N. Auburn Costco, Walmart could grab more Nevada County shoppers
April 20, 2013
It's Tax Day, and while Nevada County residents either already handled their own IRS dealings or are scrambling to do so, some local leaders are looking to North Auburn's two superstores poised for development and pondering their potential effects on local sales tax revenue.
"We've been aware of them working on those stores," said Grass Valley City Manager Dan Holler. "That will suck more sales tax dollars."
As a two-year effort to develop a Super Walmart on 18.6 acres off Highway 49 about two miles north of Auburn city limits shows signs of reconciliation, Placer County officials are moving forward with a Costco even closer to Nevada County.
"We are embarking, though we are only at the negotiating phase, for … the development of a CostCo," said Mary Dietrich, the assistant director of Placer County's facility services.
“As those types of stores move closer … will people go more often? There is a potential for that.”
— Dan Holler,
Grass Valley city manager
"Those negotiations are not completed, but Costco is doing its due diligence on site conditions," Dietrich said. "Optimistically, if everything can come together in terms of an agreement with county facility services for a lease agreement and if they can secure all environment review requirements and permits, they are looking at a 2016 timeframe."
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The Costco would be a close to 150,000-square-foot store on about 16 acres just south of Home Depot, which itself is an about 97,000-square-foot facility on about 10 acres of county-leased land, Dietrich said. Both areas are about a 25-minute drive from Grass Valley.
"This is certainly an opportunity" to bring in some retail, Dietrich said.
But where Placer County sees opportunity, Grass Valley could see more lost sales tax revenue.
"As those types of stores move closer, if it is 25 minutes away versus 45 minutes away, will people go more often? There is a potential for that," Holler said. "It has the potential to enhance that leakage of sales tax revenue."
On April 1, Grass Valley's sales tax measure went into effect. It added a half of a percent to Grass Valley's rate, bringing the overall rate up to 8.125 percent. Grass Valley estimates its tax will garner $2.4 million annually.
Since the economic downturn, Grass Valley's estimated more than $10 million general fund is $1.5 million lower than its fiscal year 2007-08 peak at nearly $11.56 million. Nevada City has lost $487,000 from 2008-09 levels, according to its city documents.
A 2011 retail sales and surplus analysis indicated that the Grass Valley area loses more than $200 million dollars annually in retail sales leakage to other communities, such as Auburn, Roseville and Sacramento, according to Texas-based Buxton Company. The report was part of a Buxton contract with Grass Valley for $65,000.
Part of analyzing Buxton's information touches on a local debate about whether to attract "big box" stores to the area or if such retailers would spoil the area's small-town feel and put local shops out of business.
Also in 2011, Wal-Mart, the Arkansas-based retail giant, purchased property on Luther Road and Highway 49 in North Auburn for $10 million to build a 155,000-square-foot store, according to The Union's archives.
The site once housed a lumber store, which has spurred the Alliance to Preserve the Auburn Community Environment to push for further soil tests before Walmart moves forward with its planned super center — a battle that has raged for two years.
The group appealed a March 2011 Placer County Superior Court decision to allow the development, stating it does not meet environmental standards. Since then, several decisions have been made and appealed with Walmart recently voluntarily agreeing to a state Department of Toxic Substances Control's testing of the site, the Auburn Journal reported.
The new store would include many of the same everyday household items expected from a Walmart store along with a full-service grocery department, a bakery and a deli, according to the website auburnwalmart.com.
"One of the things we try to do to combat losing business to those larger companies is to work on customer service as much as we can," said SPD Markets co-owner David Painter. "We also make an effort to give back to the community."
While Painter said his business hasn't seen such drastic impacts to its bottom line by Nevada County residents shopping "down the hill," he can't guarantee that future stores won't siphon away shoppers.
"It depends on how close they get to us," he said. "With the new ones that are built closer in Auburn, we may see some impact … There isn't a whole lot you can do about these issues proactively. You just kind of wait for them to happen and deal with them."
While Grass Valley can't do much to dissuade big box stores in Auburn, it can provide zoning to allow businesses to grow or move to town. The city is currently working to annex and re-zone more than 400 acres along its southern border to foster industrial use — a move its proponents say will lead to jobs. The site was once eyed for retail purposes.
The city is also adding an interchange to Highway 49 at Dorsey Drive, a move touted to have the benefit of fostering economic development at a planned development on La Barr Meadows and around Sierra College as it would give companies easier access to a main road.
"We have had leakage forever because we don't have a huge retail base," Holler said.
"Whatever type of shopping opportunity can we provide to offset (has been) the crux of the study work we have undergone," Holler also said.
To contact Staff Writer Christopher Rosacker, email firstname.lastname@example.org or call (530) 477-4236.
Editor's Note: A reference to a 2009 report from Loyola University in Chicago on the effects of a Walmart on a community has been removed from this story because its veracity has been disputed.