure K) — and the city 45 percent based on the first $1.1 million annually over a 35-year period. If it is less than $1.1 million, the city’s payment to Poag & McEwen is capped at 55 percent of the amount collected. If it more than $1.1 million the excess all goes to the city.
The maximum that Poag & McEwen can receive over 35 years is $18.5 million.  
Orchard Valley in its first full year with just JC Penney, Best Buy, and Bass Pro Shops in place took in close to $2 million in local sales tax with the bulk of it from Bass Pro.
Using $2 million that meant Poag & McEwen received $605,000 and Manteca $495,000. In addition Measure M tax receipts for the complex were $1 million.
As then City Manager Bob Adams noted at the time, Bass Pro would have gone wherever it got the best deal from the developer or the city. Well over 95 percent of Bass Pro’s receipts are from money not spent by Manteca residents. And if Bass Pro Shops hadn’t located here Orchard Valley would not have been built and there would be no Manteca JC Penney store.
While the deal enraged critics of “corporate welfare”, Adams was on target when he was quoted back in January of 2008 when he said, “(Manteca) is giving up 55 percent of what we don’t have. If we didn’t have a Bass Pro Shops, we’d get none of that revenue.”
That said the empty stores represent lost opportunity for additional sales tax. But the bottom line means Poag & McEwen is not going to receive anywhere close to the maximum $18.5 million under the deal.
And regardless of what Poag & McEwen does — even if it tries to sell the property — the city is a silent partner of sorts for the next 29 years as the parking lot lease agreement in exchange for the sales tax split stays in place.
The deal Manteca crafted means the city — unlike other municipalities that used differed deals to snare a Bass Pro — is not on the hook financially for anything at Orchard Valley on the outside chance it goes south.

Other cities weren’t as
careful as Manteca
Independence in Missouri floated $74 million in bonds for the construction of “The Falls at Crackerneck Creek” that is anchored by a Bass Pro Shops. In 2011 as the economy weakened the city found itself on the hook for $3.5 million in bond payments or 6 percent of their municipal budget. That forced the city to lay-off six workers and requires all the other remaining municipal employees to take unpaid furloughs in order to keep the city solvent. City officials had anticipated a sales tax bonanza but then the economy went south. Bass Pro Shops was generating decent sales tax but it wasn’t enough to cover the debt.
The Manteca deal isolated the city’s pocketbooks and put Poag & McEwen on the hook.
Adams — as the chief architect of the deal with Poag & McEwen — made sure that Manteca would never be put in the same position as Independence.
 
To contact Dennis Wyatt, e-mail dwyatt@mantecabulletin.com