Mike Morowit wasn’t a happy camper when he heard the news back in 2006 that the Manteca City Council was doing a sales tax split to get Costco to build a store in Manteca.
Costco sells a lot of liquor and beer — the big items in Morowit’s Miner Mart Liquors store on West Yosemite Avenue.
Twelve years ago Morowit — like the other liquor stores in town — believed it would hurt them.
Costco has now been open for more than 10 years and their sales tax split deal is about to end. Morowit is still in business as are the other liquor stores that were back in Manteca in 2006. Target and Walmart are now selling beer. Within eight blocks of Morowit’s store four other sellers of beer and liquor have opened during the past decade. Meanwhile the city this year is receiving $400,000 in sales tax from Costco to pay for city services that would have been spent at Costco stores in Tracy and Modesto to the benefit of those respective cities. They also received enough Measure M sales tax to cover 2 plus public safety positions. Given the tax split will end this year, Manteca will keep all of the Costco sales tax next year that would come in at around $750,000 as well as Measure M sales tax.
On Tuesday, Morowit — who is now part of the city council — along with his colleagues will consider a proposal for a sales tax split to bring Living Spaces Furniture to Manteca. The store is projected to generate $35 million in annual sales when it opens along the 120 Bypass southwest of the Union Road interchange. The terms of the deal are a 50-50 sales tax split for 10 years or until $3 million is reached, whichever comes first. Unlike the Costco deal, Living Spaces will not be guaranteed to recoup 100 percent of the cost to build a location in Manteca. The city will get $175,000 in Measure M sales tax — enough for 1.3 police or firefighters.
It is safe to say furniture store owners in Manteca aren’t thrilled about the proposed deal.
Morowit noted sales tax split proposals that are advanced by city managers are done to secure regional draws that could locate elsewhere whether it is Lathrop in the case of Costco or the Bay Area in the case of Great Wolf.
Morowit notes Living Spaces is one such regional draw that will lure sales tax dollars from consumers in Tracy, Modesto, Stockton and elsewhere. He added they primarily sell their own private label furniture.
He doesn’t believe Living Spaces will hurt existing furniture stores in Manteca. If anything he believes it will help create traffic for the other furniture stores.
Morowit noted Costco with its tens of thousands of unique annual customers at its Manteca store had already hooked those shoppers.
‘When you are shopping at Costco, you are shopping at Costco,” Morowit said.
That said he notes Costco has limited selection, doesn’t keep their product cold, and has limited hours.
He believes existing furniture stores will sharpen what they have to offer that Living Spaces can’t offer.
Morowit noted since he’s been on the council a number of projects have been approved that will add more beer sales and such in Manteca.
He added that he did not vote against any of them because he was elected to make decisions that do right the city noting its not about what’s best for him or his friends.
Morowit believes deals that bring regional retailers to Manteca along with outside consumer sales tax dollars plus prevents local consumer dollars from going elsewhere is good for the city. It’s a way to collect revenue to provide city services that doesn’t involve imposing new fees in city taxes.
Such a deal, he added, wouldn’t be extended to the likes of BevMo that are a dime a dozen and are located in markets of certain sizes.
The flipside to the sales tax split argument is no one helped any of the existing merchants in town open their business by either helping them with a sales tax split to build a new store.
That said what if an existing business that could arguably snag more regional customers if they had a high profile location along the 120 Bypass, would the city entertain a sales tax split to help offset the cost of building a store along the freeway?
One possibility that comes to mind is Hafer’s Fine Furnishings. Given how most people shop for furniture having Hafer’s relocate next to Living Spaces would likely significantly increase Hafer’s regional sales. If you compare Hafer’s to most other furniture stores in the area, what they offer is unique.
Why not dangle a similar offer in front of Hafer’s for a 50-50 sales tax split up to 10 years if they build a new store along the 120 Bypass?
Perhaps Century Furniture, Manteca Bedquarters or American Furniture might be enticed by a sales tax split to build a new store along the 120 Bypass. Just like Hafer’s they already pull consumers from outside of Manteca to spend money here to help strengthen the city’s general fund. A more high profile location for any of the stores would definitely snag more regional consumers.
The $3 million question is whether the city would even entertain such deals.