Craig Mayor Don Jones celebrates the grand opening of the city's Wal-Mart Supercenter this spring. Steamboat Springs city officials are again discussing the possibility of a big box retail store in west Steamboat as a means of curbing sales tax leakage.

Photo by Hans Hallgren

Craig Mayor Don Jones celebrates the grand opening of the city's Wal-Mart Supercenter this spring. Steamboat Springs city officials are again discussing the possibility of a big box retail store in west Steamboat as a means of curbing sales tax leakage.

City: Big box, big dollars

Planners say Steamboat can't lose large retail revenue

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Katie Searcy, left, helps Michael Calhoun, of Craig, at Wal-Mart Supercenter in Craig.

— Wary of the damage a big box retailer outside the city limits could wreak on city finances, Steamboat Springs officials are studying how to fit a super store into the west of Steamboat area that has long been planned for city expansion.

The threat of, for example, a Home Depot in Hayden is the resulting unprecedented sales tax leakage from the local economy, already an issue for the city's revenue stream.

"The impact of leakage is huge," Interim City Manager Wendy DuBord said last week. "What happens if you get a large-format retailer outside the city limits? You're exacerbating the leakage problem we already have. It could be very damaging."

Leakage, in this context, refers to the dollars Steamboat residents spend elsewhere. City planners have long bemoaned the loss of local sales tax revenue to Internet shopping and visits to Silverthorne, for example. Although Steamboat officials have not decided to welcome big box retailers as a way to combat leakage, they have decided to plan for the eventuality.

DuBord's comments reacted to direction Steamboat Springs City Council gave Planning Services Manager John Eastman on Sept. 2. Eastman told council he thought the city would be remiss if it didn't at least plan for the possibility that 15 or 20 years in the future, the community might desire a large retailer on the scale of a Home Depot or Super Target.

A majority of council members concurred.

Councilman Steve Ivancie said a retail component west of Steamboat is a necessity and a grocery is an obvious starting point. But he cited a need to think ahead.

In the future "we won't be the Steamboat we used to be, or even what we are today," Ivancie said. "We need to look at what we might need to be."

Going forward, Eastman was directed to pursue twin planning efforts for the area west of Steamboat, where future expansion of the city limits has been anticipated for more than a decade.

"If I could see only one plan, it would be big box," Councilwoman Cari Hermacinski said. "I'm very concerned about sales tax leakage."

Councilwoman Meg Bentley was the dissenter.

"If that big box happened to be a grocery store - I'm all over it," Bentley said. "But a Lowes or Home Depot is not appropriate in Steamboat Springs. It's not what we do best. There's nothing that shows that if we build it, they'll come."

Retail revenue

How much additional sales tax revenue could a home improvement super store generate for local government?

The city paid a consultant in economic planning to generate those numbers in December 2007.

A store of 100,000 square feet would see annual gross sales of $30 million, according to the study. Based on net new sales to the local economy, the city's 4 percent sales tax would generate $407,700 in revenue (the discrepancy is attributable to the percent taxable sales for contractor purchases). The half-cent sales tax for education, which the city collects for its Education Fund Board, would generate about $51,000 in revenue. Routt County also receives revenue from a local sales tax.

The numbers grew substantially when the consultant assumed a 125,000-square-foot general merchandise store. A store such as a Super Wal-Mart or Super Target could be expected to put up $37.5 million in sales and with 50 percent net new sales, dump $750,000 in sales tax revenue into city coffers.

Bentley said the volume of automobile traffic that could be generated by a big box west of the current city limits is of major concern.

Eastman acknowledged early traffic modeling efforts affirm Bentley's worries. It might even be enough volume to overwhelm four lanes on U.S. Highway 40, he added. But the combination of a Lowes and a Target store might also generate enough revenue to help the city address necessary improvements in the U.S. 40 corridor that would be needed even without destination retail. In an era when federal and state funding for highway improvements is dwindling, a portion of the big box tax revenue could be dedicated to backing bonded indebtedness for highway widening, for example.

The development dominating news west of Steamboat this year has been the Steamboat 700 project, which could add 2,000 dwelling units in the next decade and beyond.

The city has said it wants Steamboat 700 to be revenue neutral - in other words, to provide enough commercial activity within its boundaries to offset the cost of providing city services from snow plowing to police patrols.

However, Eastman said large format retail is not part of Steamboat 700's business plan.

"They don't desire it," Eastman said. "Staff will inventory big box sites," throughout the west of Steamboat area.

Just the same, Eastman said later this week, Steamboat 700 tacitly acknowledged, when it recently signed a pre-annexation agreement, that the city could require the developers to make a space for large-format retail within its 500-plus acres.

Public opinion

The city's decision to at least consider super stores as it plans future growth west of Steamboat comes against the backdrop of two recent efforts to gauge residents' enthusiasm for big box retail.

Vision 2030, a citizens' initiative seeking to preserve the "heart and soul" of the community, sampled public opinion on growth issues in an interim report that was just released and circulated in the Steamboat Pilot & Today.

Program manager Tammie Delaney said the interim report is just the first step in identifying the concerns of residents in all areas of Routt County. Residents were asked open-ended questions about open space, preserving community character and the local economy.

Of those responding to the Internet survey, 25 percent advocated altering present economic development patterns.

Within that subset, 67 percent advocated for managing growth. Some of those respondents called for "no big box stores."

However, the work of refining and characterizing the most essential qualities needed to preserve community character is just beginning, Delaney said. It would be premature to draw conclusions about how Vision 2030 respondents as a whole feel about big box, she said.

The city's Economic Development Assessment seems to show that residents' initial opposition to large-format retail stores reverses itself when the impact of the giant stores is mitigated.

When asked if large format stores should be allowed, 54 percent disagreed and 45 percent agreed. However, when asked if they were in favor of large-format stores only in certain areas, 57 percent were in favor and 41 percent were opposed. Similarly, 58 percent agreed to large format stores subjected to strict design standards, or if they were required to address community impacts.

When, not if?

The city has had a big box ordinance on the books since early 2006. It raises the threshold for permitting retail stores of 12,000 square feet or more by requiring them to provide public benefit. However, the large-format stores being contemplated this fall are of another magnitude.

Eastman was careful to tell council last week he wasn't looking for a definitive verdict on large-format retail.

"This doesn't imply a decision: yes big box, or no big box," Eastman said.

But it's clear the city is concerned about the revenue implications of a super store moving in outside city limits.

DuBord pointed out Steamboat Springs is more vulnerable to sales tax leakage because unlike some other mountain towns, it does not have a municipal property tax or real estate transfer tax to balance out its revenue portfolio.

"There's a growing awareness that Routt County is ripe for some form of large-format retail," she said. "It's the level of population, wealth and business activity. It may not be a question of if, but when and where," big box retail comes to Routt County.

Comments

Scott Wedel 6 years ago

I wish it was not the top priority of the SS council and government officials to figure out how to get more money.

I wish they would take some of that effort into not wasting money.

That whole Iron Horse situation is just an example of how governments tend to make bad decisions when they have too much money.

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Steve Lewis 6 years ago

Meg is right. A grocery makes sense out west. It could reduce traffic by serving our growing west end.

But the economic impact of a big box is not all good. Much more of the $ spent at a locally owned store recirculate in our valley. Plugging the cities sales tax leak with a big box creates another $ leak for the local economy.

They are old studies, but two studies in Maine and Austin TX each found that of $100 spent at a locally owned store, $45 goes back into the local economy. Of $100 spent at a chain, only $14 stays local. (Its the banking, bookeeping, management, etc. that they do elsewhere.)

And while a big box like Wal-Mart is cheap for tight budgeting, a slice of that savings comes on the backs of their employees, who tend to have poor wages and benefits. This can put a burden back on a community for things like hospital and police services.

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Fred Duckels 6 years ago

Long range planning by the city is necessary but our immediate concern should be our downtown area. It is and always has been the heart of the area. It is painfully slow watching how we make decisions. I am beginning to think that a major decision is out of the question. Politics in town tend not to offend anyone. Letting the voters decide,or hiring a consultant to tell us what we want to hear are the usual ways out. Downtown needs a lot of improvement to gain momentum and set the pace for a first class resort. The only way out of our indecision is for everyone to stand up, let our position be known , and discuss issues. Sometimes a little "fur may fly" but the outcome will be much healthier than the present leaderless lovefest . Our problem may be the desire for anonymity or self preservation in the community. Once politicians get into office I find conversation with them seems like chewing on cardboard. Lets all stand up and be counted. Dave Baldinger Jr. where are you?

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Ed Miklus 6 years ago

City Planners (whoever they are) should bemoan the city sales tax itself not its leakage. It is a regressive tax on local businesses and is counter productive to holding politicians' "feet to the fire" to run government efficiently. Tax my groceries at City Market, you've got to be kidding. It is not a tourist tax as it is purported to be but an all year around tax on locals that has a serious effect on the cost of living in the City of Steamboat Springs. Yes, and since we're still living in a free country we can express our feelings by driving out of town to purchase goods or let our fingers do the walking on the internet. Perhaps the city planners (who are they?) can come up with a "real" tourist tax. Politicians are good at wringing money out of folks especially tourists.

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JLM 6 years ago

The financial implications of retail development are real. Encourage retailers who are currently not represented and don't be fooled by traffic studies which characterize all traffic as "incremental." Hell, the traffic is already here but only now it will be going to another site.

If you allow Hayden to become the service retail hub for SBS, you will live to regret it and you will still have to pay for it.

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Malcolm_Reynolds 6 years ago

Hayden has the land to go big box retail. Since they are in the middle of the valley, they can draw from Steamboat Springs, Craig and Oak Creek. West Steamboat still will have the traffic of citizens leaving on their way to Hayden.

With CR 27 in better shape than CO 131, you won't have Oak Creek shoppers going through town they would take CR 27 that would relieve some traffic.

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mtroach 6 years ago

What you all forget to mention is the inpact on the locally owned businesses that a big box would have. Lowe's or Home Despot, would undermine the locally owned businesses that compete with them. Both of these home improvment warehouses, work to price themselves under local stores, and run them out of business. Good bye to the locally owned carpet, window shade, plumbing, and hardware stores, and hello to corporate america. Just like Wal-mart killed downtowns in the 80's, these stores will kill our locally owned hardware industry, and send the profit to elsewhere, while keeping pay low, and benifits at a substandard level. I this what our future holds? I hope not.

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Matthew Stoddard 6 years ago

Instead of just a big-box grocery store out west, we need a Super Target or something to that degree. That way, it could compete with WalMart for certain items AND have a full grocery store in it. The last grocery-only store didn't have enough stock to keep prices low enough to compete with Safeway or City Market. One multi-use facility has a better chance to do well, and WalMart really needs competition in some format. They have great prices, but little to no choices.

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Duke_bets 6 years ago

mtroach - 'low pay and substandard benefits'............I'm not sure I agree. Do the local stores offer any benefits? If they do, I highly doubt that they compare to Walmart or Home Depot benefit packages. What's a sales clerk make at the local hardware/lumber providers? Super Walmart pays over $14/hour if some experience comes with the employee. I'm not saying big box is the way to go, but they do come with many more job opportunities and some decent benefits for those that would otherwise go without.

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Steve Lewis 6 years ago

Matt, I agree that we've seen first hand how, once the competition is run out of business, Wal-Mart's selection peters down to crap. Take a walk in the store today and you find one of each cheap product. No competing products - no choice. But you do find a LOT of imports from China.

I'm not convinced that another super store will do more good, but I support a good grocery out west. So you may be right - a chain grocery is probably the way.

Duke, the new Craig Wal-Mart may be a new theme - but I doubt it. There's a ton of documentation that Wal-Mart has low, low wages and few employees ever reach the status required for their "benefit package". Pointing to the pay of a few managers avoids the sad Wal-Mart reality for the whole.

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Duke_bets 6 years ago

Steve - I'm not pointing to the pay of a few managers. The Super Walmart in Craig compensates pretty fairly across the board.

And, I can't support this statement with documentation (haven't researched and don't care to), but Duke bets that every full time employee at Walmart can receive benefits after 90 days.

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Matthew Stoddard 6 years ago

Steve- Unless a large company like Albertson's, City Market or Safeway could pretty much guarantee themselves enough clientele to have out there, it will be a store like Clarks/Curve Market. They couldn't compete due to not buying in higher bulk. This is why I think a Super Target or the like might work. Might even bring people who go to WalMart out there. This way, they'd have a full-service grocery in there, and satisfy the need for items that the west wouldn't have to drive all the way to WalMart for.

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papafu 6 years ago

A Super Target would definitely be a fine addition on the west end of town. The downtown businesses would still be able to cash in on the tourists, especially if the downtown were made to be more pedestrian friendly. If the whole process of bringing Target in and dealing with the downtown redevelopment were done as one, it might actually be better for all concerned. Geez, maybe we could hire some consultants to show us the way. Or maybe one of the numerous studies from the past that are gathering dust... Oh well, you get the point.

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Steve Lewis 6 years ago

Matt, I'll hope for the chain grocer.

Duke, The "full-time" Wal-Mart employee is actually rarer than you would think. They specialize in part-timers, thus avoiding the compensations.

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Duke_bets 6 years ago

Steve - The employee status at WalMart is not rarer than I think. That would be a typical business model of a company that size whose goal is profitability.

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