At the current new housing rate of 350 homes a year allowed to
be built by the city, by the year 2010 there will be 6,890 more of
us living in Gilroy and more than 17,000 additional people in the
greater Gilroy area.
At the current new housing rate of 350 homes a year allowed to be built by the city, by the year 2010 there will be 6,890 more of us living in Gilroy and more than 17,000 additional people in the greater Gilroy area. This is reported in a study conducted by the Association of Bay Area Governments, and confirmed in an economic impact report by the economic research firm Sedway Group.
Sedway has just completed a study on how the proposed Wal-Mart Supercenter at Pacheco Pass Center would fit into Gilroy’s retail landscape, and our regional population growth is an important piece of the picture. The conclusion of the study is clear. We have a lot to gain and little to lose by welcoming a Wal-Mart Supercenter to our town.
None of this is a surprise to me considering that I was part of the original team that helped to create the development opportunities for the development of Pacheco Pass Center and the planned expansion of the Wal-Mart store. Our exact intent was to attract big box retail stores like Wal-Mart to that location and for them to bring their tax dollars and jobs!
The Sedway Group report shows that even in a worst case scenario the Supercenter would be responsible for appropriating 7.3 percent of sales from other retailers in the general merchandise category, and 4.2 percent in food item sales. While these impacts are low, the report goes even further. It states that because of population growth and the proximity of other big-box stores in the Pacheco Pass area, even these predictions exaggerate the impact to the smaller, independent Gilroy retailers and existing supermarkets that many are concerned about.
The regional population growth studied by Sedway is significant. It shows that in just two and half years every penny of the already minimal sales impact to Gilroy retailers from a Supercenter will be made up by increasing retail sales throughout the region. In other words, there will be enough customer dollars for all of our retailers because there will be more people shopping.
Safeway was clearly aware of the coming boom when it recently sought to expand by building another store in Gilroy in the south part of town. A recent land annexation denial by LAFCO has shelved the idea for now. The influx of new customers over the past year allowed Safeway and PW Marketplace to withstand competition from the new Costco, which incidentally is a much greater threat to local supermarkets than Wal-Mart ever will be, according to the report.
After all of the worry about how a Supercenter will effect downtown, it turns out that the store’s biggest competitors will be the other national big-box stores: Costco and Target. The report show that these two retailers are also the best suited to handle competition from Wal-Mart. I say let them go head to head by providing competing prices and jobs to our residents, and paying millions of dollars in tax revenues to the city each year. These are the benefits we anticipated when we were envisioning the Pacheco Pass Center five years ago.
Gilroy’s projected population growth is an immense opportunity for our community to grow and thrive. But we must also face the significant challenge of increasing our revenues to keep up with population growth to pay for things like new fire stations and emergency services. This Supercenter along with the other major retailers associated with the two new developments on Highway 152 will provide the services our residents need, and the tax revenues the city needs, to function properly.
Sedway predicts that the Supercenter project will bring in $856,000 a year to Gilroy in tax revenues, which is more than $300,000 above what the current Wal-Mart generates. If we don’t plan to get our revenues from stores like Wal-Mart and the others, we had better come up with something else quick.
Finally, as we look to the future I believe we must take a more holistic approach to the strength of our local economy, which is another reason why the Supercenter has always made sense to me. The Sedway report shows it will significantly boost Gilroy’s proportion of regional food sales, thereby “solidifying Gilroy’s position as the region’s dominant retail location.” This regional dominance will lead to an additional $16.5 million in general merchandise sales and $14.3 million in new food stores sales in 2010, according to the report. These revenues will benefit all Gilroy retailers and of course the city’s bottom line in tax revenues.
To someone whose job it is to encourage Gilroy’s future economic vitality, this is exactly the answer. As I have previously stated, the Wal-Mart Superstore is going in the right location, it will provide more jobs and revenue, and more importantly it will offer food products at a competitive and affordable price.
Guest columnist Bill Lindsteadt is the director of the Gilroy Economic Development Corp. A copy of the Sedway Group report is available in his office at 7471 Monterey St. for public review. Anyone interested in writing a guest column should contact Editor Mark Derry at 842-6400.
