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Restaurants serve larger piece of tax pie; retail remains flat

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Downtown Steamboat Springs is becoming more of a dining destination and less of a shopping destination.

That's the conclusion that seems to be supported by a recent analysis of city sales tax figures carried out by members of Main Street Steamboat.

"Miscellaneous retail" sales in Steamboat's downtown shopping district still are the largest single category -- 31 percent more than those generated by restaurants (based on sales tax receipts). However, Main Street's analysis of downtown sales tax shows that retail sales tax receipts have been essentially flat during the past six years. At the same time, sales tax receipts from restaurant sales have increased by 30 percent.

Miscellaneous retail includes everything from gifts to clothing.

"I really feel that the downtown retail has been hurt by the loss of downtown lodging," Dan Bonner said.

Bonner, treasurer of the Main Street board of directors, wears three hats in the business community. He owns Go-Fer Foods convenience store at Seventh Street and Lincoln Avenue, is a certified public accountant and is a real estate agent.

He said his convenience store lost business when the nearby Harbor Hotel stopped operating as a hotel several years ago. The nearby Nite's Rest Motel also went out of the lodging business within the past year.

"I lost a lot of customers," Bonner said. "When you have 100 built-in customers who turn over every three or four days -- those people would walk around at night and shop."

Bonner acknowledged that his observations at this point are purely anecdotal, and his convenience store could have felt the effect of closed hotels more than other businesses.

Longtime downtown retailer Ty Lockhart of F.M. Light and Sons said his business stays open until 10 p.m., but evening sales are down significantly during the past few years. However, the trend hasn't led him to conclude that it isn't worthwhile to stay open in the evening. He attributes the loss of evening sales to the scarcity of retailers who keep evening hours, and he wishes more stores would remain open to create a lively retail environment for the increasing number of restaurant diners.

Main Street's sales tax analysis could lead to a number of conclusions. For example, a portion of the increase in sales tax receipts attributable to restaurants could be because of the increased cost of dining out rather than a shift in consumer patterns

Main Street Executive Director Tracy Barnett said the number of downtown restaurants has increased by 22 percent in the past five years. The 1999-2000 dining guide listed 27 downtown restaurants -- the current number stands at 33.

Conversely, the failure of miscellaneous retail sales to grow could reflect the conversion of some retail spaces to professional office spaces.

Lockhart said the year that the Boggs Building (former hardware store) was empty could have made a temporary but significant dent in downtown retail.

The sales tax in the city is 8.4 percent, which includes 4 percent city tax, 2.9 percent state sales tax, 1 percent county tax and a half-percent collected on behalf of Steamboat public schools.

The city sales tax report separates sporting goods and liquor tax receipts from miscellaneous retail sales. Liquor tax receipts are down about 8 percent during the past five years, and sporting goods are up 3 percent. But even when sporting goods are added back into miscellaneous retail, and liquor is left out, retails sales have grown by only about 2 percent in the past five years.

Restaurant sales tax receipts in 1999 totaled $840,541. Five years later, that number had grown to $1.09 million. During the same time, miscellaneous retail grew from $1.43 million to $1.44 million.

The total of sales taxes collected from downtown business last year was a little more than $2.8 million.

Lockhart said there was a time when downtown saw a significant bump in business after 3 or 4 p.m. as skiers came off Mount Werner several miles to the east.

"We used to see a huge surge after the lifts shut down," Lockhart said. "We don't see that now. We've really noticed that over the years."

Lockhart said that although retail is a tough business, it would be misleading to suggest downtown businesses are doing poorly.

"I'm not so sure that staying even isn't good given the new competition that has come in," he said.

Bonner said Main Street Steamboat's Economic Res-tructuring Committee would like to work with the city to generate more detailed reports about how different categories of retail are performing. He acknowledged that the city couldn't produce reports in such detail that an outsider could deduce about how individual businesses are performing.

Barnett and Bonner agreed the sales tax analysis represents another tool for understanding the dynamics of downtown's economy.

"Main Street's goal is to educate all of us about where we are now so we can decide, 'Where do we want to go in the future?'" Bonner said.


-- To reach Tom Ross call 871-4205 or e-mail tross@steamboatpilot.com

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