Editor, Manteca Bulletin,
I’m writing about the city’s potential sales tax split with Living Spaces Furniture as an enticement to get it to locate one of its stores in Manteca. According to Dennis Wyatt’s recent column, the 50/50 sales tax split will last until Living Spaces gets $3 million or for 10 years, whichever is reached first. He states, “The store is expected to generate $35 million in taxable sales annually.” So the 1% share of sales tax that the city gets would then be split with $175,000 going to the city and Living Spaces getting the other $175,000 per year. With the $3 million figure thrown in there, Living Spaces must either be projecting an increase in the sales tax rate or significant sales growth for its business within 10 years.
I have nothing against Living Spaces opening here, but I take issue with the 50/50 sales tax split. Readers may recall that I am skeptical of tax sharing deals that the city so freely gives out. However, at least with the deals reached with Bass Pro Shop and Great Wolf, the businesses were unique to not only Manteca, but the surrounding areas as well and a big draw for Bay Area shoppers. Yet there are several Living Spaces stores already located in the East Bay Area (Fremont and San Leandro, among them) so the store in Manteca will most likely not attract Bay Area buyers. Modesto has an impressive abundance of furniture businesses, so it’s hard to imagine Living Spaces siphoning off Modesto dollars. Lathrop has as Ashley Home Furnishing showroom/warehouse store which will be in direct competition with Living Spaces. Then what exactly is so special or unique about this particular furniture store that it rates a 50/50 sales tax split deal?
Living Spaces will probably be relying on the building boom in South Manteca to fuel its sales. This new home market will be the same target area for the existing furniture stores in Manteca. If they lose customers and sales to Living Spaces, they will pay less sales tax and the city’s 1% share would be adversely affected. Competition among businesses is normal and to be expected, whether it’s fast food franchises or retail stores. But it is a slap in the face to Manteca’s established furniture stores for the city to give Living Spaces a sweetheart sales tax deal to open its store here, to the detriment of these existing businesses. That gives Living Spaces an unfair advantage. Unless the city is willing to level the playing field by giving all current Manteca furniture stores the same type of 50/50 split deal, it should reconsider and retract its sales tax split offer to Living Spaces.
Living Spaces is welcome to open in Manteca, the same as any other business, without the tax incentives. Otherwise, the “Family City” will soon be known as the “city of big business tax deal giveaways”.