Grass Valley looks to recoup sales tax drop by keeping more business local | TheUnion.com

Grass Valley looks to recoup sales tax drop by keeping more business local

Christopher Rosacker
Staff Writer

With every swipe of your credit card to buy groceries, movie tickets, a meal, even to buy something online, someone is collecting information about where you live, your age and income level, what you are buying and much more.

“It’s very big brother,” joked Grass Valley City Councilwoman Lisa Swarthout at the governing body’s Tuesday meeting.

The City of Grass Valley wants to use that information to strategically grow and attract retailers, because area consumers spend more than $200 million annually to shop and dine elsewhere – plunging the city’s total annual sales tax revenue by more than $1 million since 2006, according to city figures.

The biggest destination for out-of-town shopping is to the “big box stores” many say would spoil the rural, small-town charm of western Nevada County.

“We understand the dollars that are leaving the community, what stores attract from outside, where are those sales gaps and how we can capitalize and increase your sales tax,” said Lisa Hill, vice president of Fort Worth-based Buxton Co., which was hired by Grass Valley to conduct a report on western Nevada County retail shoppers – including those who “go down the hill.”

Furniture, electronics, appliances, sporting goods and music stores were identified as products Grass Valley consumers are buying elsewhere.

Buxton is one of the largest nationwide purchasers of customer analytic data, spending more than $8 million annually from more than 250 different sources, Hill said, as she spoke before the Council at its Tuesday meeting.

The company has a $65,000, one-year contract to help the city choose locations for new stores, what new products to develop and where to launch them to fill unmet consumer demand.

“We look at how you spend your money, what it means and how we can align resources to that,” Hill said. “We’re essentially trying to create that incubator, keeping people here by providing the amenities they need and prevent them from going outside.”

That information is set to be available to the city, business owners and prospective businesses for a $1,250 a month fee (after the first free year) via Buxton’s computer marketing program.

“Unlike the census data, it is updated every week,” Hill said. “You get aggressive updates and are able to stay in front of a changing market … We’re able to organize relevant retail information in a detailed central data point and present that material electronically to the businesses and developers.”

Grass Valley’s largest consumer group is urban commuter families, which represent nearly 23 percent of the market, Buxton research indicates. This group is primarily upscale, educated baby-boomer couples and families.

Next in scope is upper-middle class professional urbanite retirees, representing nearly 15 percent of the market, according Buxton.

Young single conservatives, outdoor lovers, conservative middle-aged workers and empty nest country folk are all consumer groups that each comprise less than 10 percent of Grass Valley area market, the report shows.

“Marketing is no longer an option, it is absolutely necessary,” Hill said about attracting these groups. “We want to market your advantages; we now understand your consumers, the consumer potential. So we’re looking at public outreach … at making data available to develop the brokerage community, the property owners, merchants, commercial and industrial retail.”

Councilman Dan Miller asked who would handle the caseload of disseminating the Buxton’s SCOUT software information. Swarthout suggested some sort of partnership with the Downtown Association or the Chamber of Commerce could help.

As to who would have access to this information, Councilman Jason Fouyer wondered how data purchased with public funds would be restricted? In short, the answer is it has yet to be decided.

“We have a contract with Buxton that gives us access to their proprietary information and we’re entitled to get it, on their reasonable terms,” said Planning Director Thomas Last. “If they say that part of their database is not available to third-parties, that’s not an uncommon request.”

In March, workshops to show businesses how to use the Buxton data to become more economically viable are scheduled.

Council had previously asked that local business people be given the opportunity to provide goods and services that people go down the hill to buy, before chains are recruited.

In Grass Valley’s 2005 third-quarter financials, autos and transportation as a business group was the largest contributor to Grass Valley’s sales tax base. For that same quarter in 2011, fuel and service stations are the largest contributors with autos and transportation coming in a distant fifth place.

“There is some angst about this process because it is largely used to as a recruitment tool for communities,” Swarthout said. “But we want to make sure our retail business community understands that the focus for Grass Valley is to look at unmet needs … but first and foremost to help our existing businesses.”

The loss of large-scale businesses in the last five years, notably auto dealerships, has taken a huge toll on local sales tax revenue.

In 2006, Grass Valley garnered $3,897,438 in sales tax. But with the loss of Grass Valley Ford Lincoln Mercury Nissan, Jim Keil Chevrolet and the Weaver Auto and Truck Center – all of which were among the top 25 of sales tax contributors five years ago – the 2010 total was down to $2,899,173.

Sales tax revenue represents 50 percent of Grass Valley’s budget, Swarthout told a crowd of business owners and city stakeholders Tuesday morning.

Attracting a big box store has its challenges, too, Swarthout said, beyond any local business opposition.

“We don’t have a lot of available space in the community (for big box stores),” said Swarthout, citing zoning issues and a lack of open space within the city’s limits.

“There is going to have to be some policy decisions made by the City Council as to what we will allow in our existing areas, as far as having appropriate infrastructure or what we want to annex.”

The McKnight Way and Freeman Lane area, where Kmart is housed, is pointed to as a spot capable of housing a big box business, as well as the Glenbrook Basin.

Hill said recruiting a big business could take as long as six years.

The next step is to work with local businesses to determine which complementary business could be recruited to increase retail base, Hill recommended.

Beyond figuring out which area of commerce Grass Valley is not providing for its consumers, Hill said a targeted “shop local” campaign should be executed.

“People need to understand that when they shop or dine outside,” Hill said, “they are contributing to the leakage.”

To contact Staff Writer Christopher Rosacker, e-mail crosacker@theunion.com or call (530) 477-4236.


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