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Road to more sales tax?
Building Atherton Drive gap could help citys bottom line
GPAC Meeting3 Agenda MeetingPacket

Manteca is “leaking” enough furniture and home furnishings sales to other communities meaning it is forfeiting Measure M public safety sales tax that could fund two thirds the cost of an additional police officer plus generate $203,000 in sales tax to support the general fund.
The retail leakage data cobbled together by De Novo Planning Group — the consulting firm updating Manteca’s general plan to guide growth for the next 20 years — underscores how critical a pending City Council decision is when it comes to whether the Atherton Drive gap between Union Road and Airport Way should get a higher priority for funding than the 120 Bypass interchanges at Union Road and McKinley Avenue.
It’s a question of too few dollars being available for a list of major road projects Manteca needs between now and 2040 that will cost $215 million as well as a question of chasing taxable retail dollars pegged at $72.5 million that Manteca residents are spending elsewhere. If Manteca could capture that $72.5 million that includes money lost from auto-related sales since the city lost the Chevrolet as well as Buick-GMC dealerships during the recession, it would add $725,000 in annual sales tax receipts for city coffers and $367,500 to pay for Measure M public safety positions.
Given Manteca’s strong residential growth averaging 300 plus new housing units a year, the leakage in the furniture and home furnishings category would seem like a high priority for the city to capture.
The city in the past has made strategic investments in infrastructure to secure coveted retail sales tax including Bass Pro Shops, Costco, and the Stadium Retail Center. The waterpark resort deal — should it materialize — would leverage significantly more room tax than the $1 million the city took in during the fiscal year ending June 30. A large chunk of that additional room tax that one scenario had at 15 percent and generating close to $4 million has been identified as a way to secure infrastructure needed to make a resort deal work.

furniture store looking
at Atherton Drive site
A developer has been working with a major furniture retailer that wants to build a 120,000-square-foot store in Manteca. The site the firm is interested in is along the 120 Bypass fronting the missing link of Atherton Drive that the City Council has repeatedly said it wants built. Funds were spent on environmental and other groundwork for the project in 2011.
Manteca consumers — based on growth and household income — have the potential to spend $16 million on furniture in a given year but existing stores are only capturing $7.3 million of that market according to DeNova Group. The gap for home furnishings is even bigger. Demand based on demographics is at $14.8 million a year while Manteca stores snare just $3.1 million in that retail category. As a result Manteca is losing out on $20.3 million that local residents are spending on furniture and home furnishings.
Despite the fact Manteca and the general region may be in a position to snare big and medium box retailers that like freeway exposure when e-commerce is changing retail due to growth and demographics, the city hasn’t spent much energy on helping lure them since the Stadium Retail Center effort more than a decade ago.
The city likes to note that it has unparalleled freeway exposure and access in the heart of the booming Northern San Joaquin Valley growth region. But retailers, like distribution centers, tend to go to areas where infrastructure such as roads is in place.
City Manager Tim Ogden has noted the recently revised road fee assessed on growth through the Public Facilities Improvement Plan gives the city more flexibility in how money is spent. Before money was collected by area and could only be spent on projects tied to that specific area. Now there is one fee that goes toward a list of needed projects.
The prospect of Manteca borrowing from itself — tapping into growth fees collected for various needs — to pay for road projects and then reimbursing the accounts as road growth fees are paid has been brought up as a possible strategy. Given the city gets a low return on the money on hand collected for specific purposes due to laws governing the risk level of how such public funds can be invested and the fact construction costs are now outpacing inflation, such inter-fund borrowing may make financial sense.
That said, what road projects go forward could have a big impact on the general fund’s bottom line.
The leakage data is contained in the land use and socioeconomics document that DeNova Group has distributed to the general plan citizens committee in advance of the next workshop on Nov. 6.

Overall, Manteca’s retail
leakage has stopped
DeNova relied on Environmental Systems Research Institute — a supplier of geographic information — to pull together Manteca’s demographics including its retail spending.
That data suggests overall — based on 2014 retail and food services taxable sales of $738 million that Manteca actually snares more consumer dollars than it should, based on per capita spending. That means Manteca retail and food transactions are $69.3 million higher than expected for the community based on population and household income. That means the retail leakage factor is 3.7 percent in the positive for Manteca. That compares to the mid-1990s shortly after Wal-Mart opened that a similar study placed the city at a disadvantage of losing 30 percent of its consumer tax dollars to other cities.
The biggest reasons for the reverse in leakage — Bass Pro Shops and Costco — was the result of sales tax dealings that Manteca negotiated to land retailers. DeNova’s data shows Manteca should have a demand of $136.2 million for general merchandise sales in any given year but actually had $332.4 million or a whopping $196 million more than would be expected in a city like Manteca. Again, that is based on more than 95 percent of Bass Pro Shops customers being from outside of Manteca as well as Costco bringing back Manteca residents dollars being spent at  Costco stores in Tracy and Modesto and luring consumer dollars from Lathrop and Ripon.
Manteca restaurants and other eating places enjoyed sales of $85.9 million in 2014, or $793,981 more that what spending models called for based on household income and population.
Between 2004 and 2014 based on Board of Equalization numbers, taxable transactions at retail and food outlets in Manteca increased 24 percent compared to 11 percent for the overall county.

To contact Dennis Wyatt, email