Downtown cash floods into city coffers

Merriment is a moneymaker in downtown Modesto.

The city gained $1.3 million in its last budget year from sales tax revenue from its downtown restaurants, clubs and hotels. That's an increase of $100,000 over the previous year.

"This is a huge economic engine and we need to make sure we keep it going," said Joy Madison, president of the Modesto Chamber of Commerce.

Extra revenue from the city's entertainment center contrasts with a general decline in Modesto sales tax revenue, including other industries downtown.

Modesto collected $5.9 million from sales tax from its downtown, a drop of about $200,000 from the 2005 budget year, according to information the city provided to The Bee in response to a California Public Records Act request. Modesto's total sales tax averages about $30 million a year.

Businesses in the automotive, furniture and housing-related industries tended to earn less money last year, which accounted for most of the overall decline in downtown sales taxes.

City Finance Director Wayne Padilla said those were the same industries dealt setbacks by a wider economic downturn in the San Joaquin Valley, losses that have Modesto looking to cut its budget this year.

He said the downtown revenue showed it was a maturing neighborhood benefiting from innovative restaurant and club owners, though he'd like to find a way to draw more retail stores to the area.

Modesto gets a penny for every dollar spent in the city. Downtown businesses last year also delivered $685,371 in hotel taxes to the city's coffers, as well as $608,447 in mill taxes, which are based on a company's revenue.

"Numbers show that the downtown economy is vibrant and not affected as much as the rest of the city's economy by the economic downturn," City Councilman Brad Hawn said. "These numbers do not include the effects of the Gallo Center for the Arts opening, so I would expect them to be even stronger next quarter."

A number of downtown business owners echoed Hawn's remarks.

"Even though housing prices have gone down, there's still money that's going to be spent downtown because of all the entertainment options we have," said attorney Bart Barringer, who is trying to build a condominium tower with partner Jim Mayol on the site of their law office at 14th and J streets.

$500,000 for police overtime

Chris Ricci, general manager of the Fat Cat, said the revenue showed the city should be careful while it considers changes that could restrict downtown entertainment providers.

A city advisory committee is looking at ways to make down- town safer, and is expected to write a draft of a new entertainment ordinance by December. Hawn is a member of that advisory group.

"The city needs to focus on entertainment as a growth area and develop it," he said. "Right now, the city is only interested in 'controlling' it."

Police have said they are concerned about nightclubs consuming too much of their resources, accounting for nearly $500,000 in overtime spending last year. The department initiated the talks on the new safety plan seeking a comprehensive approach to managing downtown.

Major public projects, such as the 1988 construction of the $29 million Modesto Centre Plaza and adjoining Red Lion Hotel, spurred downtown's redevelopment, said David Boring, owner of a 14th Street advertising agency.

Now he'd like to see the downtown's rising popularity give a lift to all of the neighborhood's businesses.

"I want to see all of them be able to flourish and all of us have to be part of that process," he said. "It can't just be a downtown that only serves one segment of the population -- it's just trying to find that right balance."

Bee staff writer Adam Ashton can be reached at aashton@modbee.com or 578-2366.