Will Modesto welcome high-end retailers? City may pay to find out

Could Modesto’s shoppers support such higher-end retailers as a Nordstrom Rack, Ann Taylor’s LOFT or Cheesecake Factory?

That’s a question the city hopes to answer if it proceeds with paying a consultant $60,000 to conduct a retail and market study that would focus on opportunities for downtown, the east side, Sisk Road – home to Vintage Faire Mall, big-box retailers and the NorthPoint Shopping Center – as well as perhaps a fourth study area.

The City Council’s Healthy Economy Committee on Wednesday forwarded the proposal for consideration at the council’s March 1 meeting, but not before a discussion about whether the city can afford the $60,000. The city is looking at paying for the study from the surplus from its roughly $118 million general fund budget for its 2014-15 fiscal year, which ended June 30.

Chamber of Commerce Vice Chairman Steve Madison told committee members he was not weighing in on the merits of the proposal but said community members are bewildered by the city’s finances.

He said the city was saying it was in dire straits when it had a sales tax increase on the November ballot. Voters rejected the tax, but Madison said the city is now tapping its general fund to pay for police raises, to provide lodging and meals for the Amgen Tour of California cyclists and their teams, and this proposal. Madison told committee members the city needs to do a better job explaining its finances to the public.

Madison’s bafflement grew Thursday afternoon when he learned the city had revised the 2014-15 general fund surplus from $2.1 million to $5 million. He said while it is good news the city has more money, he added: “From the outside looking in, it’s very bewildering. I don’t understand their finances, and this makes it worse.”

The Healthy Economy Committee members forwarded the proposal to hire a consultant for the market and retail study contingent upon there being sufficient funding for it. City officials will talk about the $5 million surplus later this month at the council’s Effective Government Committee meeting, and the audit results for the 2014-15 budget at the council’s Audit Committee meeting.

City spokeswoman Amy Vickery said this about the $5 million surplus in an email: “At this point, finance is still analyzing the results and working with new auditors. There were last-minute unanticipated audit adjustments that have citywide impacts, affecting multiple funds. The Effective Government meeting ... will provide a full analysis.”

Modesto is considering hiring the Buxton Co. of Fort Worth, Texas, for the market and retail study. A city report states Buxton has worked with more than 700 cities, counties, chambers of commerce and other organizations as well as more than 2,000 retail clients, including Trader Joe’s, Target and Lowe’s. Buxton Vice President Lisa McCay spoke at Wednesday’s meeting and said her firm’s California clients include Salinas, San Jose, Oakland, Bakersfield, San Bernardino and Folsom.

Closer to home, she said Patterson and Tracy are clients. Tracy Development Services Director Andrew Malik said his city is close to finalizing a contract with Buxton. Patterson City Planner Joel Andrews said his city contracted with Buxton in 2008 for a study to analyze Patterson’s retail market. “We were happy with what we received,” he said.

Modesto Community and Economic Development Director Cindy Birdsill has said bringing in more retailers would give residents more shopping choices and add to their quality of life. It also would bring in more sales tax revenue, which makes up a huge part of the city’s general fund budget and primarily pays for public safety.

Buxton goes beyond the demographic data – such as a community’s median income and educational level – that retailers typically look at when deciding whether to enter a community. It has an arrangement with Visa, which McCay said accounts for 60 percent of U.S. credit card transactions, to look at consumer spending.

Through this and other tools, Buxton looks at households’ disposable income, how often they go to movies, what magazines they subscribe to, where they shop and what they buy. It also would provide Modesto with information on who is coming here to shop and what they are buying.

Buxton also would survey Modesto’s retail market and the factors retailers consider when deciding whether to enter a community. Those include the community’s road network, crime rate and land available for retail development. Buxton would provide Modesto with a list of the top 20 retailers that are the best fit for the city and help the city contact them.

This story was originally published February 11, 2016 at 6:24 PM with the headline "Will Modesto welcome high-end retailers? City may pay to find out."