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Thursday, May 17, 2012
Feature: February 2009
Retail Therapy
Auburn redevelopment looks to recapture local sales tax
Story by Christine Stanley
Placer County and the city of Auburn are pouring more than $40 million into dozens of public and private projects they hope will transform the landscape — and tax base — of a rural region that’s losing retail dollars to neighboring markets. Plans call for the rerouting of Highway 49, streetscape improvements and expanded retail.
With the economy in the can, now is as good a time as any to get projects moving, says Auburn City Manager Robert Richardson. Construction costs are down, good employees are plentiful and Auburn needs to hold onto revenue it’s been losing to shopping destinations such as Roseville and Rocklin.
“Auburn is well under way into a renaissance, and because of strategic planning, we will continue moving at a very rapid rate, even during this economic period,” Richardson says. “Whatever is slowing in the private sectors will be matched by efforts in the public sector in Auburn.”
And there is plenty to do. In 2005, the city totaled $314 million in retail sales, and stores in north Auburn brought in $463 million. Meanwhile, its neighbors to the west, Rocklin and Roseville, brought in $560 million and $3.6 billion, respectively, according to a market analysis and commercial study prepared for the county in 2007.
There are eight major malls within 25 miles of Auburn, yet little retail in or around the city. Such a drought has led Auburn residents to spend $8 million annually, on average, on retail purchases outside their community. If that number seems low, it should: The market analysis by Marie Jones Consulting, a Berkeley-based firm, includes auto sales. If car sales, which had been strong until this year, are excluded from the retail leakage data, lost retail revenue increases to more than $51 million.
In fact, the Auburn area experiences retail leakage in every sector — dining, apparel, building supplies, furniture — except auto sales, which have historically brought in about $60 million annually. In 2008, four dealerships closed.
“People are going down the hill to do their primary shopping, and what you don’t find is a huge amount of vacancy around [anchor] stores. People try to move in for the second dollar,” Richardson says. “If we get a few more of those anchor stores in the foothills, it will elevate the commerce of the entire area.”
According to the Marie Jones report, the Auburn retail trade area has enough demand and population growth to support 300,000 additional square feet of retail through 2020. A Home Depot and proposed warehouse club will cover 95 percent of that space within the next few years, but would only meet the demand for building materials and general merchandise. The other 146,000 square feet in the pipeline would still be needed to meet demands for clothing, restaurants and home furnishings.
To reverse the leakage trend and encourage investment, the city and county have begun supporting private outlay with public backing. Together, they’re providing a mix of commercial loans, façade loans and grants.
“We also do a lot of project support and coordination to help things move forward through the regulatory and fiscal process,” says Richard Colwell, the chief assistant county executive officer.
The private response to such support has been swift. Placer County has worked out a 99-year loan with Home Depot, which is constructing a 129,000-square-foot retail center on 10.88 acres at First Street and Willow Creek Drive. The project, which absorbed about $21 million in private investment, is due to open in February.
“If we get a few more of those anchor stores in the foothills,
it will
elevate the commerce of the entire area.”
— Robert Richardson, city manager, Auburn
Down the street, Auburn Plaza Phase I, which was built in the summer and is now partially filled, spans 70,000 square feet and houses a Little Caesars pizza and Sleep Train Mattress Centers among other tenants.
Bernie Magnussen, owner of Magnussen’s Dodge Chrysler Jeep, purchased the property about 10 years ago with the intent to relocate his dealership. He later decided to remodel the existing dealership and redevelop the parcel for retail. The planning took eight years, but the $21 million project is now managed by Cornish & Carey leasing agent John Austin, who’s listing the space between $2.65 and $3 per square foot.
“It was a site that lent itself to retail, and Mr. Magnussen felt it was a good diversification,” says Hayden Stone, vice president of Magnussen Dealership Group. “Now it’s all about the anchor. They’re kind of the honey that attracts all the bees.”
A 30,000-square-foot second phase is slated for Auburn Plaza in 2010. That $9 million retail project is on the corner of Luther Road and Highway 49.
“We’re trying to replicate Douglas Boulevard in Roseville. It was a rural street from the freeway, but in the past 15 or 20 years, they have built a thriving retail and commercial center. There is a parallel,” Colwell says. “When you leave the city limits of Auburn on Highway 49 toward Bell Road, it’s rural. There was no theme to tie things together, and it wasn’t a very attractive area either.”
In addition, seven existing properties along Grass Valley Highway have invested $12.2 million in private funds and nearly $190,000 in forgivable government façade loans to upgrade and expand spaces, including Rock Creek Plaza, which added a BevMo and a Best Buy and is looking to remodel its K-Mart.
Planned projects that haven’t broken ground include Auburn Creekside, an $18.6 million retail center totaling 93,200 square feet; a 42,500-square-foot Target expansion; and a 6,800-square-foot tire and wheel store.
The county maintains a no condemnation policy and does not usurp property via eminent domain, so “less desirable” properties along the redevelopment corridor will remain in place until property values increase enough to entice a sale, according to Colwell.
Other plans for the corridor include the rerouting of a small section of Highway 49 that runs through Old Town. Essentially, the road swap between the city and Caltrans gets the highway out of Old Town and allows the city greater control over development, says Caltrans engineer Ben Bramer. The deal will cost the city $500,000. The legal process should wrap up around April, at which time the city can put beautification and redevelopment projects out to bid.
Across the city line, Placer County has three miles of Highway 49 marked for a phased rejuvenation that includes street widening, sewer maintenance, new sidewalks, lighting and landscaping. Caltrans is investing approximately $9 million in the project, and Placer County would contribute $865,000.
Within the 3.25-mile beautification stretch — from Nevada Street to Dry Creek Road — an additional $19 million in publicly funded infrastructure projects are under way. The highway improvements, say county authorities, are intended to complement and encourage the development and planning of more than 430,000 square feet of new retail along the corridor.
Such retail projects include a Home Depot, restaurants, clothing stores and a big-box warehouse center, such as a Costco or Sam’s Club, of about 155,000 square feet on 18.6 acres of what is now referred to as the Bohemia Retail Project. In 1996, the Board of Supervisors approved a Wal-Mart on the Bohemia site, but the unions filed a lawsuit against the center and sent it running. The land has been dormant since. County officials estimate a private investment of $23 million to get a similar project off the ground. So far, no one has stepped forward.
The funding and planning of so many projects has been made possible largely by the growth of the Placer County Redevelopment Agency. As the tax base swells, the agency can use its augmented revenues to make loans. Placer County has also been able to purchase bonds against its revenue — about $23 million.
Likewise, in September, the Auburn City Council and its members approved $6 million in bonds to finance public improvements for redevelopment.
“We’ll be investing a lot in the coming year. The (city’s) redevelopment agency has been relatively dormant since its inception in ’86, so we restructured and floated our first bond in October with an A rating,” says Richardson, who notes the bonds sold in just a few hours amid of one of the month’s worst economic days.
