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Home My WebLink About06/28/2004, - 1. (AK) Isn't an economic impact report supposed to reach a numerical conclusion on impact effects, rather than just stating terms like "minimal or moderate?" Bottom line, what is the NUMBER that Downtown can expect to experience if the Marketplace is built: Based on Keyser's calculations, the number is 13%. If Kotin disagrees, what is his reasoning and what are the mathematics to back it up? 2. (AK/JK) If a Downtown business loses 13% of'its revenue and goes out of business as a result, won't this be a complete loss of that business and 100% of their sales. 3. (AK)Kotin makes the statement in response to Keyser's report: "Based on the current configuration and tenant mix, which eliminates Macy's and sharply reduces space available to small retailers, ADK&A is even more confident that there will be only a very modest impact on Downtown retailing." However, the developer has stated publicly that he will be announcing another fashion department store to replace Macy's soon and no changes to the configuration have been announced. Why do you think the impact is modest and what is modest? 4. (AK/City)Once entitlements are given, what legally restricts the current or a future property owner from leasing to say, a movie theatre? What control does the City have over this developer or future owner to control uses and sizes of tenants? 5. (City)Does the Council/staff believe that the two previous developments did not, in fact, impact Downtown? Isn't it true that the design of Central Coast Mall led to its demise? And if it had been designed "properly," wouldn't it have had a greater impact on Downtown than it did? 6. (City)Does Council/staff agree (or not agree) with the Downtown Association Strategic Plan, section 2.5, discouragement of specialty retail outside the Downtown, even though staff was a participant in its drafting and Council approved the plan? If 7. (AK)The stores proposed in the Marketplace are similar and in some cases inferior to stores already in place. Examples are Lowe's and Circuit City which don't typically do as well as Home Depot and Best Buy. You noted in your report that this (SLO) is a small market and these are big stores. If these stores fail, wouldn't this have a negative impact on the perception by customers/visitors that SLO isn't a very vibrant shopping area, especially with the Marketplace's high visibility from the freeway at the entrance to our City? 8. (AK)The developer of the Marketplace has already had a failed and bankrupt shopping center in this community. Was this taken into account in the studies done? Kotin's study says that if successful, this project will bring in new customers, benefiting everyone. Wouldn't a failed center be a detriment to the community? 9. (City/AK)Has the City performed due diligence on examining Kotin's conclusions based on the proposed tenant mix? Have leases been examined? The developer has announced tenants, such as Macy's, that were not under lease to generate buzz for the project. Was the Kotin update based on information presented by the developer which is unconfirmed and did this affect the conclusions? Isn't it true that once entitlements are issued, tenants and uses can be changed such that they will compete for Downtown's niche? 10. (AK/JK)Where is there an example of another community in which a large development, not in the downtown, has helped the downtown? Isn't it true that the typical impact of large non-downtown developments is to negatively impact downtowns? 11. (AK)If the Marketplace impacts Downtown's vitality, won't tourism be affected and won't the City lose bed tax revenue? 12. (AK)Have other scenarios been examined to increase sales tax revenues to the City? Couldn't some big box stores easily be located in Froom Ranch next to Costco and Home Depot? Wouldn't this be a better and cheaper option since there would be no need for a freeway overpass? Wouldn't this option pose much less risk for the City and Downtown and be true infill? Did you consider this option in your studies when you stated there wasn't room elsewhere for these stores if the Marketplace wasn't built? 13. (AK)Kotin states that the "balance of the space is accounted for primarily by subanchors occupying relatively large footprints which could not be accommodated in Downtown and for the most part do not directly compete with the Downtown merchandising mix which is focused on apparel." Why could these not be accommodated downtown?There are large footprint retailers downtown currently—for example, Ross Dress for Less, Barnes and Noble, or Copeland's Sports. Other large spaces could be created. Why would these large footprint retailers not compete with downtown. Many of them offer the same products as downtown retailers, including apparel. Kotin states "presence of large other anchor stores materially reduces the amount of competitive shop space" Again much of this type of retail competes with downtown. Why does Kotin believe this type of retail would not compete with downtown? Kotin concludes that the "project design is consistent with the Downtown Strategic.Plan's goal of discouraging other"main street"type projects." How is this conclusion made?This project is designed much like many other parking lot oriented "main street" type projects. For example Westlake Village Shopping Center in the city of Westlake Village has many of the same types of tenants and is similarly designed. 06/22/2004 14:32 FAX 2136133780 Sedway LA 1002 SEDWAV GROUP Real Estate and Urban Economics Wells Fargo Center 355 South Grand Avenue Suite 1200 June 21,2004 Los Angeles, CA 90071 T 213 613 3750 F 213 613 3780 Mayor and Members of sedway@sedway.com San Luis Obispo City Council 990 Palm Street San Luis Obispo,CA 93401 RE: Analysis of SLO Marketplace Dear Councilmembers: Sedway Group/CB Richard Ellis Consulting has been retained as the economic consultant for the developers of the proposed San Luis Obispo Marketplace project on the Dalidio property. We have been asked by William Bird to review the Keyser Marston Associates ("KMA'�report that indicated there would potential negative impact on Downtown retailers from development of the SLO Marketplace project. We note that the KMA report did not provide a thorough analysis of the retail marketplace in San Luis Obispo. It simply made assumptions as to the sales volume of the downtown retailers and applied a hypothetical allocation of competitive sales that would be taken from downtown retailers to claim"dramatic negative impact". KMA's report fails to note that Downtown San Luis Obispo is a unique entertainment,dining and shopping destination for regional visitors, students and local residents, while the SLO Marketplace project, with its freeway location is designed to be a convenient regional shopping center,that will draw shoppers from throughout SLO County with a unique mix of tenants. KMA's report also ignores the synergistic effect from combining many retailers into a cluster to create a regional draw. M ost everyone is aware of antique clusters,r estaurant r ows o r h ome design centers where dozens of similar retailers compete directly. They succeed because they are able to draw from a much wider market area than one or two stores. According to data from the California Retail Survey, in 2003 San Luis Obispo County retailers achieved $2.5 billion in taxable sales supporting approximately 10 million square feet of retail shop space. The SLO Marketplace potentially represents only 6 percent of the Countywide inventory. According to the same data, San Luis Obispo County residents only spend 75 percent of their total potential on apparel, general merchandise and specialty retail within the County ($700 million actual sales vs. $950 million potential). Thus,there is a leakage of$250 million in annual sales to Santa Barbara and other counties. The total estimated annual sales volume of the apparel and general merchandise tenants at SLO Marketplace is approximately $100 million, or 40 percent of the annual leakage,thus indicating no threat to the downtown merchants. Every mall developer understands that new retailers are necessary to create the excitement necessary to keep shoppers coming back. If San Luis Obispo loses Target and other new retailers to another location, your existing downtown tenants risk losing much more business, as regional shoppers have less reason to stop in San Luis Obispo. Given the long distances that many SLO County residents drive for special shopping trips, it is obvious that the shopping area that a Ca Richard Ellis Company 06/22/2004 14:32 FAX 2136133780 Sedway LA —` Q003 SEDWAY GROUP San Luis Obispo City Council Real Estate and Urban Economics June 21,2004 Page 2 provides the newest retail concepts with the greatest selection and diverse shopping experiences, will attract most of those shoppers. While this letter and its underlying analysis is not a definitive or comprehensive study, it does illustrate that the proposed development would provide a major revenue boost to the City general fiord and is unlikely to have significant negative impacts on the Downtown retail district. I will be attending the City Council workshop on June 280' to answer any questions you may have. Respectfully submitted, Thomas Jim sky Senior Ma ging Director