feia-final-deer-cree..

Transcription

FISCAL AND ECONOMIC IMPACT ANALYSIS
FOR
PROPOSED DEER CREEK VILLAGE SHOPPING CENTER
IN PETALUMA, CA
Prepared for:
City of Petaluma
Prepared by:
Bay Area Economics
January, 2009
Table of Contents
Executive Summary .............................................................................................. i Background and Study Purpose ........................................................................................ i Key Findings ..................................................................................................................... i Introduction .......................................................................................................... 1 Background and Study Purpose ....................................................................................... 1 Project Description........................................................................................................... 1 Approach .......................................................................................................................... 2 Population and Employment Overview .............................................................. 3 Definition of the Trade Area ............................................................................................ 3 Population Trends ............................................................................................................ 5 Household Trends ............................................................................................................ 6 Employment Trends ......................................................................................................... 7 Summary of Demographic and Economic Overview ...................................................... 7 Retail Sales Analysis ........................................................................................... 9 Overall Retail Sales .......................................................................................................... 9 Per Capita Taxable Retail Sales ..................................................................................... 12 Building Materials Stores............................................................................................... 13 General Merchandise Store Sales .................................................................................. 14 Home Furnishings and Appliances ................................................................................ 15 Restaurant Sales ............................................................................................................. 18 Apparel Stores ................................................................................................................ 18 Food Stores .................................................................................................................... 19 Other Retail Outlets ....................................................................................................... 20 Retail Sales Elsewhere in the Trade Area ...................................................................... 21 Leakage Analysis ........................................................................................................... 23 Major Competing Retail Stores and Nodes in Petaluma ................................................ 26 Summary of Retail Sales Analysis ................................................................................. 31 Retail Impacts Analysis ..................................................................................... 33 Estimated Sales in Proposed Project .............................................................................. 33 Capture of Leakage by Proposed Project ....................................................................... 34 Capture of Sales from Outside the Trade Area .............................................................. 36 Capture of Sales from Other Outlets in the Trade Area ................................................. 36 Impacts of Proposed Project on Petaluma’s Retail Environment .................................. 40 Opportunities for Renewal and Growth ......................................................................... 40 Potential Negative Impacts of the Proposed Project on Existing Retailers.................... 40 Potential Cumulative Impacts ........................................................................................ 44 Summary of Impacts on Existing Retailers .................................................................... 44 Employment Impacts ......................................................................................... 47 Employment ................................................................................................................... 47 Wages and Benefits ........................................................................................................ 50 Summary of Employment Impacts................................................................................. 52 Fiscal Impact Analysis....................................................................................... 53 Overview ........................................................................................................................ 53 Projected General Fund Revenues ................................................................................. 54 Projected General Fund Costs ........................................................................................ 60 Projected Net Fiscal General Fund Balance................................................................... 65 Non-General Fund Revenues and Costs ......................................................... 66 Development Impact Fees .............................................................................................. 66 Other Public Revenue Benefits ...................................................................................... 68 Public Contributions to Proposed Project ...................................................................... 69 Summary of Non-General Fund Revenues and Costs.................................................... 69 Appendices ......................................................................................................... 70 Executive Summary
Background and Study Purpose
The City of Petaluma has received a proposal for the Deer Creek Village development, an
approximately 315,000 square-foot mixed-use center comprising retail, a health club, and office
uses on the west side of North McDowell Boulevard to the south of Rainier Avenue. The retail
in the project as currently proposed includes a large Lowe’s home improvement center, and
other tenants in space ranging up to approximately 50,000 square feet.
Concerned about the size and scope of potential large-scale commercial developments in the
City, Council passed Resolution No. 2008-189 N.C.S. requesting the preparation of a Fiscal and
Economic Impact Analysis (FEIA) for projects such as Deer Creek Village, to address issues of
concern to the City and its citizens. These concerns fall into three areas: (1) impacts on the
retail market and other retailers in Petaluma; (2) types of employment generated, including
likely wages and benefits relative to a living wage; and (3) fiscal impacts, comparing revenues
generated with costs of services required by the new development.
Key Findings
The leakage analysis indicates that Petaluma and the Trade Area are significantly under-retailed
in many major retail categories. Deer Creek Village has the potential to capture a sizable
portion of these sales, which are resident expenditures currently going elsewhere. While there
is the possibility of some disruption for existing retail outlets, growing overall retail demand
linked to the area’s gradual population growth should allow for eventual re-tenanting of any
short-term vacancies.
Deer Creek Village should result in a net gain in retail employment estimated at 361 retail jobs
in 2011. Within the project, there are projected to be 510 permanent jobs, with 409 of those in
the retail sector. Sales losses at current retailers are estimated to lead to a loss of 48 retail jobs
in existing retail outlets in 2011. By 2016, however, overall retail sales at existing outlets as a
group would be above 2008 baseline levels, leading to overall retail employment also above
baseline levels, although in some retail sectors existing stores would still have lower
employment than in 2008. The permanent jobs in the project will be a mix of full and part-time
typical of retail employment. The Proposed Project is also estimated to generate 331 temporary
construction jobs,
Lowe’s reportedly pays competitive wages that are set at or above the market average, and
offers a range of benefit packages. Starting wages for some new hires in some components of
the project could be below the City’s official Living Wage levels, but Deer Creek Village’s
employment structure would not necessarily provide lower wages or benefits than are normally
found for retail workers in the area. Average wages in Sonoma County for most of the typical
occupations in the project are above Living Wage levels.
i
Taking into account local tax and fee revenues generated by Deer Creek Village and city costs
to provide services, the project will generate an estimated net fiscal surplus of approximately
$681,000 annually to the City of Petaluma General Fund, owing largely to the sales taxes
generated. This surplus could have a relatively significant positive impact on the City’s overall
fiscal position. The City has no plans to make any public contributions to assist in project
development, and development impact fees estimated at $9.2 million should cover public costs
associated with the project. Because of its location in a redevelopment area, Deer Creek Village
will also generate property tax increment revenues estimated at $311,000 annually which the
redevelopment agency can use for improvements in the area and to provide affordable housing.
In more detail, the findings are as follows:
•
Based on the location of competitors and the distance from which the anchor tenant
Lowe’s can be expected to draw the majority of its customers, the Trade Area is
assumed to include the City of Petaluma and surrounding areas in southern Sonoma
County extending east and including the City of Sonoma. The store may also draw
some customers from northern Marin County, which is lacking in a warehouse-style
major chain home improvement outlet.
•
The Trade Area is characterized by gradual population, employment, and income
growth over the long term. While the economy is currently in recession and extremely
unsettled, the Bay Area continues to see high housing demand, and Sonoma County has
not been as impacted as some other areas of the state by the crisis in the housing
market. The moderate population, household, and income growth all indicate that upon
recovery, retail sales are likely to grow over the long term, with increases in purchasing
power in Petaluma, the Trade Area, and Sonoma County.
•
Petaluma and the Trade Area are losing retail sales to other communities for the
categories of General Merchandise Stores, Food Stores, Home Furnishings and
Appliances, Building Materials (the category encompassing the anchor tenant Lowe’s),
and Other Retail Outlets.
•
Overall, “on the ground” retail conditions in Petaluma appear relatively healthy; there
are few vacancies, although the recent closures of Mervyns and Shoe Pavilion and the
impending closure of Yardbirds Home Depot will cause a rise in vacancy rates.
Limited new retail development in Petaluma in recent years has constrained the retail
market and kept vacancies low.
•
At stabilized performance levels, the Proposed Project will achieve estimated total
annual retail sales of approximately $82.7 million. Sales at Lowe’s will constitute the
largest share, at slightly above 40 percent of this total.
ii
•
Much of the new retail space in Deer Creek Village would be supported by recapturing
Trade Area resident sales currently going to other communities, especially in the
building materials store category. Some shoppers from outside the Trade Area will also
shop at the Proposed Project, for example, Novato residents wishing to frequent a large
home improvement center who might otherwise go to the Home Depot in San Rafael.
•
Deer Creek Village will also capture some sales from existing local retail stores. For all
retail sectors, this capture will lead to a net loss of $2.7 million, or less than one percent
of the 2008 baseline for overall retail sales at the existing outlets. Over time, these
losses will be offset by sales by generated through the overall gradual growth in
population in the Trade Area.
•
Existing apparel stores and home furnishings/appliance stores may continue to have
lower than baseline sales, but overall demand increases in the Trade Area indicate the
potential for re-tenanting by other retail types of any vacated space.
•
Yardbirds Home Depot, which was the closest equivalent to Lowe’s in Petaluma, was
slated for closure subsequent to BAE’s analysis, as this report was already under
review. Orchard Supply Hardware, Tomasini’s Rex Ace Hardware, and M. Masselli &
Sons, the remaining major competitive stores do not carry same the broad mix of
products as Lowe’s, and they operate in a slightly different niche, especially with
respect to conveniences and service. The analysis indicates that the sales losses would
not lead to the closure of additional building materials outlets in Petaluma.
•
Based on their anchor tenants, East Washington Place (the other large project currently
under consideration by the City) and Deer Creek Village are targeted toward somewhat
different and complementary retail niches, and even slightly different geographic areas.
This will lessen any cumulative impacts in Petaluma, as the two projects recapture
resident retail expenditures in different market segments. While individual outlets
might be impacted, the overall capture of existing market share is limited such that the
overall retail market should be able to absorb these projects without the prospect of
long-term closures for existing retail outlets.
•
While some sales may be captured from existing outlets, the project should result in a
net increase in the number of stores and in overall retail sales in Petaluma.
•
Deer Creek Village is estimated to result in a net gain of 361 retail jobs in the Trade
Area in 2011. The Proposed Project is estimated to generate 331 temporary
construction jobs, and 510 permanent jobs, with 409 of these in the retail sector. The
project is expected to capture some sales from existing outlets, and those sales losses
could result in reduced employment, estimated at a loss of 48 retail jobs in existing
retail outlets in 2011. By 2016, however, overall retail sales in these outlets would be
above 2008 baseline levels, leading to overall retail employment also above baseline
levels, although some sectors for existing stores would still have lower employment
iii
than in 2008. Retail employment created by the Proposed Project alone would nearly
match the City of Petaluma’s retail job growth for 2010 to 2015 as previously projected
by the Association of Bay Area Governments.
•
Of the permanent jobs, slightly more than two-thirds are projected to be full-time jobs;
an estimated 175 of the total permanent jobs are associated with the Lowe’s anchor
store. Retail employment in general is typified by a large component of part-time
workers; the Proposed Project is not extraordinary in its mix of full and part-time retail
jobs. While full-time work is often sought, and some part-time workers would choose
full-time work given the option, part-time work is more suitable for certain types of
workers such as youths still in school, parents balancing child rearing and careers, and
retirees seeking supplemental income.
•
Lowe’s reportedly pays competitive wages that are set at or above the market average
for jobs with similar skills and responsibilities. Employee earnings at Lowe’s and other
tenants at Deer Creek Village would likely be comparable to the prevailing market
wages in the area for similar types of employment. The average wages for most
occupations likely to be found at Deer Creek Village exceed the City’s Living Wage
standard for employees without medical benefits. Food preparation and serving-related
occupations have average wages below the Living Wage, but food servers often earn
tips that supplement their wage income; many workers in the medical offices would be
in occupations with relatively high wages. Starting wages for new retail hires could be
below the living wage levels, but the Proposed Project’s employment structure would
not necessarily provide lower wages than are normally found for retail workers in the
area.
•
Lowe’s provides a range of benefits for employees, with the proportion of coverage
provided by Lowe’s varying depending on the plans selected and employee status (full
vs. part-time). Benefit packages for other tenants in the Proposed Project would vary
by outlet and owner, and could vary from extremely limited or no benefits up to or
beyond the level provided by Lowe’s.
•
Taking into account revenues generated and city costs to provide services, the proposed
project will generate an estimated net fiscal surplus of approximately $681,000 annually
to the City of Petaluma General Fund, owing largely to the sales taxes generated. This
surplus represents 1.8 percent of the City’s current General Fund budget, indicating that
the proposed project would have a relatively significant positive impact on the City’s
overall fiscal position.
•
The City’s development impact fees have been recently updated, so estimated fees of
approximately $9.2 million should mitigate and cover public costs associated with the
Proposed Project. Since the project is in the Petaluma Community Development Area,
the Petaluma Community Development Commission should also benefit substantially
iv
from the estimated $311,000 in annual property tax increment, which can be used for
improvements in the area as well as for affordable housing. The City will also benefit
from the developer’s land dedication for the eventual completion of a new highway
interchange. Currently, the City has no plans to make any public contributions such as
land write-downs, tax rebates or refunds, below-market or contingent loans to the
project, or to pay for any other costs associated with the development of the project.
v
Introduction
Background and Study Purpose
The City of Petaluma has received a proposal for the Deer Creek Village development, an
approximately 315,000 square-foot mixed-use center comprising retail, a health club, and office
uses on the southwest side of North McDowell Boulevard to the east of Rainier Avenue.
Concerned about the size and scope of this project and other potential large-scale commercial
developments in the City, Petaluma City Council passed Resolution No. 2008-189 N.C.S.
requesting the preparation of a Fiscal and Economic Impact Analysis (FEIA) for projects such as
Deer Creek Village, to address issues of concern to the City and its citizens. These concerns fall
into three areas: (1) impacts on the retail market and other retailers in Petaluma; (2) types of
employment generated, including likely wages and benefits relative to a living wage; and (3)
fiscal impacts, comparing revenues generated with costs of services required by the new
development. The City of Petaluma has retained Bay Area Economics (BAE) to undertake an
FEIA for this project. It should be noted that BAE’s analysis uses the most recently available
information at the time of analysis (December 2008). This represents a reasonable effort to
establish baseline conditions. BAE recognizes that over the course of the FEIA process,
conditions may change rapidly, especially in the current economic environment; BAE attempts to
take that into consideration, but future economic conditions may vary from those assumed here.
Project Description
Deer Creek Village (also referred to in this report as the “Proposed Project”) is a mixed-use
center of approximately 315,000 square feet located on the southwest side of North McDowell
Boulevard to the east of Rainier Avenue, between North McDowell and Highway 101. The site is
currently vacant. The Proposed Project includes a mix of retail in several large spaces, with a
major anchor of 122,256 square feet. Other major tenant spaces range from 5,000 to 50,300
square feet; there are also several additional spaces in the project subdividable for smaller shops.
In addition, the project contains 11,800 square feet of medical/office space, and a 44,450 square
foot health club.
At this time, the likely tenants are reported to be Lowe’s as the major anchor tenant, and the
relocation of Petaluma’s existing 24-Hour Fitness Club. The project sponsors also report as other
potential tenants an apparel/home goods store, an electronics store, a pharmacy, a bank, and a
small grocery store; however, specific retailers have not been confirmed. Based on its leakage
analysis (see Retail Sales Analysis chapter of this report) and a mix typical of centers of this type,
BAE has assumed that the other retail spaces will be occupied by specialty stores in the other
retail stores category (as classified by the California State Board of Equalization). It should be
noted that the actual tenant mix may vary somewhat from what is assumed here, but this mix
provides a reasonable basis to assess the potential impacts of this project for this FEIA. For the
purposes of this analysis, the Proposed Project is configured as shown in Table 1.
1
Table 1: Deer Creek Village Proposed Tenant Configuration
Type
Home Improvement/Lowe's
Apparel/Home Goods
Electronics
Fitness/Health Club
Pharmacy
Bank
Restaurant A
Restaurant B
Grocery
Shops A
Shops B
Shops C
Shops D
Shops E
Medical/Office 1
Medical/Office 2
Square
Feet
122,256
50,300
18,000
44,450
14,820
5,000
6,000
6,000
13,969
4,500
5,000
4,000
4,000
5,000
6,800
5,000
Total
315,095
Note: Site plan and tenant mix still conceptual and may be
subject to change as project moves forward and a formal
application is submitted.
Sources: Merlone Geier Management, December 2008; Bay Area Economics.
Approach
This analysis assumes that the project will be fully developed and occupied by the beginning of
2011. The analysis also assumes that this will be a fully functioning center, with the project’s
outlets achieving a level of revenue reflective of state and national averages or benchmarks for
each sector represented in the project. This is considered a reasonable and defensible basis upon
which to evaluate the potential economic, employment, and fiscal impacts of the proposed
project.
2
Population and Employment Overview
This section presents background information on current and projected demographic and
economic conditions in Petaluma and the Deer Creek Village Trade Area. Developing an
economic and demographic profile of Petaluma and the Trade Area will provide background
information that will assist in estimating future retail sales and in assessing the potential impacts
of the Proposed Project on other retail outlets and centers, as well as the employment and fiscal
impacts of the project. Data sources include the U.S. Census Bureau, the California Employment
Development Department (EDD), the California Department of Finance, and the Association of
Bay Area Governments (ABAG).
Definition of the Trade Area
The Trade Area has been defined based on the area from which the potential Lowe’s anchor store
is likely to draw the large majority of its customers. This area has been bounded based in part on
the location of other nearby Lowe’s stores and similar competitive outlets, on the assumption that
shoppers would tend to go to the large chain home improvement center closest to their residence
(see Figure 1), and in part based on a reasonable travel time and distance as an outer boundary
limit. The Trade Area consists of Petaluma and surrounding areas, extending east through the
City of Sonoma, south to the border with Marin County, and a very limited distance to the north
and west due to the location of Lowe’s in Cotati and Home Depot in Rohnert Park and Santa
Rosa. While Novato is not included in this Trade Area, there is no such large major chain home
improvement center in that city; the closest such store currently is the larger Home Depot in San
Rafael. If Lowe’s opens a store in Petaluma, some Novato shoppers will venture to Petaluma;
this is taken into account in the analysis. The City of Sonoma does have a relatively large home
improvement center in Friedman’s, a small chain with three stores in the North Bay, in Santa
Rosa, Sonoma, and Ukiah. While these stores have large yard areas with a greater inventory of
building materials than either Lowe’s or Home Depot, they also carry a cross-section of
hardware, plumbing and electrical, garden supplies, tools, appliances, and home remodeling items
similar to the two national chains. Residents in and near the City of Sonoma also have access to a
Home Depot in the City of Napa at a distance similar to Deer Creek Village. The analysis will
take into account the ability of the proposed Deer Creek Village Lowe’s to capture Trade Area
sales in estimating an appropriate capture from leakage and/or existing stores in the Trade Area.
This Trade Area is used for all the retail uses in the center; because of nearby retail nodes in
surrounding cities, this is the area that would be served by most region-serving retailers based in
Petaluma in a center of this type. Some of the tenants, e.g., the drug store, may be more local
serving; leakage capture rate estimates take this into account.
The Trade Area is defined using Census Tracts, and a listing of the Tracts can be found in
Appendix A. This represents the level of geography providing the “best fit” within the
constraints of available demographic data.
3
*************s
4
Population Trends
Short-Term Trends. The Trade Area is undergoing gradual population growth, as shown in
Table 2. Based on estimates from the Association of Bay Area Governments (ABAG), the Trade
Area gained 5,865 persons from 2000 to 2008, with additional growth of 2,605 persons expected
by 2011 (the assumed first full year of project operation), and growth of an additional 2,428
persons five years after the first year of project operation (2016). Slightly over half of the Trade
Area population lives within the City of Petaluma.
Table 2: Population Trends, 2000-2016
2000
2008 (b)
Average
Annual
Change
2000-2008
2011 (b)
2016 (b)
Average
Annual
Change
2008-16
Petaluma
54,548
58,925
1.0%
61,034
63,136
0.9%
Trade Area (a)
94,835
100,700
0.8%
103,305
105,733
0.9%
458,614
496,756
1.0%
511,713
524,855
1.0%
33,871,648
38,049,462
1.5%
39,609,709
42,079,010
1.3%
Sonoma County (b)
California (c)
(a) Trade Area is 17 Census Tracts as shown in Figure 1 and Appendix A.
(b) Data point for this year is interpolated from ABAG data for 5-year intervals assuming a constant annual
compound growth rate, with the exception of California, where data points are directly from DOF, Report E-5
for current year, and Race/Ethnic Population with Age and Sex Detail, 2000–2050, July 2007 for future
years. 2000 data from U.S. Census.
Sources: 2000 U.S. Census; Association of Bay Area Governments (ABAG) Projections 2007 ; California
State Department of Finance (DOF), 2007 & 2008; BAE, 2008.
Long-Term Trends. ABAG projections estimate that Petaluma and the Trade Area will continue
to show gradual population growth, as will Sonoma County (see Table 3). Nearby Novato in
Marin County is projected to show the same pattern. Petaluma’s population is projected to reach
67,500 in 2030 and the Trade Area’s population is projected to reach 111,279 that same year.
Table 3: Long-Term Population Projections
2000
2005
2010
2015
2020
2030
Annual
% Change
2010-2030
Petaluma
54,548
56,500
60,600
62,800
64,500
67,500
0.9%
Novato
47,630
50,700
52,500
54,300
55,800
58,000
0.7%
Trade Area (a)
94,835
97,607
102,816
105,286
107,538
111,279
0.7%
458,614
478,800
509,100
522,300
535,200
558,900
0.8%
Sonoma County
(a) Trade Area is 17 Census Tracts as shown in Figure 1 and Appendix A.
Source: Association of Bay Area Governments Projections 2007 .
5
Household Trends
Household Growth. As shown in Table 4, the rates of household growth in Petaluma and the
Trade Area mirror the respective population growth rates. The Trade Area contains an estimated
38,925 households as of 2008, with an increase to 40,041 households projected by 2011 and
41,461 households by 2016.
Table 4: Household Trends, 1990-2010
2000
Average
Annual
Change
2008 (b) 2000-08
2011 (b)
Average
Annual
Change
2008-11
2016 (b)
Average
Annual
Change
2011-16
Petaluma
19,932
21,739
1.1%
22,582
1.3%
23,665
0.9%
Trade Area (a)
36,232
38,925
0.9%
40,041
0.9%
41,461
0.7%
172,403
188,240
1.1%
194,054
1.0%
201,132
0.7%
Sonoma County
(a) Target Trade Area is 17 Census Tracts as shown in Figure 1 and Appendix A.
(b) Data point for this year is interpolated from ABAG data for 5-year intervals assuming a constant
annual compound growth rate. 2000 data from U.S. Census.
Sources: 2000 U.S. Census; Association of Bay Area Governments (ABAG) Projections 2007 ; BAE, 2008.
Household Income. Household incomes and resulting consumer buying power are key factors in
assessing the potential for additional retail development. The Trade Area shows slightly lower
1
income levels than the Bay Area, with a mean household income of $93,366 in 2008, in
comparison to $100,193 for the nine-county ABAG region (see Table 5). Petaluma’s mean
household income is only slightly lower than the Trade Area’s while Sonoma County as a whole
has a 2008 mean household income of $85,036. ABAG projects very gradual increases in
household income over the next several years.
Table 5: Mean Household Income
Households
2000
2008
2011
Petaluma (a)
$90,700
$95,844
$98,126
$102,462
2016
Trade Area (b)
$89,644
$93,366
$95,257
$99,140
Sonoma County
$82,800
$85,036
$87,639
$92,479
ABAG Region (c)
$104,000
$100,193
$103,177
$108,755
In constant 2005 dollars
(a) Sphere of influence, which is a slightly larger area than the incorporated City.
(b) Trade Area is 17 Census Tracts as shown in Figure 1 and Appendix A.
(c) Nine-county ABAG region includes Alameda, Contra Costa, Marin, Napa, San Francisco, San
Mateo, Santa Clara, Solano, and Sonoma Counties.
Sources: Association of Bay Area Governments (ABAG) Projections 2007; BAE, 2008.
1
All income estimates in constant 2005 dollars. Estimates for 2008, 20011, and 2016 based on
interpolation of ABAG five-year interval data.
6
Employment Trends
Employed Residents and Unemployment. Employment can be an indicator of regional buying
power; employed workers and their households will have higher incomes and expenditures than
unemployed workers and their households. Growth in the employed labor force of an area can
indicate increased buying power. As shown in Figure 2 and Appendix B, long-term trends show
an increase in the number of employed residents in Sonoma County, with the number of
employed residents ranging from 244,600 in 2000, declining to 240,900 in 2003, and then
increasing to 250,500 in 2007. Unemployment was at only 3.4 percent in 2000, and then peaked
at 5.5 percent in 2003, with a subsequent decline to 4.4 percent for 2007. Petaluma has tracked at
slightly lower unemployment percentages, with between 29,800 and 31,000 employed persons in
the years from 2000 through 2007. The most recent data from 2007 and the most recent month,
November 2008, reflect the economic downturn, with an increase in unemployment as the
economy tightens, although the estimated size of the employed labor force continues to grow.
Unemployment in November 2008 was measured at 5.9 percent in Petaluma and 6.5 percent in
Sonoma County, and recent trends indicate that the number of unemployed in Sonoma County is
likely to continue increasing in the near term. Over the long term, the trend has been toward an
increased number of residents in the labor force and employed, with unemployment trending
along with national cycles of the economy.
Employment by Sector. Most of Deer Creek Village will consist of retail outlets. Retail
employment in Sonoma County, at 24,100 jobs, makes up 12.3 percent of the County’s overall
employment (see Appendix F for details). This is a slightly higher proportion than statewide,
where 10.9 percent of workers are in the retail sector. The Proposed Project will also have
workers in the leisure and hospitality sector (restaurant workers), as well as employment in
professional, medical, and business services or other office-related sectors.
Summary of Demographic and Economic Overview
The Trade Area, which includes the cities of Petaluma and Sonoma and surrounding
unincorporated areas, is undergoing gradual population and household growth. It is estimated the
Trade Area will have 103,305 persons and 40,041 households by 2011. Long term growth is
expected to slow, with the Trade Area projected to have a population of 111,279 in 2030.
The Trade Area exhibits a 2008 estimated mean household income of $93,366 (incomes in
constant 2005 dollars), with modest growth to $95,257 by 2011.
Sonoma County over the long term has shown an increase in the number of employed residents,
with declines and increases following national and regional economic trends. The most recent
data from November 2008 reflect the increasing unemployment as the economy stalls, with
unemployment at 5.9 percent, although the estimated size of the employed labor force continues
to grow.
While currently the economy is in recession and extremely unsettled, the Bay Area continues to
see high housing demand, and Sonoma County has not been as impacted as some other areas of
7
the state by the crisis in the housing market. The gradual population, household, and income
growth all indicate that upon recovery, retail sales are likely to grow over the long term, with
increases in purchasing power in Petaluma, the Trade Area, and Sonoma County.
Figure 2: Employed Residents and Unemployment Rate
35,000
7.0%
30,000
6.0%
25,000
5.0%
20,000
4.0%
15,000
3.0%
10,000
2.0%
5,000
1.0%
-
0.0%
Employment
Resident Unemployment Rate
Employed Residents
City of Petaluma
Unemployment Rate
350,000
7.0%
300,000
6.0%
250,000
5.0%
200,000
4.0%
150,000
3.0%
100,000
2.0%
50,000
1.0%
-
0.0%
Employment
Resident Unemployment Rate
Employed Residents
Sonoma County
Unemployment Rate
Data presented are for residents of the area by place of residence, not workers by place of
work. Annual data are annual averages. For detailed data, see Appendix B.
Sources: California Employment Development Department; Bay Area Economics, 2008.
8
Retail Sales Analysis
This section examines retail trends in Petaluma, the Trade Area, and Sonoma County. For
comparative purposes, data from other nearby cities and the State of California are also presented.
The analysis covers the major tenant types considered for the Proposed Project, as well as
generally considering other categories of likely tenants. Overall retail sales trends in Petaluma,
the Trade Area, and Sonoma County are examined, as are trends for general merchandise stores
and other major store categories assumed as potential tenants for the Proposed Project.
Comparative data for Novato, Rohnert Park, and California are also presented. Summing up the
overall retail analysis is a leakage calculation for the Trade Area, focusing on the store categories
assumed as potential tenants in the Proposed Project. Finally, this section concludes with an
inventory of key competitive existing retail outlets in Petaluma and the Trade Area, by store type
and center location.
Overall Retail Sales
2
As shown in Figure 3 and Table 6, over the last decade, Petaluma’s taxable retail sales have
grown at a faster rate than population. Taxable retail sales in 1997 were approximately $505
million (all sales here presented in constant 2007 dollars unless otherwise noted), and grew to
Building Materials Stores
The major anchor tenant and largest store in the Proposed Project is likely to be a Lowe’s home
improvement center, which is in the building materials store category. Petaluma and Novato both
lag well behind Rohnert Park in this category. In Petaluma and Novato, 2007 sales were $46.2
million and $25.4 million, respectively, compared to $76.2 million in Rohnert Park. Petaluma
and Novato saw a gradual upward trend through 2004-2005; Novato’s sales have been declining
gradually since then, while Petaluma’s sales have fluctuated, reaching their highest level of the
3
decade in 2007. Rohnert Park, though, has seen a sharp decline since 2004, when building
materials store sales peaked at nearly $123 million. This dropoff is almost certainly related to the
opening of the Lowe’s in Cotati in the same period, as well as the closure of the Yardbirds store
in Rohnert Park.
Taxable Building Materials Store Sales
Figure 5: Taxable Sales Trends for Building Materials Stores in Petaluma,
Rohnert Park, and Novato
$150,000
$125,000
$100,000
$75,000
$50,000
$25,000
$0
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Petaluma
Novato
Rohnert Park
Notes: Sales here are taxable sales only, and exclude most grocery sales as well as prescription drugs
and certain other items. Sales are presented in 2007 dollars. For details, see Appendix C.
Sources: State Board of Equalization; State Department of Finance; Bay Area Economics, 2008.
On a per capita basis, Petaluma and Novato have sales below Sonoma County, while Rohnert
Park is well above the countywide figure. Petaluma’s 2007 annual per capita sales in this
category were $815, compared to $1,275 for all of Sonoma County. Novato had even lower per
3
The slight decline during 2006 might be related to the closure of Yardbirds in June of that year, with the
store reopening as a Yardbirds Home Depot in April 2007. The Ace Hardware in downtown Petaluma also
closed due to fire in June 2006, reopening in early 2008.
Table 7: Detail for Selected Other Retail Store Categories
Period Covered is 4th Quarter 06 through 3rd Quarter 07
Total Taxable Sales in 2007 $000
Household and Home Furnishings
Household Appliance Dealers
Total from Home Furnishings/Appliances Group
Gifts, Art, Novelties
Sporting Goods
Florists
Stationery and Books
Jewelry
Office Supplies, Computer Stores
Packaged Liquor Stores
Second Hand Merchandise
Total from Selected Other Retail
Per Capita Taxable Sales in 2007 $
Sporting Goods
Florists
Jewelry
Population
Petaluma
$11,464
$2,460
$13,924
Sonoma
County
$177,176
$55,872
$233,048
$3,522
$7,990
$4,585
$7,184
$1,293
$10,857
$1,745
$1,924
$39,100
$25,554
$78,320
$16,792
$52,295
$23,543
$173,497
$56,789
$14,113
$440,903
Petaluma
$202
$43
$245
Sonoma
County
$369
$116
$486
$62
$141
$81
$127
$23
$191
$31
$34
$689
$53
$163
$35
$109
$49
$362
$118
$29
$919
56,743
479,668
Includes store subcategories for Other Retail where detail is available for Petaluma. Store
categories not listed are unavailable due to disclosure issues.
Sources: State Board of Equalization; Bay Area Economics, 2008.
Additional detail for electronics and appliance stores only is also available from the 2002
Economic Census, and is shown in Appendix D. This confirms that Rohnert Park is
outperforming Petaluma and Novato and Sonoma County overall for the home furnishing and
appliances category. For appliance and electronics stores, this pattern also holds, with Rohnert
Park annual per capita sales at $527, compared with $306 in Petaluma, only $148 in Novato, and
$450 for Sonoma County. Thus, for this subcategory Petaluma likely is losing sales to other
nearby communities, particularly Rohnert Park, and also to the destination retail concentrations in
Santa Rosa and San Rafael. The lack of a major store in this category in Novato indicates that
this is one store type where shoppers from that city might be attracted to such an outlet in
Petaluma.
17
Restaurant Sales
Deer Creek Village as proposed includes 12,000 square feet of restaurant space. The current
development plan for the center makes it likely that these would be sit-down restaurants rather
than fast food outlets. As shown in Figure 8 and Table 6, Petaluma has shown slightly higher
sales than Novato and Rohnert Park in this category. In 2007, Petaluma had inflation-adjusted
taxable sales in the eating and drinking places category of $85 million, compared to $70 million
in Novato and $75 million in Rohnert Park. On a per capita basis, Petaluma is performing above
the level of Sonoma County; Petaluma’s 2007 taxable restaurant sales are $1,492 per capita,
compared with $1,236 countywide. Rohnert Park shows sales above Petaluma, while Novato
lags.
Figure 8: Taxable Sales Trends for Eating & Drinking Places in Petaluma,
$90,000
Taxable Restaurant Sales
$80,000
$70,000
$60,000
$50,000
$40,000
$30,000
$20,000
$10,000
$0
1997
1998
1999
2000
Petaluma
2001
2002
Novato
2003
2004
2005
2006
2007
Rohnert Park
and certain other items. Sales presented in 2007 dollars. For details, see Appendix C.
Apparel Stores
The Proposed Project is assumed to have a mid-size apparel/home goods store; as with eating and
drinking places, Petaluma has outperformed Novato and Rohnert Park in this retail category, as
shown in Figure 9. Petaluma has 2007 per capita apparel store taxable sales of $1,148, compared
with only $540 for Sonoma County overall. The gap between Petaluma and Novato has widened
6
in recent years due to the opening of Kohl’s, which caused a considerable jump in apparel store
sales in Petaluma. However, per capita apparel store sales in Petaluma were higher than the other
6
Apparel store sales are no longer reported separately for Rohnert Park due to BOE disclosure rules, but it
is unlikely they have increased substantially since the Other Retail category (with which apparel sales have
been combined) has not shown a significant increase in sales since 2003.
18
Building Materials Stores
The major anchor tenant and largest store in the Proposed Project is likely to be a Lowe’s home
improvement center, which is in the building materials store category. Petaluma and Novato both
lag well behind Rohnert Park in this category. In Petaluma and Novato, 2007 sales were $46.2
million and $25.4 million, respectively, compared to $76.2 million in Rohnert Park. Petaluma
and Novato saw a gradual upward trend through 2004-2005; Novato’s sales have been declining
gradually since then, while Petaluma’s sales have fluctuated, reaching their highest level of the
3
decade in 2007. Rohnert Park, though, has seen a sharp decline since 2004, when building
materials store sales peaked at nearly $123 million. This dropoff is almost certainly related to the
opening of the Lowe’s in Cotati in the same period, as well as the closure of the Yardbirds store
in Rohnert Park.
Taxable Building Materials Store Sales
Figure 5: Taxable Sales Trends for Building Materials Stores in Petaluma,
$150,000
$125,000
$100,000
$75,000
$50,000
$25,000
$0
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Petaluma
Novato
Rohnert Park
and certain other items. Sales are presented in 2007 dollars. For details, see Appendix C.
On a per capita basis, Petaluma and Novato have sales below Sonoma County, while Rohnert
Park is well above the countywide figure. Petaluma’s 2007 annual per capita sales in this
category were $815, compared to $1,275 for all of Sonoma County. Novato had even lower per
3
The slight decline during 2006 might be related to the closure of Yardbirds in June of that year, with the
store reopening as a Yardbirds Home Depot in April 2007. The Ace Hardware in downtown Petaluma also
closed due to fire in June 2006, reopening in early 2008.
Figure 10: Taxable Sales Trends for Food Stores in Petaluma, Rohnert
Park, and Novato
$70,000
Taxable Food Store Sales
$60,000
$50,000
$40,000
$30,000
$20,000
$10,000
$0
1997
1998
1999
Petaluma
2000
2001
Novato
2002
2003
2004
2005
2006
2007
Rohnert Park
Other Retail Outlets
The Proposed Project includes 22,500 square feet of shop space without specified types of
tenants; much of this space is likely to be occupied by specialty retail stores falling in the state’s
7
Other Retail outlets category. Figure 11 shows trends in sales for this category in Petaluma,
8
Rohnert Park, and Novato. In 1997, Petaluma and Rohnert Park lagged Novato in this catch-all
category; by 2002, Petaluma led in this category, only to fall slightly behind Novato again in
2007.
Since this category is so broad, and includes outlets not suitable for Deer Creek Village (e.g., fuel
and ice dealers), further analysis was completed on the subcategories for Other Retail, as shown
9
above in Table 7. Overall, Petaluma’s per capita taxable sales for the selected subcategories in
7
This total includes stores in a variety of subcategories, as follows: historically this has included Gifts, Art,
Novelties; Sporting Goods; Florists; Photo Equipment; Musical Equipment; Stationery and Books; Jewelry;
Office, Store, and School Supplies; Other Specialties; Packaged Liquor Stores; Second Hand Merchandise;
Farm & Garden; Fuel & Ice; Mobile Home, Campers, and Trailers; Boat, Motorcycle and Plane; and All
Other Stores. Some additional small categories (e.g., farm implements) were added at the beginning of
2007, and the categories related to vehicles were removed.
8
Because of the combination of apparel with other retail beginning in 2004, sales for this category for
Rohnert Park are no longer comparable and are not presented here.
9
Because of disclosure rules and changes in the classification scheme beginning in 2007, detail was only
available for the subcategories shown in the table. Data for this table from 4th Quarter 2006 through 3rd
Quarter 2007 rather than calendar year 2007.
20
Other Retail lag the County considerably, at $689 as compared with $919 countywide. This
varies widely by category, however. For instance, in the category of stationery and books
Petaluma actually shows stronger sales than the County ($127 vs. $109). Sporting Goods shows
levels only slightly below the county, at $141 vs. $163. For Office Supplies and Computer
Stores, however, Petaluma trails far behind the County ($191 vs. $362).
Figure 11: Taxable Sales Trends for Other Retail Stores in Petaluma,
Taxable Other Retail Sores Sales
$120,000
$100,000
$80,000
$60,000
$40,000
$20,000
$0
1997
1998
1999
Petaluma
2000
2001
Novato
2002
2003
2004
2005
2006
2007
Rohnert Park
and certain other items. Sales presented in 2007 dollars. For details, see Appendix C. Data for Rohnert
Park from 2004-2007 not included because apparel sales have been combined with Other Retail group.
Retail Sales Elsewhere in the Trade Area
The Trade Area includes retail outlets that are located outside Petaluma, and these outlets need to
be considered in evaluating overall retail sales and demand. The only other incorporated place in
the Trade Area is the City of Sonoma, and the taxable sales data from the City of Sonoma have
been added to Petaluma’s to get taxable retail sales for the incorporated portions of the Trade
Area, as shown in Table 8.
Unfortunately, the published taxable sales and Economic Census data do not separate out
unincorporated subareas of a County. To estimate these sales, BAE has relied on a number of
sources, using county data as a baseline for sales per employee by store type, retail employment
data available for the unincorporated Trade Area, and estimating sales by major store category.
This analysis can be found in Appendix E.
The results of this analysis, including total estimated taxable sales by category for the Trade Area,
are shown in Table 8. While the per capita analysis comparing Petaluma to the County and other
nearby cities is instructive, the numbers shown here, when compared to Sonoma County overall
21
and the state, give a better sense of retail sales in the Trade area vis-à-vis Sonoma County. The
per capita sales comparison with the County here provides the starting point for the leakage
analysis which assesses the retail potential for Deer Creek Village and its Trade Area.
Table 8: Trade Area Taxable Sales
Sales in 2007 $000 (a) (b) (c) (d)
Apparel Stores
General Merchandise Stores
Food Stores
Eating and Drinking Places
Home Furnishings and Appliances
Building Materials (e)
Motor Vehicles and Parts
Service Stations
Other Retail Stores
Petaluma
$65,163
$51,054
$58,100
$84,687
$13,324
$46,226
$268,358
$87,978
$83,053
Sonoma
City
$8,612
$18,049
$29,835
$41,311
$6,174
$17,875
$22,954
$20,844
$21,417
Trade Area
Incorporated
$73,775
$69,103
$87,935
$125,998
$19,498
$64,101
$291,312
$108,822
$104,470
Retail Stores Total
$757,943 $187,071
Deer Creek Retail Types
Sales per Capita in 2007 $ (c) (f)
Apparel Stores
Food Stores
Service Stations
Other Retail Stores
Retail Stores Total (b)
Population
Sonoma
County
$258,991
$845,947
$398,084
$592,801
$222,132
$611,581
$1,033,898
$582,426
$858,737
California
$20,855,890
$59,897,350
$22,461,059
$51,658,575
$16,720,852
$32,656,324
$70,779,978
$47,084,940
$64,910,134
$945,014
$91,989 $1,037,003 $5,404,597
$387,025,102
$401,607 $143,273
$544,880
$73,529
$618,409 $3,788,273
$269,160,184
Petaluma
$1,148
$900
$1,024
$1,492
$235
$815
$4,729
$1,550
$1,464
Sonoma
City
$870
$1,823
$3,014
$4,174
$624
$1,806
$2,319
$2,106
$2,164
Trade Area
Incorporated
$1,107
$1,037
$1,320
$1,891
$293
$962
$4,371
$1,633
$1,568
Trade Area
Remainder
$145
$8
$336
$552
$78
$665
$365
$194
$443
Trade Area
$788
$696
$994
$1,447
$221
$864
$3,044
$1,156
$1,195
Sonoma
County
$540
$1,764
$830
$1,236
$463
$1,275
$2,155
$1,214
$1,790
California
$555
$1,595
$598
$1,375
$445
$869
$1,884
$1,254
$1,728
$13,357
$18,900
$14,181
$2,786
$10,406
$11,267
$10,304
$7,078
$14,475
$8,176
$2,227
$6,205
$7,898
$7,166
56,743
9,898
66,641
Trade Area
Remainder
$4,791
$251
$11,079
$18,233
$2,569
$21,963
$12,058
$6,402
$14,643
33,017
Trade Area
$78,566
$69,354
$99,014
$144,231
$22,067
$86,064
$303,370
$115,224
$119,113
99,658
479,668
37,559,440
(a) Retail sales have been adjusted to 2007 dollars based on the Taxable Sales Deflators calculated by the State Board of Equalization (BOE).
(b) Analysis excludes all non-retail outlets (business and personal services) reporting taxable sales.
(c) A "#" sign indicates data supressed to preserve confidentiality due to four or fewer outlets or sales of more than 80% of the category in one
store. Suppressed sales have been combined with Other Retail Stores, so evaluation of changes in the Other Retail category should take this into
consideration.
(d) Incorporated Trade Area consists of Petaluma and Sonoma cities. Unincorporated area sales are estimated as shown in Appendix E.
(e) For City of Sonoma, building materials group sales have been estimated based on last year of available data (2002). Examination of the shift to
"other retail," historic trends, and employment estimates for the sector from the Economic Census indicate that the sales levels have likely remained
relatively constant. This estimate has then been subtracted from the estimate for other retail sales for the City of Sonoma. Beginning in 2007,
farm implements are no longer included in this category, but instead have been moved to other retail. Other changes in some smaller categories
have also been made. None of these changes should materially affect the analysis.
(f) With the exception of the Trade Area, per capita sales calculated based on State Board of Equalization reported sales and annual Department of
Finance population estimates benchmarked to the decennial Census. Trade Area population in 2007 has been estimated using the ABAG Census
Tract Projections, assuming a constant annual growth rate from 2005-2010. The populations of Petaluma and Sonoma (city) have been subtracted
out to obtain a population estimate for the unincorporated portion of the Trade Area. The ABAG estimates for Petaluma and Sonoma are not
significantly different from those from DOF.
Sources: State Board of Equalization, 2000 U.S. Census; State Department of Finance; ABAG Projections 2007 ; Bay Area Economics, 2008.
22
Table 7: Detail for Selected Other Retail Store Categories
Period Covered is 4th Quarter 06 through 3rd Quarter 07
Total Taxable Sales in 2007 $000
Sporting Goods
Florists
Jewelry
Per Capita Taxable Sales in 2007 $
Sporting Goods
Florists
Jewelry
Population
Petaluma
$11,464
$2,460
$13,924
Sonoma
County
$177,176
$55,872
$233,048
$3,522
$7,990
$4,585
$7,184
$1,293
$10,857
$1,745
$1,924
$39,100
$25,554
$78,320
$16,792
$52,295
$23,543
$173,497
$56,789
$14,113
$440,903
Petaluma
$202
$43
$245
Sonoma
County
$369
$116
$486
$62
$141
$81
$127
$23
$191
$31
$34
$689
$53
$163
$35
$109
$49
$362
$118
$29
$919
56,743
479,668
Includes store subcategories for Other Retail where detail is available for Petaluma. Store
categories not listed are unavailable due to disclosure issues.
Sources: State Board of Equalization; Bay Area Economics, 2008.
Additional detail for electronics and appliance stores only is also available from the 2002
Economic Census, and is shown in Appendix D. This confirms that Rohnert Park is
outperforming Petaluma and Novato and Sonoma County overall for the home furnishing and
appliances category. For appliance and electronics stores, this pattern also holds, with Rohnert
Park annual per capita sales at $527, compared with $306 in Petaluma, only $148 in Novato, and
$450 for Sonoma County. Thus, for this subcategory Petaluma likely is losing sales to other
nearby communities, particularly Rohnert Park, and also to the destination retail concentrations in
Santa Rosa and San Rafael. The lack of a major store in this category in Novato indicates that
this is one store type where shoppers from that city might be attracted to such an outlet in
Petaluma.
17
Restaurant Sales
Deer Creek Village as proposed includes 12,000 square feet of restaurant space. The current
development plan for the center makes it likely that these would be sit-down restaurants rather
than fast food outlets. As shown in Figure 8 and Table 6, Petaluma has shown slightly higher
sales than Novato and Rohnert Park in this category. In 2007, Petaluma had inflation-adjusted
taxable sales in the eating and drinking places category of $85 million, compared to $70 million
in Novato and $75 million in Rohnert Park. On a per capita basis, Petaluma is performing above
the level of Sonoma County; Petaluma’s 2007 taxable restaurant sales are $1,492 per capita,
compared with $1,236 countywide. Rohnert Park shows sales above Petaluma, while Novato
lags.
Figure 8: Taxable Sales Trends for Eating & Drinking Places in Petaluma,
$90,000
Taxable Restaurant Sales
$80,000
$70,000
$60,000
$50,000
$40,000
$30,000
$20,000
$10,000
$0
1997
1998
1999
2000
Petaluma
2001
2002
Novato
2003
2004
2005
2006
2007
Rohnert Park
Apparel Stores
The Proposed Project is assumed to have a mid-size apparel/home goods store; as with eating and
drinking places, Petaluma has outperformed Novato and Rohnert Park in this retail category, as
shown in Figure 9. Petaluma has 2007 per capita apparel store taxable sales of $1,148, compared
with only $540 for Sonoma County overall. The gap between Petaluma and Novato has widened
6
in recent years due to the opening of Kohl’s, which caused a considerable jump in apparel store
sales in Petaluma. However, per capita apparel store sales in Petaluma were higher than the other
6
Apparel store sales are no longer reported separately for Rohnert Park due to BOE disclosure rules, but it
is unlikely they have increased substantially since the Other Retail category (with which apparel sales have
been combined) has not shown a significant increase in sales since 2003.
18
two cities even before Kohl’s opened, probably due to the presence of the outlet mall in Petaluma,
which occupies a specialized retail niche and serves a larger area than just the City of Petaluma or
the assumed Deer Creek Village Trade Area.
Figure 9: Taxable Sales Trends for Apparel Stores in Petaluma, Rohnert
Park, and Novato
$70,000
Taxable Apparel Store Sales
$60,000
$50,000
$40,000
$30,000
$20,000
$10,000
$0
1997
1998
1999
Petaluma
2000
2001
Novato
2002
2003
2004
2005
2006
2007
Rohnert Park
Park not available for 2004-2007 due to disclosure rules.
Food Stores
Current plans call for a small-format grocery store in the Proposed Project; this is a newer format
being rolled out in California and other states based on carrying a more limited selection than
full-size supermarkets, with an emphasis on convenience items (e.g., more prepared foods). In
California, the Fresh & Easy stores being rolled out by Tesco represent this format; elsewhere,
Wal-Mart and Safeway are testing similar concepts.
Petaluma’s taxable food store sales are well above those in Novato and Rohnert Park, as shown in
Figure 10, with 2007 sales of $58.1 million, in contrast to only $33.4 million in Novato and $37.2
million in Rohnert Park. These figures, however, include only taxable items, while the majority
of sales in these stores are non-taxable items. Data from the Economic Census used in the
leakage analysis indicates that Petaluma food stores have a high proportion of non-taxable sales.
This may be related to the lack of general merchandise outlets in the City; shoppers are buying
more everyday housewares (e.g., paper products, small housewares) in supermarkets.
19
Figure 10: Taxable Sales Trends for Food Stores in Petaluma, Rohnert
Park, and Novato
$70,000
Taxable Food Store Sales
$60,000
$50,000
$40,000
$30,000
$20,000
$10,000
$0
1997
1998
1999
Petaluma
2000
2001
Novato
2002
2003
2004
2005
2006
2007
Rohnert Park
Other Retail Outlets
The Proposed Project includes 22,500 square feet of shop space without specified types of
tenants; much of this space is likely to be occupied by specialty retail stores falling in the state’s
7
Other Retail outlets category. Figure 11 shows trends in sales for this category in Petaluma,
8
Rohnert Park, and Novato. In 1997, Petaluma and Rohnert Park lagged Novato in this catch-all
category; by 2002, Petaluma led in this category, only to fall slightly behind Novato again in
2007.
Since this category is so broad, and includes outlets not suitable for Deer Creek Village (e.g., fuel
and ice dealers), further analysis was completed on the subcategories for Other Retail, as shown
9
above in Table 7. Overall, Petaluma’s per capita taxable sales for the selected subcategories in
7
This total includes stores in a variety of subcategories, as follows: historically this has included Gifts, Art,
Novelties; Sporting Goods; Florists; Photo Equipment; Musical Equipment; Stationery and Books; Jewelry;
Office, Store, and School Supplies; Other Specialties; Packaged Liquor Stores; Second Hand Merchandise;
Farm & Garden; Fuel & Ice; Mobile Home, Campers, and Trailers; Boat, Motorcycle and Plane; and All
Other Stores. Some additional small categories (e.g., farm implements) were added at the beginning of
2007, and the categories related to vehicles were removed.
8
Because of the combination of apparel with other retail beginning in 2004, sales for this category for
Rohnert Park are no longer comparable and are not presented here.
9
Because of disclosure rules and changes in the classification scheme beginning in 2007, detail was only
available for the subcategories shown in the table. Data for this table from 4th Quarter 2006 through 3rd
Quarter 2007 rather than calendar year 2007.
20
Other Retail lag the County considerably, at $689 as compared with $919 countywide. This
varies widely by category, however. For instance, in the category of stationery and books
Petaluma actually shows stronger sales than the County ($127 vs. $109). Sporting Goods shows
levels only slightly below the county, at $141 vs. $163. For Office Supplies and Computer
Stores, however, Petaluma trails far behind the County ($191 vs. $362).
Figure 11: Taxable Sales Trends for Other Retail Stores in Petaluma,
Taxable Other Retail Sores Sales
$120,000
$100,000
$80,000
$60,000
$40,000
$20,000
$0
1997
1998
1999
Petaluma
2000
2001
Novato
2002
2003
2004
2005
2006
2007
Rohnert Park
Park from 2004-2007 not included because apparel sales have been combined with Other Retail group.
Retail Sales Elsewhere in the Trade Area
The Trade Area includes retail outlets that are located outside Petaluma, and these outlets need to
be considered in evaluating overall retail sales and demand. The only other incorporated place in
the Trade Area is the City of Sonoma, and the taxable sales data from the City of Sonoma have
been added to Petaluma’s to get taxable retail sales for the incorporated portions of the Trade
Area, as shown in Table 8.
Unfortunately, the published taxable sales and Economic Census data do not separate out
unincorporated subareas of a County. To estimate these sales, BAE has relied on a number of
sources, using county data as a baseline for sales per employee by store type, retail employment
data available for the unincorporated Trade Area, and estimating sales by major store category.
This analysis can be found in Appendix E.
The results of this analysis, including total estimated taxable sales by category for the Trade Area,
are shown in Table 8. While the per capita analysis comparing Petaluma to the County and other
nearby cities is instructive, the numbers shown here, when compared to Sonoma County overall
21
and the state, give a better sense of retail sales in the Trade area vis-à-vis Sonoma County. The
per capita sales comparison with the County here provides the starting point for the leakage
analysis which assesses the retail potential for Deer Creek Village and its Trade Area.
Table 8: Trade Area Taxable Sales
Sales in 2007 $000 (a) (b) (c) (d)
Apparel Stores
Food Stores
Service Stations
Other Retail Stores
Petaluma
$65,163
$51,054
$58,100
$84,687
$13,324
$46,226
$268,358
$87,978
$83,053
Sonoma
City
$8,612
$18,049
$29,835
$41,311
$6,174
$17,875
$22,954
$20,844
$21,417
Trade Area
Incorporated
$73,775
$69,103
$87,935
$125,998
$19,498
$64,101
$291,312
$108,822
$104,470
Retail Stores Total
$757,943 $187,071
Sales per Capita in 2007 $ (c) (f)
Apparel Stores
Food Stores
Service Stations
Other Retail Stores
Population
Sonoma
County
$258,991
$845,947
$398,084
$592,801
$222,132
$611,581
$1,033,898
$582,426
$858,737
California
$20,855,890
$59,897,350
$22,461,059
$51,658,575
$16,720,852
$32,656,324
$70,779,978
$47,084,940
$64,910,134
$945,014
$91,989 $1,037,003 $5,404,597
$387,025,102
$401,607 $143,273
$544,880
$73,529
$618,409 $3,788,273
$269,160,184
Petaluma
$1,148
$900
$1,024
$1,492
$235
$815
$4,729
$1,550
$1,464
Sonoma
City
$870
$1,823
$3,014
$4,174
$624
$1,806
$2,319
$2,106
$2,164
Trade Area
Incorporated
$1,107
$1,037
$1,320
$1,891
$293
$962
$4,371
$1,633
$1,568
Trade Area
Remainder
$145
$8
$336
$552
$78
$665
$365
$194
$443
Trade Area
$788
$696
$994
$1,447
$221
$864
$3,044
$1,156
$1,195
Sonoma
County
$540
$1,764
$830
$1,236
$463
$1,275
$2,155
$1,214
$1,790
California
$555
$1,595
$598
$1,375
$445
$869
$1,884
$1,254
$1,728
$13,357
$18,900
$14,181
$2,786
$10,406
$11,267
$10,304
$7,078
$14,475
$8,176
$2,227
$6,205
$7,898
$7,166
56,743
9,898
66,641
Trade Area
Remainder
$4,791
$251
$11,079
$18,233
$2,569
$21,963
$12,058
$6,402
$14,643
33,017
Trade Area
$78,566
$69,354
$99,014
$144,231
$22,067
$86,064
$303,370
$115,224
$119,113
99,658
479,668
37,559,440
(c) A "#" sign indicates data supressed to preserve confidentiality due to four or fewer outlets or sales of more than 80% of the category in one
store. Suppressed sales have been combined with Other Retail Stores, so evaluation of changes in the Other Retail category should take this into
consideration.
(d) Incorporated Trade Area consists of Petaluma and Sonoma cities. Unincorporated area sales are estimated as shown in Appendix E.
(e) For City of Sonoma, building materials group sales have been estimated based on last year of available data (2002). Examination of the shift to
"other retail," historic trends, and employment estimates for the sector from the Economic Census indicate that the sales levels have likely remained
relatively constant. This estimate has then been subtracted from the estimate for other retail sales for the City of Sonoma. Beginning in 2007,
farm implements are no longer included in this category, but instead have been moved to other retail. Other changes in some smaller categories
have also been made. None of these changes should materially affect the analysis.
(f) With the exception of the Trade Area, per capita sales calculated based on State Board of Equalization reported sales and annual Department of
Finance population estimates benchmarked to the decennial Census. Trade Area population in 2007 has been estimated using the ABAG Census
Tract Projections, assuming a constant annual growth rate from 2005-2010. The populations of Petaluma and Sonoma (city) have been subtracted
out to obtain a population estimate for the unincorporated portion of the Trade Area. The ABAG estimates for Petaluma and Sonoma are not
significantly different from those from DOF.
Sources: State Board of Equalization, 2000 U.S. Census; State Department of Finance; ABAG Projections 2007 ; Bay Area Economics, 2008.
22
Leakage Analysis
Retail leakage analysis compares actual retail sales in an area with some benchmark that provides
a measure of the potential sales generated by that area's residents. If sales levels are below the
predicted level, the area may be able to support increased sales. This increase in sales could take
the form of increased sales in existing outlets or in new outlets.
A lower-than-predicted sales volume implies that consumers are traveling outside the area to
shop; thus, sales would be “leaking” out of the study area. Conversely, if the area shows more
sales than would be expected from the area's characteristics, there would be sales “injections” into
the study area. Often, an injection of sales indicates that the study area is serving as the regional
shopping destination for a broader area. On the other hand, if an area shows substantial leakage,
it may be due to the presence of a region-serving retail node outside the study area capturing
those “leaked” sales. In such a case, the study area itself may not have sufficient population to
support region-serving retail, so those sales cannot expect to be captured within the study area.
There are a number of factors that can be used to predict sales levels, with the two most important
factors being the number of persons in the area and the disposable income available to that
population. Additional factors influencing retail spending in an area include household type, age
of population, number of workers in the area (i.e., daytime population), tourism expenditures,
tenure patterns (owner vs. renter), and cultural factors.
To develop a benchmark for Petaluma, BAE has assumed that Sonoma County as a whole
represents an appropriate conservative benchmark for sales potential for the Trade Area. Income
levels are similar (albeit slightly higher in the Trade Area), and Sonoma County has a broad range
of retail for its residents such that overall leakage from the county should be minimal. In fact, the
stores in Marin County may attract some shoppers, particularly from the Trade Area at the south
end of Sonoma County, but Sonoma County also acts as a shopping destination for the more rural
counties to the north. Because county income levels are slightly below the Trade Area, this
analysis is inherently conservative. Also making the analysis conservative is that no adjustment
has been made for projected increases in household income leading to future additional retail
expenditures.
10
Using 2007 taxable sales data as a baseline, BAE has estimated the additional amount of leakage
of retail sales from the Trade Area in 2008. The results of this analysis are shown in Table 9.
The Trade Area shows significant leakage for General Merchandise Stores, Food Stores, Home
Furnishings and Appliances, Building Materials, and Other Retail Stores. In the key category of
building materials stores, where Lowe’s could capture a significant share of the leakage, there is
an estimated 2008 leakage of $41.4 million; this leakage is very large relative to the estimated
11
sales of $87.0 million in estimated 2008 sales in this category in the Trade Area. For general
10
From the State Board of Equalization. Data have been adjusted to take into account non-taxable sales,
and adjusted to 2008 levels assuming constant sales per capita.
11
It should be noted that this calculation is based on data prior to the closure of the Yardbirds Home Depot
store. That closure may increase the leakage of sales in this category.
23
merchandise stores, there is an estimated 2008 leakage of $88.8 million, which is also large
relative to the estimated Trade Area sales of $115.8 million. A home electronics store is assumed
for one of the spaces at Deer Creek Village; leakage in the home furnishings/appliance store
category that includes these stores is also substantial, at $24.3 million annually. Food store
leakages are estimated at $56.2 million, suggesting that even subsequent to the completion of the
new Raley’s store (see discussion below), there might be additional sales to be captured by the
Proposed Project. In the last category suitable for the Proposed Project which shows leakages,
other retail stores show leakages of $59.9 million annually. Apparel stores and eating and
drinking places, also part of the tenant mix proposed for Deer Creek Village, show attractions of
sales from outside the Trade Area. The leakages indicate that Petaluma and the Trade Area are
significantly under-retailed in many major retail categories; Deer Creek Village has the potential
to capture a sizable portion of these sales.
24
Table 9: Leakage Analysis
2007 Per Capita
Taxable Retail Sales
2007 $ (a)
Store Category
Apparel Stores
Food Stores
Building Materials
Service Stations
Other Retail Stores
Trade
Area
$788
$696
$994
$1,447
$221
$864
$3,044
$1,156
$1,195
Sonoma
County
$540
$1,764
$830
$1,236
$463
$1,275
$2,155
$1,214
$1,790
Store Category
Apparel Stores
Food Stores
Building Materials
Service Stations
Other Retail Stores
2008 Per Capita
Retail Sales
2007 $
Trade
Sonoma
Area
County
$788
$540
$1,150
$2,031
$2,208
$2,766
$1,447
$1,236
$221
$463
$864
$1,275
$3,044
$2,155
$1,156
$1,214
$1,195
$1,790
Estimated 2008
Taxable Retail Sales
2007 $000 (b)
Trade
Area
$79,387
$70,079
$100,049
$145,739
$22,298
$86,964
$306,542
$116,429
$120,358
Sonoma
County
$268,217
$876,084
$412,266
$613,919
$230,045
$633,368
$1,070,730
$603,175
$889,329
Per Capita
Injection/
(Leakage)
2007 $
$248
($882)
($559)
$211
($242)
($411)
$889
($58)
($595)
Total
2008
Injection/
(Leakage)
2007 $ 000
$25,000
($88,800)
($56,200)
$21,300
($24,300)
($41,400)
$89,500
($5,800)
($59,900)
Total Adjusted
Retail Sales
2008 $000 (c)
Trade
Area
$79,387
$115,774
$222,332
$145,739
$22,298
$86,964
$306,542
$116,429
$120,358
SC
County
$268,217
$1,009,123
$1,374,219
$613,919
$230,045
$633,368
$1,070,730
$603,175
$889,329
Notes:
The Trade Area includes the Cities of Petaluma and Sonoma as well as surrounding unincorporated areas, as descibed in Figure 1 and Appendix A.
(a) From Table 8.
(b) 2007 per capita taxable sales times 2008 population. 2008 population from Table 2, and shown below. Numbers are generally consistent with
DOF estimates used elsewhere.
(c) Sales have been adjusted to take into account non-taxable items for food and drug stores.
Adjustments have been made as follows:
Trade
Sonoma
Percent of Total Sales that are Taxable
Area
County
Drug Stores
30%
38%
Food Stores
45%
30%
Taxable Sales in 2007 $000
General Merchandise Taxable Total Incl Drug
Drug Store Baseline Taxable $000
Baseline Population
Durg Store Baseline Per Capita Taxable Sales
Adjusted to 2007 $
Drug Store Est 2008 Taxable $000
$70,079
$17,500 (2002)
95,934 (2002)
$182
$194
$19,583
$876,084
$80,546 (2007)
490,697 (2007)
$164
$164
$81,541
Adjustment for Non-Taxable Drug Store
$45,695
$133,040
$115,774
$222,332
$1,009,123
$1,374,219
100,700
496,756
Total Adjusted General Merchandise
Total Adjusted Food
2008 Population
County per capita sales have been assumed as baseline against which to compare the Trade Area. Sales assumed to be "leaking" from the Trade
Area if that area has per capita sales below county benchmark. Sales injections and capture amounts rounded to nearest hundred thousand dollars.
Sources: Bay Area Economics 2008, based on information from the CA State Board of Equalization, 2000 U.S. Census, 2002 Census of Retail
Trade, and Association of Bay Area Governments.
25
Major Competing Retail Stores and Nodes in Petaluma
The largest likely tenant in the Proposed Project is the Lowe’s home improvement warehouse.
Other assumed retail tenants include an apparel store, a consumer electronics store, a food store, a
pharmacy, and other retail outlets in some smaller spaces. BAE has identified and inventoried
major Trade Area competitors for the Proposed Project in the building materials store category
which includes Lowe’s, and located other key retail nodes in Petaluma that might include stores
competitive with the Proposed Project’s retail mix. Figure 12 shows the competing retail nodes
and major building materials outlets in the Trade Area. Because of the City of Sonoma’s small
population base and more isolated location, most of the retail there is either local-serving or
tourism oriented, but the City of Sonoma is home to the largest building materials outlet in the
Trade Area, a Friedman’s home improvement center.
Competitive Building Materials Outlets. Petaluma and the Trade Area have various outlets that
may compete with the Lowe’s. Following is a discussion of the most directly competitive outlets.
Orchard Supply Hardware. This 41,000 square-foot outlet is located at the north end of Petaluma
at 1390 North McDowell Boulevard. Orchard Supply is a San Jose-headquartered hardware
chain of 86 outlets, all in California. The chain is owned by the Sears Holding Company, which
also owns Sears and Kmart. This store opened in 1994, and provides a broad range of items
typical of hardware stores, including tools, small home appliances, a garden department, home
repair and maintenance items, and a limited selection of lumber. This store is the anchor space in
its shopping center, which includes a number of other small businesses, most of them independent
outlets, as well as fast-food outlets (e.g., Burger King).
Tomasini’s Rex Ace Hardware & Country Store. This store is located in downtown Petaluma at
313 B Street. This small (7,000 square foot) store is best described as a convenience-oriented
hardware store focused on service, with tools, small home appliances, and home maintenance and
repair items. This store, which opened originally in 1907, closed in June 2006 following a major
fire, but rebuilt at the same site and reopened in early 2008.
M. Masselli & Sons. Opened in 1960, this store at 519 Lakeville Street carries a mix of hardware,
tools, and new and used building supplies and materials in a 15,000 square-foot store and fiveacre yard. The store is largely oriented toward contractors and does not carry lumber.
Friedman’s Home Improvement. This store is located in the City of Sonoma, at 1360 Broadway.
Friedman’s is a three-store home improvement chain with stores in Santa Rosa, Ukiah, and the
City of Sonoma. The product mix is very similar to a Lowe’s or Home Depot, but Friedman’s
outlets also have large outdoor lumber and building materials yards unlike either of the national
chains. This location, previously under different ownership, was acquired by Friedman’s in the
1990s and an indoor area expansion from 35,000 to 45,000 square feet was completed in June
2008.
26
Parsons Lumber and Hardware. Located to the north of the City of Sonoma at 17800 Sonoma
Highway in Boyes Hot Springs, Parsons is a small hardware store and lumber yard. The indoor
store portion of the business is estimated at approximately 4,500 square feet.
Yardbirds Home Depot. At the time of BAE’s analysis, Home Depot was still operating this
small-format home improvement center in Petaluma. On January 26, 2009, as BAE’s analysis
was under initial review, Home Depot announced the impending closure of all five Yardbirds
Home Depot locations as part of a larger restructuring that includes closure of their Expo Design
Centers, thus refocusing on their core business of large-format home improvement warehouse
stores. The Petaluma store, located at 2000 Lakeville Highway at the south end of Petaluma, is a
38,000 square-foot outlet. Yardbirds was a regional chain of home improvement stores focused
in the North Bay (and headquartered in Petaluma) that was purchased by Home Depot in late
2005. Most of the outlets, such as this one, were well below the size of a regular Home Depot,
but following a period of closure and remodeling, several stores (including this one, which
opened in April 2007, and a store in San Rafael) were reopened as a smaller “infill retail format”
focused more specifically on local needs than the standard larger Home Depot stores, and with a
more limited selection of merchandise. Most notably lacking from this store is the indoor lumber
yard found in full-size Home Depots and in Lowe’s. Evidently, Home Depot has determined that
this store concept does not fit with their future plans. This store is in a very small center and
occupies most of the space in the center. This is a stand-alone center with little additional retail
nearby.
Major Retail Nodes in Petaluma. Overall, retail conditions in Petaluma appear relatively
healthy; there are few vacancies, with the largest being the recently closed Mervyns, and while in
some cases the key retail nodes are somewhat dated in appearance and function, none currently
exhibit signs of urban decay or physical deterioration. Brokers interviewed indicated that the lack
of new retail development in Petaluma has constrained the retail market and kept vacancies low.
Keegan & Coppin, a real estate brokerage firm with a strong presence in Sonoma County, reports
a third quarter 2008 vacancy rate in Petaluma of 3.8 percent, up from 3.2 percent the previous
12
quarter and 3.3 percent in third quarter 2007. By comparison, the rate reported for Sonoma
County overall for third quarter 2008 was 4.7 percent, up from 3.6 percent a year earlier. Rohnert
Park has a particularly high vacancy rate, reported at 9.3 percent in third quarter 2008. It should
be noted that the additional vacancy of Mervyns, as well as Shoe Pavilion, will add substantially
to the 93,121 square feet Keegan & Coppin lists as vacant, raising rates above five percent.
Petaluma Plaza. Petaluma Plaza is to the south of the Proposed Project, at the northwest corner
of McDowell Boulevard and East Washington Street. This center includes Petco, Ross, Trader
Joe's, Big 5 Sporting Goods and a number and variety of smaller stores. This center is
undergoing a major upgrade, with a former JC Penney being replaced by a Raley’s supermarket,
12
Discussion based on various reports available at http://www.keegancoppin.com. Other brokers directly
interviewed reported higher rates, but did not provide the same level of quantitative support. BAE’s field
survey indicated very limited retail vacancies in Petaluma, with the exception of the Theater Square project,
where initial absorption is underway at a somewhat slow rate.
27
which is currently under construction. The imminent opening of this additional supermarket will
absorb much of the leakage for food store sales in the Trade Area, and both the Raley’s and the
Trader Joe’s will compete with a small grocery store in Deer Creek Village.
Petaluma Plaza North. This center is directly to the north of Petaluma Plaza on McDowell and
13
includes a Kmart, Longs Drugs, and a mix of other smaller retailers. While Petaluma Plaza next
door has undergone a major facelift, this center’s appearance is somewhat dated, but the center
appears to be well-maintained. The Longs in this center would be directly competitive with a
new pharmacy in the Proposed Project.
Washington Square. This 219,000 square-foot center is located diagonally across from
Petaluma Plaza, on the southeast corner of McDowell and East Washington. The major anchor
retailers were Mervyns and Safeway, but in October 2008, the Mervyns chain, already in
bankruptcy, announced that they would be closing all their remaining outlets by the end of 2008,
including their 66,916 square-foot space in this center. This is now the largest vacant retail space
in the Trade Area. The Safeway in this center would compete with the food store at Deer Creek
Village.
Redwood Gateway Center. This center is located on the southwest corner of North McDowell
Boulevard and Old Redwood Highway, at the north end of Petaluma. At buildout, the center will
have a total of 166,713 square feet of space. Major tenants in this center include Kohl’s,
Michaels Arts and Crafts, and Pier 1. This 95,900 square-foot Kohl’s is classified as an apparel
store by the State Board of Equalization, but also carries housewares and other household items,
in a product mix very similar to Mervyns, and would compete with an apparel/home goods outlet
in the Proposed Project. One large space in this center currently vacant was occupied by Shoe
Pavilion, which recently closed all of its outlets.
This Kohl’s accounts for a substantial portion of apparel store sales in the City, and is the largest
apparel outlet in Petaluma. An examination of historic trends (as shown in Appendix C) shows
that prior to Kohl’s opening, apparel stores sales peaked at approximately $30 million in 2000;
subsequent to the opening of Kohl’s, sales climbed to $65 million in 2007. Some of this has been
at the expense of general merchandise stores, where annual sales have declined by $16.5 million
since 2001. JC Penney also closed their Petaluma store in this same time frame. Assuming that
the increase is largely due to Kohl’s, sales performance in that store is in the range of $300 per
14
gross square foot, well above the Kohl’s national average.
Downtown Petaluma. Downtown Petaluma has the small Ace Hardware as discussed above. In
addition, the fitness club assumed for Deer Creek Village will be relocating from Downtown,
leaving their current space vacant. Other smaller specialty stores may also be affected by the
Proposed Project. As of 2004, Downtown and surrounding areas had an estimated 362,000
13
The Longs Drugs company recently announced its acquisition by CVS, a major national pharmacy chain.
Based on Kohl’s Fact Book for Quarter Ended November 1, 2008, sales and store size data from FY
2007. Kohl’s national average is $249 per selling square foot, and $212 per gross square foot.
14
28
15
square feet of retail space, largely configured as small storefronts on Petaluma Boulevard and
nearby streets. Recently, the Theatre District Project has added approximately 86,000 square feet
of additional retail space to the Downtown area. Also, the largest single-user space Downtown,
the 18,000 square-foot former Carrithers department store, which had been occupied by a
furniture store for several years, is currently vacant. The broker representing this space reports
that it is available both for lease and for sale.
Petaluma Village Premium Outlets. This factory outlet center consists of specialized off-price
outlets that operate in a specialized niche not directly competitive with the Proposed Project.
This center may account in part for the high apparel sales in Petaluma, attracting visitors from
beyond the Deer Creek Village Trade Area with stores such as the Saks Fifth Avenue Outlet. At
the time of BAE’s most recent visit, the Food Court was closed and undergoing remodeling.
Other Retail Nodes. Other retail centers of note in Petaluma include the Orchard Supply
Hardware center on North McDowell near the new Redwood Gateway Center and discussed
above: Petaluma Gateway, anchored by a Lucky Supermarket; the Golden Eagle Center on the
edge of Downtown, anchored by Grocery Outlet; the Town and Country center on Petaluma
Boulevard North, anchored by another Lucky; the center anchored by the G&G Market
supermarket on Sonoma Mountain Parkway; and the center on East Washington Street anchored
by another Longs Drugs.
In the City of Sonoma, there are additional centers, but these are either local-serving, with stores
such as Safeway, Rite-Aid, and Longs, or tourism-oriented. While the Trade Area for Deer Creek
Village encompasses this area, this is primarily with respect to the anchor store, not the more
local-serving pharmacy and food store assumed as tenants, which will largely compete with
outlets in Petaluma itself.
15
Petaluma Leakage & Sustainable Retail Strategy Study, June 2004, Thomas Consultants, Inc.
29
30
Summary of Retail Sales Analysis
Over the last decade, Petaluma’s taxable retail sales have grown at a higher rate than population.
On an inflation-adjusted basis, sales peaked at $794 million in 2005, and as of 2007 had declined
to $758 million. However, while overall Petaluma is showing long-term increases in retail sales,
nearly half of its growth has been in the motor vehicle sector, where Petaluma shows
proportionally strong sales, even as sales in this sector have declined since 2005. Limiting the
analysis to the major categories assumed for tenancy at Deer Creek Village by excluding the
motor vehicle-related sectors presents a different comparative picture. For the suitable sectors,
Petaluma shows 2007 sales of only $402 million, compared to $430 million in Novato and $507
million in Rohnert Park.
Per capita retail sales are an indicator of the relative strength of a city as a retail destination; other
factors being equal, higher per capita sales relative to the region and other cities point toward
attraction of shoppers from outside the city. Petaluma’s per capita sales in the key retail
categories likely to be tenants in Deer Creek Village are another indicator of the city’s weakness
as a retail destination, with key category per capita sales in recent years at or below Countywide
levels, while surrounding cities outperform the County and Petaluma. This is especially the case
for Rohnert Park, which saw a sharp increase in per capita sales in the earlier part of this decade
that indicated increasing capture from outside the city, enlarging its share of regional sales.
Petaluma has relatively low sales in the building materials store category in comparison to
16
Rohnert Park, but sales are still above Novato’s. On a per capita basis, Petaluma lags behind the
County in this category. Petaluma lags behind Rohnert Park, Novato, and Sonoma County in
general merchandise sales. Both Petaluma and Novato have lower sales than Rohnert Park in the
home furnishings and appliances store category. For apparel stores, food stores, and other retail
outlets Petaluma actually has stronger per capita taxable sales than either Rohnert Park or Novato.
Apparel store sales are enhanced by the outlet mall and Kohl’s.
Key components of the demand for new retail space in the Trade Area are capture of sales to
Trade Area residents that are currently occurring elsewhere (leakage), and population and income
growth. BAE has conservatively assumed no increase in sales from income growth, so the
estimates here for retail sales potential will be based on leakage and population growth only.
Using 2007 taxable sales data as a baseline and adjusting for nontaxable items, the Trade Area
shows significant leakage for General Merchandise Stores, Food Stores, Home Furnishings and
Appliances, Building Materials, and Other Retail.
There are three major building materials store competitors to Lowe’s in Petaluma, and two
elsewhere in the Trade Area: Orchard Supply Hardware, Tomasini’s Rex Ace Hardware &
Country Store, and M. Masselli & Sons in Petaluma in Petaluma, and Friedman’s Home
Improvement in the City of Sonoma and Parsons Lumber and Hardware in Boyes Hot Springs.
16
Once again, it should be noted that analysis uses sales data predating the announced closure of Yardbirds
Home Depot.
31
Major retail nodes in Petaluma include Petaluma Plaza, Petaluma Plaza North, Washington
Square, Redwood Gateway Center, Downtown Petaluma, and Petaluma Village Premium Outlets.
Other retail centers of note in Petaluma include the Orchard Supply Hardware center, Petaluma
Gateway, the Golden Eagle Center, the Town and Country center, the center anchored by the
G&G, and the center on East Washington Street anchored by another Longs Drugs.
Overall, “on the ground” retail conditions in Petaluma appear relatively healthy; there are few
vacancies, with the largest being the recently vacated Mervyns, and although in some cases the
key retail nodes are somewhat dated in appearance and function, none currently exhibit
substantial signs of urban decay and physical deterioration. The limited new retail development
in Petaluma in recent years has constrained the retail market and kept vacancies low.
32
Retail Impacts Analysis
This chapter provides estimates of the impacts on sales at existing retail outlets with the Proposed
Project in place. This section begins by estimating sales in Deer Creek Village, and then makes
assumptions regarding the capture from leakage, capture from residents living outside the Trade
Area, and capture from existing retailers in the Trade Area. The inventory of competing retail
nodes is discussed and the impacts are then analyzed.
Estimated Sales in Proposed
Project
BAE has estimated baseline retail
sales levels of Deer Creek Village
upon completion in 2011, assuming
stabilized performance and a full year
of operations. As shown in Table 10,
the Proposed Project is projected to
achieve total annual sales of
approximately $82.7 million. Sales in
the building materials anchor store of
the project constitute the largest share,
and are estimated at $35.5 million,
followed by the apparel store at $12.1
million. The pharmacy (general
merchandise store), the food store, the
restaurants, and the other retail store
segments each are estimated to
generate sales in the range between $5
million and $7.5 million.
Table 10: Estimated Annual Sales in Project
Store Component
Apparel Stores
Food Stores
Building Materials
Service Stations
Other Retail
Non Retail
Total
Square
Feet (a)
50,300
14,820
13,969
12,000
18,000
122,256
22,500
61,250
315,095
$280
$0
Estimated
Sales
in Proposed
Project
$12,072,000
$7,410,000
$6,426,000
$5,280,000
$9,774,000
$35,454,000
$0
$0
$6,300,000
$0
$263
$82,716,000
Potential
Sales
per SF (b)
$240
$500
$460
$440
$543
$290
All sales estimates in 2007 dollars. Estimated sales rounded to nearest thousand.
(a) Derived from Table 1 per latest site plan available.
(b) Sales per square foot in relevant categories has been derived as follows.
Apparel Stores
Apparel sales per square foot based on averaging the
estimated sales per square foot for TJX Corp (TJ Maxx,
Marshall's) and Ross Stores.
Average of averages of sales per square foot for
Walgreens, CVS, Longs, and Rite Aid from most recent
Annual Reports and 10-Ks.
Food Stores
Based on reported Fresh & Easy sales per square foot,
adjusted for total vs. sales square footage. While tenant
is unconfirmed, this would be a likely type of tenant for
this space.
Restaurant sales per square foot based on averaging
the lowest and highest estimates from HdL for each
subcategory.
Average sales per square foot for Circuit City
Superstores, from most recent Circuit City Annual
Report.
Building Materials
Building Materials sales per square foot based on
average of most recent Lowe's and Home Depot
Annual Reports, adjusted for selling vs. total square
footage. While Lowe's has sales per square foot below
Home Depot on average, this location will not be
competing with a large warehouse-style Home Depot in
Petaluma.
Other Retail Stores
Other Retail sales per square foot based on averaging
the lowest and highest estimates from HdL for each
subcategory.
Sources: Bay Area Economics 2008, based on information from the CA State Board of Equalization,
2000 U.S. Census, 2002 Census of Retail Trade, Association of Bay Area Governments, Urban Land
Institute/ICSC, Walgreens, CVS, Rite Aid, Longs, Lowe's, Home Depot, Ross Stores, TJX Companies,
and Circuit City Annual Reports, Tesco, Merlone Geier, and Hinderliter de Lamas 2007 (HdL).
33
Capture of Leakage by Proposed Project
In Table 11, BAE estimates the Proposed Project’s potential capture of leakage by major store
category for the assumed first full year of project operation, 2011, and for five years later, in
2016. The analysis indicates substantial leakage of Trade Area resident retail expenditures in
several major store categories, including general merchandise, food, home furnishings/appliances,
building materials, and other retail. However, it would be speculative to conclude that any given
project could capture all of the leakage in any particular major store category, since that project
would not cover all the specific store types within each major category, and even for a particular
market niche, some shoppers would have preferences for certain stores or items not available in
the project.
Because of Lowe’s, Deer Creek Village should capture a significant percentage of the leakage
occurring in the building materials store category. The analysis here assumes a two-thirds
capture of the estimated $42.5 million annual sales leakage in 2011. Because some local
residents will still prefer to shop at other stores not found in the Trade Area (e.g., shoppers who
prefer Home Depot over Lowe’s), some leakage will still not be captured by Lowe’s even with its
broad range of merchandise.
Capture of leakage in the general merchandise store and food store categories is assumed to be
minimal, since the store types proposed (pharmacy and small grocery store) are smaller
convenience-oriented stores similar to existing outlets and more likely to cannibalize sales from
those outlets.
Because of the lack of a similar outlet in Petaluma, the assumed home electronics store is
assumed to capture 25 percent of leakage; this is limited in large part by the size of the store and
thus its ability to compete with larger outlets in San Rafael, Santa Rosa, and beyond.
In the Other Retail stores category, because of the limited size of the store space available,
potential capture has been estimated at 7.5 percent of leakage. It should be noted that the actual
capture of leakage in this category will depend in large part on the specific store types that locate
in the project.
By 2016, an increasing dollar amount of leakage would occur with if the project were not built
and one assumes the same retail mix as in baseline 2008 conditions, and the dollar amount of
sales capture would increase also.
34
Table 11: Capture of Leakage in Deer Creek Village
2011 Trade Area Leakage Analysis
Store Category
Apparel Stores
Food Stores
Building Materials
Service Stations
Other Retail Stores
2016 Trade Area Leakage Analysis
Store Category
Apparel Stores
Food Stores
Building Materials
Service Stations
Other Retail Stores
Per Capita
Injection/
(Leakage)
2007 $
$248
($882)
($559)
$211
($242)
($411)
$889
($58)
($595)
Total
Capture,
Injection/
Proposed
(Leakage)
Project
2007 $ 000
$25,700
0%
2.5%
($91,100)
2.5%
($57,700)
$21,800
0%
25%
($25,000)
67%
($42,500)
$91,800
($6,000)
7.5%
($61,500)
Per Capita
Injection/
(Leakage)
2007 $
$248
($882)
($559)
$211
($242)
($411)
$889
($58)
($595)
Total
Capture,
Injection/
Proposed
(Leakage)
Project
2007 $ 000
$26,300
0%
($93,200)
2.5%
($59,100)
2.5%
$22,400
0%
($25,600)
25%
($43,500)
67%
$94,000
($6,100)
($62,900)
7.5%
Additional
Sales
2007 $ 000
$0
$2,278
$1,443
$0
$6,250
$28,333
$4,613
Additional
Sales
2007 $ 000
$0
$2,330
$1,478
$0
$6,400
$29,000
$4,718
Notes:
Per capita leakage/injection from Table 9. See Table 9 for details on methodology. Sales leakages and injections
rounded to nearest hundred thousand dollars.
Population from Table 2
2011:
2016:
103,305
105,733
Assumptions have been made regarding possible capture by the proposed project of leakage in each category; for
instance, the Trade Area is unlikely to achieve 100 percent capture of general merchandise sales, because some
general merchandise shopping is mall-based, and and shoppers seeking mall stores are likely to go to Santa Rosa or
elsewhere. The project is assumed not to capture any sales in categories such as service stations and automotive
retail.
Sources: Bay Area Economics 2008, based on information from the CA State Board of Equalization, 2000 U.S.
Census, 2002 Census of Retail Trade, Association of Bay Area Governments, Urban Land Institute/ICSC, Walgreens,
CVS, Rite Aid, Longs, Lowe's, Home Depot, Ross Stores, TJX Companies, and Circuit City Annual Reports, Tesco,
and Hinderliter de Lamas 2007 (HdL).
35
Capture of Sales from Outside the Trade Area
Although the majority of shoppers for Deer Creek Village should reside in the Trade Area,
market area boundaries are not absolute, and some shoppers from outside the Trade Area will
shop at the Proposed Project. For example, the lack of a large home improvement center in
Novato might lead to the attraction of shoppers from northern Marin County to a Lowe’s in
Petaluma. Commuters and others passing through on Highway 101 might also stop at the center.
However, the presence of similar region-serving retail nodes in surrounding or nearby cities
including Rohnert Park, Santa Rosa, San Rafael, and Napa should limit this attraction for most
store types. Out of a total of $87.2 million in sales in the Proposed Project, $5.6 million is
assumed to be captured from outside the Trade Area (see Table 12). Capture is assumed at 10
percent for Lowe’s (or $3.5 million), because the lack of a comparable store in Novato should
lead to the attraction of customers from that city and elsewhere in northern Marin County. For
the apparel, home furnishing/appliances, and other retail category, the assumed capture rate is
lower at five percent; the apparel capture is limited by the presence of many outlets in nearby
cities, and the capture for the other categories is limited in part due to the smaller footprint of the
stores and the corresponding limits on the ability to carry a broad range of items likely to attract
from a greater region. For the food store and pharmacy, captured is estimated at only three
percent, since these stores will be convenience-oriented toward local shoppers; however, the
presence of a strong regional draw such as Lowe’s may serve to attract some non-residents of the
Trade Area who are already at the center to do some convenience shopping in the Proposed
Project.
Capture of Sales from Other Outlets in the Trade Area
While a new retail center may capture sales leakages and bring in shoppers from outside the
Trade Area, it will also capture some proportion of its sales from existing outlets in the Trade
Area. Table 12 also shows estimates of the level of capture by major store category necessary to
achieve benchmark levels of sales performance at the Proposed Project. The total capture from
sales that would otherwise go to existing outlets in 2011 is estimated at $34.2 million, declining
to $33.2 million in 2016 as modest population growth creates additional retail demand.
36
Table 12: Capture from Leakage, Outside Trade Area, and Existing Outlets
2011
Estimated
Sales
in Proposed
Project (a)
$12,072,000
$7,410,000
$6,426,000
$5,280,000
$9,774,000
$35,454,000
$0
$0
$6,300,000
$ Capture
from
Leakage (b)
$0
$2,278,000
$1,443,000
$0
$6,250,000
$28,333,000
$0
$0
$4,613,000
Total
$82,716,000
$42,917,000
2016
Estimated
Sales
in Proposed
Project (a)
$12,072,000
$7,410,000
$6,426,000
$5,280,000
$9,774,000
$35,454,000
$0
$0
$6,300,000
$ Capture
from
Leakage (b)
$0
$2,330,000
$1,478,000
$0
$6,400,000
$29,000,000
$0
$0
$4,718,000
$82,716,000
$43,926,000
Type of Store
Apparel Stores
Food Stores
Building Materials
Service Stations
Other Retail
Type of Store
Apparel Stores
Food Stores
Building Materials
Service Stations
Other Retail
Total
% Capture
from
Outside
Area
5%
3%
3%
5%
5%
10%
0%
0%
5%
$ Capture
from
Outside
Trade Area (c)
$603,600
$222,300
$192,780
$264,000
$488,700
$3,545,400
$0
$0
$315,000
$5,631,780
% Capture
from
Outside
Area
5%
3%
3%
5%
5%
10%
0%
0%
5%
$ Capture
from
Outside
Trade Area (c)
$603,600
$222,300
$192,780
$264,000
$488,700
$3,545,400
$0
$0
$315,000
$5,631,780
$ Capture
from 2011
Existing
Outlets (d)
$11,468,400
$4,909,700
$4,790,220
$5,016,000
$3,035,300
$3,575,600
$0
$0
$1,372,000
$34,167,220
$ Capture
from 2011
Existing
Outlets (d)
$11,468,400
$4,857,700
$4,755,220
$5,016,000
$2,885,300
$2,908,600
$0
$0
$1,267,000
$33,158,220
(a) From Table 10.
(b) From Table 11.
(c) Percent capture from outside area times estimated sales in Proposed Project.
(d) Estimated capture from existing outlets in Trade Area equals estimated sales in project less sales captured from
leakage and sales captured from outside the Trade Area.
Census, 2002 Census of Retail Trade, Association of Bay Area Governments, Urban Land Institute/ICSC,
W algreens, CVS, Rite Aid, Longs, Lowe's, Home Depot, Ross Stores, TJX Companies, and Circuit City Annual
Reports, Tesco, and Hinderliter de Lamas 2007 (HdL).
37
However, these represent sales that would be captured in each category that year, but sales at
existing outlets (in the absence of the Proposed Project) would have grown from current baseline
levels due to population growth; changes from baseline sales, representing impacts on current
conditions, are shown below in Table 13.
Overall, in 2011 there would be a net decline for all retail sectors of only $2.7 million, or less
than one percent of the baseline 2008 total for overall retail sales. This includes categories not in
the project which gain sales that offset losses in some of the sectors represented in Deer Creek
Village, and in two categories, food stores and other retail stores, the losses due to capture from
existing outlets are estimated to be offset by gains due to Trade Area population growth.
In 2007 dollars, the declines in 2011 by major store category range from $1.3 million in building
materials stores to $9.4 million in apparel stores. As a percentage of total sales by category,
losses range from only one percent or two percent for general merchandise stores, eating and
drinking places, and building materials stores to 11 percent for home furnishings/appliances
17
stores and 12 percent for apparel stores.
By 2016, increases in overall retail demand due to population growth are projected to decrease
the capture from existing outlets. Including all retail categories including those not assumed to be
represented in Deer Creek Village, total retail sales in existing outlets are projected to increase
two percent from current estimated levels. By 2016, the only two store categories where existing
outlets are estimated to still be showing losses from 2008 levels are home furnishings/appliances
stores with a loss of $1.8 million or eight percent of baseline sales and apparel stores with a loss
of $7.5 million or nine percent of baseline sales.
17
This analysis was completed based on data not reflecting the closure of Yardbirds Home Depot. Thus it
may overstate the impacts on retailers in Petaluma, since it is possible that some of the sales at that store
will not be captured in the Trade Area, but instead will “leak” to other communities.
38
Table 13: Net Change in Sales at Existing Outlets in Trade Area from Baseline 2008
2011
Sales in
Existing
Outlets,
2011 (a)
w/o Project
$81,441,000
$118,769,000
$228,083,000
$149,509,000
$22,875,000
$89,214,000
$314,472,000
$119,441,000
$123,472,000
$ Capture
from 2011
Existing
Outlets (b)
$11,468,000
$4,910,000
$4,790,000
$5,016,000
$3,035,000
$3,576,000
$0
$0
$1,372,000
Total
$1,247,276,000
$34,167,000
2016
Sales in
Existing
Outlets,
2016 (a)
w/o Project
$83,355,000
$121,560,000
$233,444,000
$153,023,000
$23,412,000
$91,310,000
$321,863,000
$122,248,000
$126,374,000
$ Capture
from 2016
Existing
Outlets (b)
$11,468,400
$4,857,700
$4,755,220
$5,016,000
$2,885,300
$2,908,600
$0
$0
$1,267,000
$1,276,589,000
$33,158,220
Type of Store
Apparel Stores
Food Stores
Building Materials
Service Stations
Other Retail
Type of Store
Apparel Stores
Food Stores
Building Materials
Service Stations
Other Retail
Total
% Capture
from
Existing,
2011 (c)
14%
4%
2%
3%
13%
4%
0%
0%
1%
3%
% Capture
from
Existing,
2016 (c)
14%
4%
2%
3%
12%
3%
0%
0%
1%
3%
Sales in
Existing
Outlets,
2011 (d)
w Project
$69,973,000
$113,859,000
$223,293,000
$144,493,000
$19,840,000
$85,638,000
$314,472,000
$119,441,000
$122,100,000
Baseline
Sales in
Existing
Outlets,
2008 (e)
$79,387,000
$115,774,000
$222,332,000
$145,739,000
$22,298,000
$86,964,000
$306,542,000
$116,429,000
$120,358,000
Change
in Sales,
20082011 (f)
w Project
($9,414,000)
($1,915,000)
$961,000
($1,246,000)
($2,458,000)
($1,326,000)
$7,930,000
$3,012,000
$1,742,000
$1,213,109,000
$1,215,823,000
($2,714,000)
Sales in
Existing
Outlets,
2016 (d)
w Project
$71,886,600
$116,702,300
$228,688,780
$148,007,000
$20,526,700
$88,401,400
$321,863,000
$122,248,000
$125,107,000
Baseline
Sales in
Existing
Outlets,
2008 (e)
$79,387,000
$115,774,000
$222,332,000
$145,739,000
$22,298,000
$86,964,000
$306,542,000
$116,429,000
$120,358,000
Change
in Sales,
20082016 (f)
w Project
($7,500,400)
$928,300
$6,356,780
$2,268,000
($1,771,300)
$1,437,400
$15,321,000
$5,819,000
$4,749,000
$1,243,430,780
$1,215,823,000
% Change
in Sales,
20082011
-12%
-2%
0%
-1%
-11%
-2%
3%
3%
1%
-0.2%
% Change
in Sales,
20082016
-9%
1%
3%
2%
-8%
2%
5%
5%
4%
$27,607,780
2%
(a) From Table 9. Represents sales without Proposed Project in place, based on current per capita spending levels.
(b) From Table 12.
(c) Capture in 2009 divided by sales in 2009 (sales as assumed without Proposed Project).
(d) Represents estimated sales in existing outlets in Trade Areas with Proposed Project open and operating at stabilized levels.
(e) Estimated sales in existing outlets in given year with project in place. From Table 9, derived from most recent taxable sales data with adjustments for
nontaxable items
(f) Estimated change in baseline sales, subtracting baseline sales from 2008 from adjusted sales of existing outlets with project in place.
Sources: Bay Area Economics 2008, based on information from the CA State Board of Equalization, 2000 U.S. Census, 2002 Census of Retail Trade,
Association of Bay Area Governments, Urban Land Institute/ICSC, Walgreens, CVS, Rite Aid, Longs, Lowe's, Home Depot, Ross Stores, TJX
Companies, and Circuit City Annual Reports, Tesco, and Hinderliter de Lamas 2007 (HdL).
39
Impacts of Proposed Project on Petaluma’s Retail Environment
Overview. Driven by the above analysis, this section assesses how the Proposed Project might
affect the overall retail environment in Petaluma. Per Resolution No. 2008-189 N.C.S., the FEIA
should consider
[t]he estimated impacts of the proposed project on existing retail businesses, including
the potential for opportunities for business renewal and growth due to new businesses
locating in the Petaluma community, as well as the potential for negative impacts such as
reduced sales or closures.
Thus this FEIA needs to look at both positive and negative potential impacts of the proposed Deer
Creek Village project on the City’s retail environment. The above retail sales, leakage, and
capture analysis lays the groundwork for this discussion.
Opportunities for Renewal and Growth
The Proposed Project will bring new retail outlets to the City. The likely anchor tenant, Lowe’s,
represents a retail store type not currently represented in the City. Petaluma residents wishing to
shop at a large home improvement warehouse store must journey at least as far as Cotati or
Rohnert Park. There are other gaps in the City’s retail fabric that might be filled by some of the
other outlets in Deer Creek Village, e.g., a mid-size home electronics outlet. The leakage analysis
demonstrates that local residents are probably venturing to other nearby cities to shop because of
the lack of preferred stores within the City. While some sales may be captured from existing
outlets (see discussion below regarding these potential negative impacts), the project should result
in a net increase in the number of stores and in overall retail sales in Petaluma. Table 13 above
shows the overall dollar change from estimated 2008 baseline sales; in 2011 with the Proposed
Project in place, retail sales in existing stores in the Trade Area are projected to decline $2.7
million from 2008 levels, with an overall net increase in existing stores in 2016. It is important to
note that some of this net change is due to population increases in the Trade Area, and that certain
sectors directly competitive with the Proposed Project show losses for existing outlets even in
2016. Thus there is a potential mix of disruption and closure for some retail types with
backfilling of space due to growing demand in all sectors, including those not assumed for Deer
Creek Village. The potential negative and disruptive impacts are discussed in more detail in the
following section.
Potential Negative Impacts of the Proposed Project on Existing Retailers
Estimated Impacts of Proposed Project on Building Materials Outlets. As noted above,
Lowe’s fills a large gap in the retail mix in Petaluma, and as such should capture a large portion
of its sales from leakages to other cities. Factoring in population growth, it is estimated that the
decline in sales in existing stores in the building materials store sector would be minimal, at $1.3
million in 2011. By 2016, Trade Area population growth would “fill” this gap, with sales in
existing outlets recovering to above current levels. It is important to note that this analysis is
40
based on data not reflecting the closure of Yardbirds Home Depot, thus the impacts may be
overstated somewhat.
The stores with the most potential to be impacted include three outlets: Orchard Supply
Hardware, Tomasini’s Rex Ace Hardware, and M. Masselli & Sons. The Ace Hardware store
downtown is convenience and service-oriented and does not carry larger items such as appliances
or lumber; Orchard Supply is also more convenience-oriented than Lowe’s; and M. Masselli &
Sons carries a somewhat different range of building material products and caters to contractors
rather than to the general public. As discussed previously, closure of the Yardbirds Home Depot
store was announced in late January 2009. The closure of this store eliminates Petaluma’s
competitor most like the proposed Lowe’s, and while indicating current weakness in the market,
the closure may also show that smaller format stores with this profile are not able to compete
successfully with large-scale warehouse stores even when those stores are not located nearby (i.e.,
shoppers would rather drive to a large store with more selection that shop at a local store with
limited items). Some of the loss of sales in existing stores attributed to the Lowe’s, as shown in
Table 13 above, would have come from this store. For the remaining three stores, the level of
estimated losses is not such that any store should be at risk of closure.
As part of its research, BAE contacted representatives of these stores, as well as stores in the City
of Sonoma and Novato to get their impressions of the potential impacts of Lowe’s on their
businesses. Orchard Supply Hardware, the downtown Ace Hardware, and M. Masselli & Sons
responded to BAE’s queries. The Orchard Supply store manager stated that while they expected
a drop in sales, they catered to a different market niche, with the customers often being “do it
yourselfers” looking for smaller items rather than large appliances or lumber. Their store also
differentiates itself by a higher level of service and by carrying specialty parts that are not found
in the large warehouse stores. While business has slowed due to current economic conditions,
and the manager would prefer not to have Lowe’s in Petaluma, he did not foresee that this store
would close due to the Lowe’s opening. Tomasini’s Rex Ace Hardware’s store manager
expressed similar sentiments, saying that the current economy has affected business and that
Lowe’s would cause the loss of some sales but not closure, since they had a loyal customer base
that preferred not to shop in “big boxes” and relied on strong service to differentiate their small
store in the market. The representative of M. Masselli & Sons indicated that their store was more
reliant on contractors, and as a supplier of materials both new and used not found elsewhere, they
would survive even with some loss of sales to Lowe’s.
BAE also elicited responses from Parson’s Lumber and Hardware in Boyes Hot Springs. The
owner of this store emphasized that his business was based on providing a high level of service,
and because of that and the distance to Lowe’s, he felt that his store would be minimally
impacted; they already face competition similar to that of Lowe’s from the much closer
Friedman’s in the City of Sonoma, and they already compete with large-format stores in Napa,
Santa Rosa, and elsewhere.
In summary, while the competing stores may face some loss of business, the leakage analysis and
interviews with store representatives indicate that overall losses in Petaluma and the Trade Area
would not be large enough to force the closure of any remaining additional existing stores. The
41
Yardbirds Home Depot closure cannot be attributed to Deer Creek Village, a project which is at
best a few years in the future and still not through the approvals process.
Estimated Impacts of Proposed Project on Existing General Merchandise Outlets. Deer
Creek Village is slated to contain a pharmacy; while no committed tenant has been indicated to
BAE, at this time there are three major drug chains that would be likely as the tenant: Walgreens,
Rite-Aid, and CVS (which recently purchased the Longs chain). With only two large drug stores
(both Longs) currently operating in Petaluma, the City appears under-retailed in this sector. The
leakage analysis estimates that existing general merchandise stores would lose approximately
$1.9 million in sales from current levels in 2011, or two percent of overall sales. While this loss
might be focused on the two drug stores, some of the loss would likely be at other general
merchandise stores and other stores (e.g., Safeway) which have a pharmacy counter. These losses
are not of such magnitude as to indicate a likelihood of closure of any existing retail outlets.
Estimated Impacts on Existing Apparel Stores. Based on information provided by the
developer, BAE assumes the presence of a 50,300 square foot apparel/home goods store in Deer
Creek Village. Because of Kohl’s and the outlet mall, Petaluma is not assumed to be leaking
sales in this store category, thus any additional apparel outlets would capture sales in large part
from existing stores. In 2011, such a store is estimated to capture approximately 12 percent, or
$9.4 million in sales from baseline 2008 levels for existing stores; this estimated loss would
decline in 2016 to nine percent, or $7.5 million. This sizable loss might indicate a risk of closure
for existing outlets, but the level of that risk depends in part of the particular market niche of the
new store. If Kohl’s alone sustained all of this loss, the store sales would drop slightly below the
chain’s national average sales per square foot, recovering to slightly above average by 2016.
While no leakage is indicated from the analysis above, sales in the outlet mall, because of its
specialized focus, likely come in considerable part from beyond the Trade Area, and may mask
gaps in the more local-serving market for certain types of apparel stores. In any case, overall
demand increases in the Trade Area indicate the potential for re-tenanting of vacated space due to
impacts in this particular sector.
Estimated Impacts on Existing Food Stores. BAE’s analysis assumes a small convenienceoriented grocery store. Even though this store will capture sales from existing outlets, the small
size of the store relative to demand makes impacts minimal. By 2011, the leakage analysis
indicates that sales in existing food stores would be above current levels. It should be noted that
this does not directly take into account the entry of Raley’s into the market, but the leakages of
sales in this category overall in the Trade Area mean that there should be space in the Petaluma
retail mix for both of these stores.
Estimated Impacts on Existing Restaurants. The Trade Area shows attraction of sales in the
Eating and Drinking Places category (see Table 9 above), much of it due to strong tourism-related
sales in the City of Sonoma. As a result, there is no leakage to be captured, and additional
support for restaurant uses due to population growth is extremely limited. Thus, a restaurant at
the Proposed Project would likely capture sales from existing outlets. However, this capture is
very limited as a proportion of total eating and drinking places sales and the impacts on any
42
particular restaurant are unknown. One portion of the restaurant market that is under-represented
in Petaluma is national chain full-service restaurants. The Petaluma Leakage & Sustainable
Retail Strategy Study cites this as a market niche showing significant leakage of sales, despite the
18
overall attraction of sales in the Eating and Drinking Places category.
Estimated Impacts in Home Furnishings and Appliances Sector. The Proposed Project
assumes one 18,000 square-foot retailer in this category, more specifically a home electronics
store. However, Petaluma is very under-retailed in this overall category and specifically for home
appliances/electronics stores, as indicated by the analysis above. This size of home electronics
store could capture some of the leakage in this category, and with population growth, there is
strong demand for a store of this type in the Trade Area. The Petaluma Leakage & Sustainable
Retail Strategy Study cites electronics/computers as well as home furnishings, appliances, and
19
accessories as additional sectors with significant leakage of sales. The analysis shows a capture
of 11 percent of baseline sales from existing stores in this category, declining to eight percent by
2016. This level of sales decline could potentially imperil other competitors in the category, but
the lack of specificity regarding the particular retailer and its product mix makes it impossible to
point to a particular existing store being at risk. As with the potential for closure of apparel
stores, overall demand increases in the Trade Area indicate that vacated spaces could be retenanted with other retail uses within a relatively short period of time.
Estimated Impacts on Other Retail Sectors in Petaluma and the Trade Area. In the Other
Retail Stores category, 2008 baseline sales are estimated at approximately $126.4 million.
Because of the sizable leakage in this broad category, Deer Creek Village is assumed to capture
most of its sales from leakage rather than existing outlets, and any sales losses would be mitigated
by increases in population between now and 2011. The ultimate level of impact will depend in
large part on the particular retail types that end up as tenants in the project, and since the specific
retail mix for these stores is unknown at this time, it would be speculative to assume impacts on
particular stores or store types.
Impacts on Overall Retail Environment. Because of the limited impacts by retail type, and the
scattered locations of those outlets potentially impacted, the impacts of Deer Creek Village are
not focused on particular nodes, but may be spread throughout the City. As noted in the retail
inventory discussion, retail vacancy rates in Petaluma have generally trended low, due in part to
the limited retail development in recent years in contrast to other nearby cities. However, the
recent vacancies of the large spaces occupied by Mervyns and Shoe Pavilion and the impending
closure of Yardbirds Home Depot, as well as some other vacancies as the retail market has
slumped, have increased vacancy rates somewhat. Petaluma Plaza is undergoing a substantial
renewal with the addition of Raley’s which should serve to attract shoppers to both that center
and the adjoining Petaluma Plaza North.
Downtown Petaluma has evolved into a different market niche as other shopping centers have
developed in the City, offering an option for a different kind of shopping/dining/entertainment
18
19
Petaluma Leakage & Sustainable Retail Strategy Study, June 2004, Thomas Consultants, Inc.
Ibid
43
experience, along with providing a place for small local start-up businesses serving this unique
market niche. With its historic structures and ambience, the stores here cater to a larger area than
the Trade Area, attracting residents of nearby cities and day-trip tourists. Many of the stores are
in the apparel or other retail category, along with many restaurants. Whatever the impact on
particular stores, the existing Downtown as a whole will probably be minimally impacted, as it
provides a different shopping experience than the chain retail that will be largely occupy Deer
Creek Village.
Potential Cumulative Impacts
East Washington Place, located at the East Washington Street exit from U.S. Highway 101, is
another large proposed mixed-use project under development in Petaluma on a tentative schedule
similar to Deer Creek Village. As currently planned, the center will total approximately 380,000
square feet, largely in retail but with some office space. The anchor tenant, a Target discount
store, would not be directly competitive with the retail mix for Deer Creek Village. Some of the
other uses could overlap, in the categories of apparel, food, home furnishings/appliances,
restaurants, and for tenants in the small shops. The pharmacy, while in the general merchandise
category, would be more local-serving and not directly competitive with the Target.
Based on their anchor tenants, East Washington Place and Deer Creek Village are targeted in
large part toward somewhat different and complementary retail niches, and even slightly different
geographic areas. This will lessen any cumulative impacts in Petaluma. While individual outlets
might be impacted, the total capture of existing market share is limited such that the overall retail
market should be able to absorb these projects without the prospect of long-term vacancies in
existing retail spaces.
Summary of Impacts on Existing Retailers
BAE estimates that at stabilized performance levels, the Proposed Project will achieve total
annual sales of approximately $82.7 million. Sales at Lowe’s will constitute the largest share,
and are estimated at $35.5 million, followed by the home electronics store at $9.8 million, the
apparel store at $12.1 million, the pharmacy at $7.4 million, the food store at $6.4 million, the
other retail stores in the small shop spaces at $6.3 million, and restaurants at $5.3 million.
The Trade Area is estimated to be leaking sales in several major store categories, including
general merchandise, food, home furnishings/appliances, building materials, and other retail. In
the food store category and general merchandise store categories there is limited capture due to
the local-serving nature of the stores. There is a lack of significant competition in the
appliances/electronics sector in Petaluma but the small size of the store potentially in this center
would limit its ability to capture sales from large competitors in the region. In the Other Retail
stores category, there is also some potential capture of leakages, depending in part on the
particular stores that end up in the Proposed Project. By 2016, a modest increase in the dollar
amount of leakage available for capture would occur with no change in the retail mix from
baseline 2008 conditions, leading to a modest increase in estimated sales capture from leakage.
44
Although the Trade Area should account for the large majority of shoppers for Deer Creek
Village, some shoppers from outside the Trade Area will also shop at the Proposed Project. For
example, the lack of a large home improvement center in Novato might lead to the attraction of
shoppers from northern Marin County to a Lowe’s in Petaluma. However, the presence of similar
region-serving retail nodes in surrounding or nearby cities including Rohnert Park, Santa Rosa,
San Rafael, and Napa should limit this attraction. Out of a total of $87.2 million in sales in the
Proposed Project, only $5.6 million is assumed to be captured from outside the Trade Area.
While a new retail center may capture sales leakages and bring in shoppers from outside the
Trade Area, it will also capture some proportion of its sales from existing outlets in the Trade
Area. Overall, in 2011 there would be a net decline for all retail sectors of only $2.7 million, or
less than one percent of the baseline 2008 total for overall retail sales. Net sales captures are
assumed for building materials, apparel, general merchandise stores, eating and drinking places,
and home furnishings/appliances. In two categories, food stores and other retail stores, the losses
due to capture from existing outlets are estimated to be offset by gains due to Trade Area
population growth.
By 2016, increases in overall retail demand due to population growth are projected to decrease
the capture from existing outlets. Including all retail categories including those not assumed to be
represented in Deer Creek Village, total retail sales in existing outlets are projected to increase
two percent from current estimated levels. By 2016, the only two store categories where existing
outlets are estimated to still be showing losses from 2008 levels are home furnishings/appliances
stores and apparel stores.
Lowe’s fills a large gap in the retail mix in Petaluma, and as such should capture a substantial
portion of its sales from leakages to other cities. Factoring in population growth, it is estimated
that the decline in sales in existing stores in the building materials store sector would be minimal,
at $1.3 million in 2011; since this calculation assumes Yardbirds Home Depot as part of its
baseline, the actual capture from existing stores may be less. By 2016, Trade Area population
growth would “fill” this gap, with sales in existing outlets recovering to above current levels.
Given that the closure of Yardbirds Home Depot will have already occurred, the specific stores
with the most potential to be impacted include three remaining outlets: Orchard Supply
Hardware, Tomasini’s Rex Ace Hardware, and M. Masselli & Sons. However, none of these
stores carries the broad mix of products as Lowe’s, and each of them operates in a slightly
different niche, especially with respect to conveniences and service. The two stores in or near the
City of Sonoma are distant enough that they should not face a severe loss of sales. In summary,
while the competing stores may face some loss of business, the leakage analysis and interviews
with store representatives indicate that overall losses in Petaluma and the Trade Area would not
be large enough to force the closure of additional stores.
For general merchandise stores, food stores, restaurants, and other retail outlets, the level of
capture from existing outlets is limited and the losses are not of a magnitude as to indicate a
likelihood of closure of any existing retail outlets. For apparel and home furnishings/appliance
stores, the losses are greater. However, the sales attraction for the outlet mall from beyond the
Trade Area may mask gaps in the more local-serving market for certain types of apparel stores.
45
A home electronics store may attract additional sales from the Novato area due to the lack of such
an outlet in that city. In any case, overall demand increases in the Trade Area indicate the
potential for re-tenanting of vacated space due to impacts for these two sectors, or for the other
sectors.
Because of the limited impacts by retail type, and the scattered locations of those outlets
potentially impacted, the impacts of Deer Creek Village are not focused on particular nodes, but
may be spread throughout the City. While retail vacancies have been low in recent years, the
closure of Mervyns and Shoe Pavilion will cause a jump in vacancy rates.
Downtown Petaluma has evolved into a different market niche as other shopping centers have
developed in the City, offering an option for a different kind of shopping/dining/entertainment
experience, along with providing a place for small local start-up businesses serving this unique
market niche. With its historic structures and ambience, the stores here cater to a larger area than
the Trade Area, attracting residents of nearby cities and day-trip tourists. Many of the stores are
in the apparel or other retail category, along with many restaurants. Whatever the impact on
particular stores, the existing Downtown as a whole will probably be minimally impacted, as it
provides a different shopping experience than the chain retail that will be largely occupy Deer
Creek Village.
The Proposed Project will bring new retail outlets to the City. The anchor tenant, Lowe’s,
represents a retailer not currently present in the City. Petaluma residents wishing to shop at a
large home improvement warehouse store must journey at least as far as Cotati or Rohnert Park.
There are other gaps in the City’s retail fabric that might be filled by some of the other outlets in
Deer Creek Village, e.g., a home electronics outlet. The leakage analysis demonstrates that local
residents are probably venturing to other nearby cities to shop because of the lack of preferred
stores within the City. While some sales may be captured from existing outlets, the project
should result in a net increase in the number of stores and in overall retail sales in Petaluma. In
summary, there is a potential mix of disruption and closure for some retail types with backfilling
of space due to growing demand in all sectors, including those not assumed for Deer Creek
Village.
46
Employment Impacts
The second major component of an FEIA as requested per the Council Resolution is an analysis
of potential employment impacts in the City of Petaluma, including types of employment
generated, likely wages and benefits relative to industry standards and/or the City’s Living Wage.
This chapter assesses those impacts to the extent possible with available data.
Employment
Job Creation. Deer Creek Village will create both temporary and permanent jobs in Petaluma.
Assuming the project has a one year construction period, the Proposed Project will create an
20
estimated 331 temporary jobs in construction-related fields.
A majority of the permanent jobs created will be in retail and related sectors, but the
medical/office component will provide jobs in office or medical occupations. The project
sponsor indicated that Lowes expects to employ between 175 and 200 individuals at Deer Creek
Village. Between 70 and 75 percent of these jobs would be full-time positions.
Because specific likely tenants for the remaining retail spaces have not been confirmed, BAE
estimated new employment levels for these spaces based on the projected tenant mix and
frequently used employee density figures which indicate the square footage of floor space per
employee. According to a 2001 Employment Density Study prepared for the Southern California
Association of Governments, regional retail stores average approximately 900 square feet per
employee. Other commercial uses such as restaurants and offices have higher employment
densities. As shown in Table 14, the Proposed Project is expected to generate 510 new jobs,
including 343 full-time positions and 167 part-time positions. An estimated 409 jobs would be in
retail and related sectors.
With the exception of Lowe’s, the ratio of part-time and full-time workers here is estimated based
on an analysis of retail workers throughout California from the 2000 Census Public Use
Microdata Sample, which provides a breakdown of this ratio by detailed industry sector not
available elsewhere. Because the ratio is derived this way, comparison of the mix in the Proposed
Project to “norms” would effectively be circular.
It is important to note also that part-time employment is more suitable for certain workers and is
thus not necessarily involuntary or inherently an indicator of underemployment or
underutilization of the labor force. For instance, part-time work can be more appropriate for
younger persons still attending school, parents attempting to balance child care needs and careers,
or retired persons seeking some supplemental income. National data from the Current Population
20
This estimate was arrived at using IMPLAN, an input-output model. IMPLAN assumes a certain value of
construction per employee-year in a given area such as Sonoma County. Since construction has been
assumed to take 12 months, employee-years in this case are equivalent to the number of employees. The
cost of the construction is derived from the fiscal impact analysis below (see Table 20).
47
Survey indicate that for the combined retail and wholesale sectors, out of a total of approximately
5.1 million workers in part-time positions, only 13 percent were working part time for economic
reasons (e.g., slowing of business in the workplace, could only find part-time work); the
remainder were working part time due to a desire to work part-time, vacations, illness, or other
21
reasons.
Table 14: Estimated Permanent Employment
Square
Feet
Home Improvement (Lowe's) (b)
Apparel/Home Goods
Electronics
Pharmacy
Restaurants
Grocery
Small Shop Tenants
122,256
50,300
18,000
14,820
12,000
13,969
22,500
Total Retail and Food Services
253,845
Bank
Fitness/Health Club
Medical/Office
Total
5,000
44,450
11,800
315,095
Employee
Density
(Sq. Ft./Emp)
n/a
900
900
400
400
400
400
400
900
300
Employment
Part-Time (a) Full-Time
Total
53
24
3
11
13
12
22
122
32
17
26
17
23
34
175
56
20
37
30
35
56
138
271
409
3
19
8
10
30
31
13
49
39
167
343
510
Notes:
Some totals may not sum from parts due to independent rounding.
(a) Estimated percentage of employees who are part-time (less than 35 hours per week) based on an
analysis of ratio of full and part-time employment by key industry sectors derived from the 2000 Census
Public Use Microdata Sample (PUMS). See Appendix G.
(b) Lowe's employment figures provided by Lowe's. Approximately 30
percent of employees will be part-time.
Sources: SCAG Employment Density Summary Report, 2001; U.S. Census 2000 Public Use Microdata
Sample; Lowe's ; BAE, 2009.
Net Employment Impacts. The entrance of new retail, including a Lowe’s, into Petaluma would
increase overall employment in the City, but nevertheless could result in a loss of sales at existing
retail outlets as they adjust to lower sales levels due to the capture of some sales in the Proposed
Project. Using average sales per employee, changes in sales can be translated into estimated
changes in employment levels. As shown in Table 15 below, if the Proposed Project opened in
2011, it would result in a loss of 48 retail jobs in existing retail outlets in the City of Petaluma
22
from baseline 2008 levels. By 2016, however, expected gains in population would lead to
21
2007 Current Population Survey, Characteristics of the Employed, Table 21, Bureau of Labor Statistics.
Some of these losses could conceivably occur outside Petaluma but within the Trade Area, but to be
conservative, it is assumed here that all job losses will occur within the City. Additionally, this figure is
based on conditions at the assumed date of project opening in 2011, after sales levels have increased due to
project population increases. If Deer Creek Village opened in 2008, the loss of jobs from baseline levels
would be higher.
22
48
overall estimated retail employment in Petaluma in existing outlets being greater than current
baseline levels, although existing retailers in some sectors (e.g., apparel, home
furnishings/appliances) could still see losses.
Table 15: Change in Employment at Existing Retail Outlets in the Trade Area
2011
Type of Store
Apparel Stores
Food Stores
Building Materials
Service Stations
Other Retail
Change
in Sales,
20082011 (a)
w Project
($9,414,000)
($1,915,000)
$961,000
($1,246,000)
($2,458,000)
($1,326,000)
$7,930,000
$3,012,000
$1,742,000
Total
($2,714,000)
2016
Type of Store
Apparel Stores
Food Stores
Building Materials
Service Stations
Other Retail
Change
in Sales,
20082016 (a)
w Project
($7,500,400)
$928,300
$6,356,780
$2,268,000
($1,771,300)
$1,437,400
$15,321,000
$5,819,000
$4,749,000
Total
$27,607,780
Sales
per
Employee (b)
$129,000
$266,000
$213,000
$216,000
$235,000
$401,000
$370,000
$164,000
$234,000
Change in
Employment,
Existing
Retail Outlets
-73
-7
5
-6
-10
-3
21
18
7
-48
Sales
per
Employee (b)
$129,000
$266,000
$213,000
$216,000
$235,000
$401,000
$370,000
$164,000
$234,000
Change in
Employment,
Existing
Retail Outlets
-58
3
30
11
-8
4
41
35
20
79
(a) Estimated change in baseline sales, subtracting baseline sales from 2008 from adjusted sales of existing
outlets with project in place. From Table 13.
(b) Based on Appendix E. County sales and employee totals have been re-aggregated into BOE categories,
inflated to 2007 dollars, to derive sales per employee. Rounded to nearest thousand.
Census, 2002 Census of Retail Trade, Sources: Bay Area Economics 2008, based on information from the CA
State Board of Equalization, 2000 U.S. Census, 2002 Census of Retail Trade, Association of Bay Area
Governments, Urban Land Institute/ICSC, Walgreens, CVS, Rite Aid, Longs, Lowe's, Home Depot, Ross
Stores, TJX Companies, and Circuit City Annual Reports, Tesco, and Hinderliter de Lamas 2007 (HdL).
While the Proposed Project is anticipated to create an initial reduction of employment at existing
retail outlets, the losses would be offset by the 409 retail jobs created by Lowes and other tenants.
This would result in a net job creation of 361 new retail positions. As shown in Table 16, net
49
retail employment created by the Proposed Project alone would amount to over three-quarters of
the City of Petaluma’s retail job growth as projected by the Association of Bay Area
Governments for the 2010 to 2015 period.
Table 16: Net Retail Employment, 2011
Job Creation, Proposed Project
Job Losses, Existing Retail Outlets (a)
409
(48)
Net Job Creation
361
Projected Retail Job Growth, 2010-2015 (b)
440
Notes:
(a) Estimated job losses at exiting retail outlets in 2011.
(b) ABAG projected growth for Petaluma.
Sources: ABAG, 2007; BAE, 2009
Wages and Benefits
Wages. While a large proportion of employment opportunities at Deer Creek Village would be in
retail sales and related occupations, the Proposed Project can also be expected to generate jobs in
other areas such as food preparation and serving, building and grounds cleaning and maintenance,
medical-related, and office and administrative support. Estimated employee wages will vary
depending on the particular occupation. Table 17 provides wage data for relevant occupations in
the Santa Rosa-Petaluma region.
Table 17: Estimated Wages for Likely Occupations in Proposed Project
Average
Annual
Wage
Sales & Related Occupations
Food Preparation & Serving-Related Occupations
Building & Grounds Cleaning & Maintenance Occupations
Office & Administrative Support Occupations
Construction & Extraction Occupations
Healthcare Practitioners & Technical Occupations
Healthcare Support Occupations
$39,801
$21,775
$27,482
$36,367
$52,804
$74,449
$32,309
Average
$19.14
$10.47
$13.21
$17.48
$25.39
$35.79
$15.53
Hourly Wage
25th
Percentile
Median
$9.52
$8.19
$9.53
$12.70
$18.99
$22.03
$11.53
$14.00
$9.17
$11.88
$16.73
$24.92
$31.71
$14.83
75th
Percentile
$21.94
$11.42
$15.42
$21.40
$30.52
$44.94
$18.84
Wage data reported for Santa Rosa-Petaluma MSA for 1st quarter 2008.
Sources: CA Employment Development Department, 2008; BAE, 2009.
As do many employers, Lowe’s considers their wage information proprietary, so BAE did not
obtain typical wages for various positions at the store. Nevertheless, wages for employees at
Lowe’s and other tenants at Deer Creek would likely be comparable to the prevailing market
wages in the area.
50
The City of Petaluma adopted a Living Wage Policy in January 2007, which is intended to ensure
that City employees and employees of City contractors earn an hourly wage that is sufficient to
live with dignity and to achieve self-sufficiency. Although the Living Wage Policy does not
apply to private sector employers who do not do business with the City, it serves as a standard
against which to compare average wages for relevant occupations.
The current living wage, which was updated on January 1, 2008, is $13.64 per hour without an
employee medical benefit plan and $12.14 per hour with an employee medical plan. The average
wage data presented in Table 17 above does not provide information on the level of medical and
other benefits offered to employees in conjunction with their wage. Nevertheless, the average
wages for sales and related occupations, office and administrative support occupations,
construction and extraction occupations, and the two healthcare occupational sectors shown
exceed the $13.64 living wage hourly standard for employees without medical benefits. Food
preparation and serving-related occupations have the lowest average wage at $10.47 per hour, but
food servers often earn tips that supplement their wage income. The 25th percentile wages,
however, are below the living wage levels for all but the office and construction occupational
categories, indicating that starting wages for new hires could be below the living wage levels. It
is important to note, though, that the wage data shown here are based on typical Sonoma County
retail wages; the Proposed Project’s employment structure would not necessarily provide lower
wages than are normally found for retail workers in the area. At the other end of the pay scale,
medical office tenants would employ workers in higher-skill and higher-paying occupations,
including doctors, nurses, and technical workers.
Benefits. Benefit packages associated with different positions will vary by tenant for part-time
and full-time employees. The Lowe’s Corporation offers full-time employees medical, vision,
and dental plans, disability and life insurance, flexible spending accounts, a 401(k) plan, and an
employee stock purchase plan. Part-time employee benefits include a part-time health and dental
plan, a vision plan, part-time disability and life insurance, as well as a 401(k) and employee stock
purchasing plan. Employees select the benefit options that meet their needs. Each year, Lowe’s
decides how much the company will contribute toward employee benefits costs. Employees may
be required to pay for all or a portion of the benefits they select. The cost of benefits is
determined by the options and coverage levels selected by each employee.
Benefit packages for other tenants in the Proposed Project would vary by outlet and owner, and
could vary from extremely limited or no benefits up to or beyond the level provided by Lowe’s.
51
Summary of Employment Impacts
Deer Creek Village is estimated to result in a net gain of 361 retail jobs in the Trade Area in
2011. The project is projected to generate 331 construction jobs, and 510 permanent jobs, with
409 of these in the retail sector. Of the permanent jobs, slightly more than two-thirds are
projected to be full-time jobs; an estimated 175 of the total permanent jobs are associated with the
Lowe’s anchor store. Retail employment in general is typified by a large component of part-time
workers; the Proposed Project is not extraordinary in its mix of full and part-time retail jobs.
While full-time work is often sought, and some part-time workers would choose full-time work
given the option, part-time work is more suitable for certain types of workers such as youths still
in school, parents balancing child rearing and careers, and retirees seeking supplemental income.
The project is expected to capture some sales from existing outlets, and those sales losses could
result in reduced employment, estimated at a loss of 48 retail jobs in existing retail outlets in
2011. By 2016, however, overall retail sales in the universe of existing outlets would be above
2008 baseline levels, leading to overall retail employment also above baseline levels, although for
some sectors existing stores would still have lower employment than in 2008. Retail employment
created by the Proposed Project alone would nearly match the City of Petaluma’s projected retail
job growth for 2010 to 2015.
Most of the permanent jobs at Deer Creek Village would be in retail occupations, but there would
also be additional jobs in other areas such as food preparation and serving, building and grounds
cleaning and maintenance, and office and administrative support, as well as medical-related
occupations if there are medical uses in the office portion of the project. Estimated employee
wages will vary depending on the particular occupation. Lowe’s reportedly pays competitive
wages that are set at or above the market average for jobs with similar skills and responsibilities,
but because wage information is proprietary, BAE did not obtain information on Lowe’s wages in
Sonoma County. Nevertheless, employee earnings at Lowe’s and other tenants at Deer Creek
Village would likely be comparable to the prevailing market wages in the area for similar types of
employment.
The average wages for sales and related occupations, office and administrative support
occupations, medical occupations, and construction and extraction occupations exceed the City’s
Living Wage standard for employees without medical benefits. Food preparation and servingrelated occupations have wages below the Living Wage, but food servers often earn tips that
supplement their wage income. While these averages are generally above the Living Wage,
starting wages for new hires could be below the living wage levels. However, the Proposed
Project’s employment structure would not necessarily provide lower wages than are normally
found for retail workers in the area.
Lowe’s provides a range of benefits for employees, including medical, vision, and dental plans,
disability and life insurance, flexible spending accounts, a 401(k) plan, and an employee stock
purchase plan, with the proportion of coverage provided by Lowe’s varying depending on the
plans selected and employee status (full vs. part-time). Benefit packages for other tenants in the
Proposed Project would vary by outlet and owner, and could vary from extremely limited or no
benefits up to or beyond the level provided by Lowe’s.
52
Fiscal Impact Analysis
Overview
The fiscal impact analysis focuses on projecting the balance of municipal revenues and municipal
service costs associated with the proposed Deer Creek Village commercial development at
buildout. Although development would not be completed by the end of 2009, all cost and
revenue estimates are in current, 2009, dollars. The primary focus of the fiscal impact analysis is
on the City of Petaluma General Fund, which receives the City’s revenues for discretionary
expenditures and funds the City’s primary public municipal services.
This analysis uses a combination of techniques to estimate the increases in costs and revenues.
Where possible, the increases in revenues are modeled following the manner in which they are
collected and allocated to the City. For example, increases in property tax revenues are based on
an estimate of the increase in assessed valuation associated with a given project component. In
other cases, where this type of detailed modeling is not possible due to lack of adequate data,
BAE utilized revenue multipliers that represent the City’s current average revenue per service
23
population . The same general approach applies to the service cost portions of the model.
Generally, this methodology presents a reasonably conservative analysis of the potential fiscal
impacts of the proposed project. Table 18 presents the development plan summary, including
estimates of the number of employees as derived above, as well as an estimate of the total number
of businesses for each use category
Table 18: Proposed Deer Creek Development Plan
Use Category
Home Improvement
Apparel/Home Goods
Electronics
Fitness/Health Club
Pharmacy
Bank
Restaurants
Grocery
Small Shop Tenants
Medical/Office
Total
Additional Service Population (a)
Square
Feet
122,256
50,300
18,000
44,450
14,820
5,000
12,000
13,969
22,500
11,800
Sq. Ft. Per
Employee
n/a
900
900
900
400
400
400
400
400
300
315,095
New
Employees
175
56
20
49
37
13
30
35
56
39
510
255
# of New
Businesses
1
1
1
1
1
1
2
1
11
4
24
(a) Service population equals resident population plus one-half the employment population.
Sources: SCAG Employment Density Summary Report, 2001; Lowe's; BAE, 2009
23
Service population equals the resident population plus one half of the number of employees. This scaling
of employees represents the lower service demand of employees relative to residents.
53
Projected General Fund Revenues
This portion of the analysis projects the anticipated increase in the City of Petaluma General Fund
revenues from the proposed commercial development. The main focus of this analysis includes
Property Tax Revenues, Property Tax In-Lieu of Vehicle License Fees (ILVLF), and Sales Tax
revenues.
Sales Tax Revenues. According to the retail impacts section of this report, the proposed project
should generate sales of approximately $82.7 million, of which 97 percent will be taxable based
on the proposed development program. The City receives 0.975 percent of all taxable sales as
Sales Tax revenues. Thus, the proposed project should generate approximately $714,000 in sales
tax revenues for the City General Fund. Table 19 shows the projected sales tax revenues from the
proposed project.
It should be noted that some portion of the development’s sales could come from existing retail
within the City, at least in the short run. Thus, the short-term projected sales tax revenues are
likely overstated to some extent. However, as the retail impacts section of the analysis shows that
overall citywide sales should grow over time, and all existing retail space should be absorbed in
the long run, these sales tax revenue projections represent a reasonable estimate for ongoing fiscal
impacts.
Table 19: Projected Sales Tax Revenues
Development Summ ary
Home Improvement
Apparel/Home Goods
Electronics
Pharmacy
Restaurants
Grocery
Small Shop Tenants
Square Feet
122,256
50,300
18,000
14,820
12,000
13,969
22,500
Sales Tax Revenues
New Taxable Sales (a)
City's Share of Taxable Sales
2009
Dollars
$73,253,100
0.975%
Total Sales Tax Revenues
Total
Sales
$35,454,000
$12,072,000
$9,774,000
$7,410,000
$5,280,000
$6,426,000
$6,300,000
Percent
Taxable
100%
100%
100%
33%
100%
30%
100%
Taxable
Sales
$35,454,000
$12,072,000
$9,774,000
$2,445,300
$5,280,000
$1,927,800
$6,300,000
$714,218
(a) Based on Table 10 with an adjustment for non-taxable sales. Adjustments are more
conservative than ratios shown per Appendix D.
Sources: City of Petaluma; BAE, 2008.
54
Property Tax Revenues. Basic
Table 20: Projected Property Tax Revenues
property taxes are equal to one percent
24
2009
of total assessed value. Since the
Property Tax Revenues
Dollars
project site is located within the
Property Tax Increment
Petaluma Community Development
New Assessed Value (a)
$62,881,107
1.0%
(PCD) area, the redevelopment agency Basic Property Tax as % of Assessed Value (b)
Other Taxing Entities Share
20.0%
receives the majority of the property
City's Share of Increment (c)
13.6%
tax increment from increased assessed
Total Property Tax Revenues
$17,041
value. However, according to the
City’s redevelopment consultant,
(a) Assessed values based on construction costs and portion
Seifel Consulting, the City will
of overall land value. See Appendix H for details.
(b) Property tax increment goes to redevelopment agency with
receive some portion of the tax
some pass through back to City General Fund.
increment. Starting in FY 09/10,
(c) Based on City's base allocation, 13.55 percent.
other taxing entities will receive a
Sources: City of Petaluma; Sonoma County Auditor-Controller;
statutory pass through equal to 20
Sonoma County Assessor's Office; Seifel Consulting, BAE, 2008.
percent of the property tax increment,
25
to be allocated in proportion to each entity’s share of the basic property tax. Since the City of
Petaluma General Fund’s Pre-ERAF allocation is 13.55 percent, the City will receive 13.55
26
percent of the 20 percent allocated to other taxing entities. As redevelopment allocation
agreements were written before ERAF legislation, and the redevelopment agency passes the
increment through to the City, the City’s share is based on its pre-ERAF allocation. However, it
27
should be noted that the State has begun asking redevelopment agencies to contribute to ERAF.
Should the State amend redevelopment law to require ERAF payments, the City could receive
less property tax revenues than this analysis projects.
To estimate the value of improvements, this analysis uses a construction cost method for
determining the assessed value of the improvements, as shown in Appendix H. Using the new
development costs as a proxy for value, the proposed project would generate approximately
$17,000 in annual property tax revenues for the City. Table 20 shows the projected property tax
revenues from the proposed project.
24
Although many properties are assessed taxes greater than one percent of assessed valuation, these
additional taxes are for specific voter-approved purposes and are not available to the General Fund.
25
Seifel Consulting, 2009.
26
Ibid.
27
Ibid.
55
Property Transfer Tax Revenues. When a property changes ownership, the City collects
property transfer taxes. These taxes total $3.10 per $1,000 of assessed value, of which the City
collects $2.00. The County collects the remaining $1.10. This analysis assumes that commercial
property changes ownership every 20 years, or turns over at an annual rate of five percent. Thus,
the City can anticipate annual property transfer tax revenues of approximately $6,300. Table 21
shows the projected property transfer tax revenues from the proposed project. It should be noted
that these revenues could vary significantly on an annual basis, depending on which project
components are sold in a given year. It may also be the case that the entire project remains under
one owner, with transfer tax revenues only occurring rarely as the entire parcel is transferred to a
new owner.
Table 21: Projected Property Transfer Tax Revenues
Property Transfer Tax Revenues
New Assessed Value
Annual Commercial Turnover Rate (a)
Amount of Assessed Value subject to Turnover (b)
Transfer Tax Rate (c)
Net Increase to City Property Transfer Tax Revenues
2009
Dollars
$62,881,107
5%
$3,144,055
$2.00
$6,288
(a) Shows the amount of assessed value subject to turnover in a given year
(b) Assumes that one twentieth of commercial spaces turnover per year.
(c) The property transfer tax rate is $3.10 per $1,000 in value, $2.00 of which goes to
the City, while $1.10 goes to the County.
Sources: City of Petaluma; Sonoma County Auditor-Controller; Sonoma County
Assessor's Office; BAE, 2008.
Property Tax In-Lieu of VLF Revenues. Beginning in the 2005-2006 fiscal year, the State
ceased to provide backfill funds to counties and cities in the form of Motor Vehicle In-Lieu Fees
(VLF) as they had through the 04-05 fiscal year. As a result of complicated financial
restructuring enacted as part of the State’s budget balancing process, counties and cities now
receive revenues from the State in the form of what is known as property tax in-lieu of vehicle
license fees, or ILVLF. This State-funded revenue source is tied to a city’s total assessed
valuation. In 2005-06, former vehicle license fee revenues were swapped for ILVLF revenues,
which set the local jurisdiction’s ILVLF “base.” The base increases each year thereafter
proportionate to the increase in total assessed valuation within the jurisdiction. Thus, if total
assessed valuation increases by ten percent from one year to the next, the ILVLF base would
increase by ten percent.
In order to calculate the increment in ILVLF revenues that would result from the construction of
the proposed project, the analysis first determines the total assessed value within the City, and the
City’s current year ILVLF revenues. The analysis then determines the percentage by which the
project would increase the City’s assessed valuation and applies that percentage increase to the
56
current year’s ILVLF revenues in order to determine the incremental amount of ILVLF
attributable to the new development.
The improvements from the proposed project would generate an 0.84 percent increase the City’s
total assessed value, resulting in project-generated ILVLF revenues of approximately $33,600. It
should be noted that the State could modify these revenue calculations between the current year
and buildout. Table 22 shows the projected ILVLF revenues from the proposed project based on
the current allocation formula.
Table 22: Projected Property Tax In-Lieu Of VLF (ILVLF) Revenues
ILVLF Revenues
New Assessed Value
2008/09 Total Citywide Assessed Value
Percent Change in Total AV resulting from Development
2008 ILVLF Revenues
Percent Increase from New Development
Net Increase to City ILVLF Revenues
2009
Dollars
$62,881,107
$7,486,941,460
0.84%
$4,000,000
0.84%
$33,595
Assessor's Office; BAE, 2008.
Franchise Fee Revenues. The City collects franchise fees on utility usage. This analysis
assumes that the proposed project would use garbage, cable, and gas and electric services
provided within the City. In total, the City collects $2.4 million in franchise fees, which
translates into approximately $32 per service population. As the proposed project would generate
a 255-person net service population increase, the City can expect to generate approximately
$8,100 in additional franchise fees. Table 23 shows the projected annual franchise fee revenues
from the proposed project.
License, Permits, and Fees Revenues. The City collects revenues on licenses, permits, and fees.
The City budget projects that in Fiscal Year 08/09, the City will collect approximately $580,000
in license, permits, and fees revenues, which translates into approximately eight dollars per
service population. As the proposed project would generate a 255-person net service population
increase, the City can expect to generate approximately $2,000 in additional license, permits, and
fees revenues. Table 24 shows the projected annual license, permits, and fees revenues from the
proposed project.
57
Table 23: Projected Franchise Fee Revenues
FY 08/09 Budget Revenues
Waste
Cable
Electric/Gas
Total Franchise Fee Revenues
2009
Dollars
$1,200,000
$750,000
$440,000
$2,390,000
Total Service Population (a)
Resident Population
Employment
74,974
58,925
32,097
Total Franchise Fee Revenues Per Service Population
$31.88
New Franchise Fee Revenues Associated with New Development
Net New Employment
Net New Service Population
Revenue Per Service Population
510
255
$31.88
Total New Franchise Fee Revenues Associated with New Development
$8,134
(a) Service Population estimated based on ABAG estimates. Service population equals the
resident population plus one-half the employment population.
Sources: ABAG; City of Petaluma FY 08/09 Budget; BAE, 2008.
Table 24: Projected Licenses, Permits, and Fees Revenues
Total Licenses, Permits, and Fees Revenues
Resident Population
Employment
2009
Dollars
$580,000
74,974
58,925
32,097
Total Licenses, Permits, and Fees Revenues Per Service Population
$7.74
New Licenses, Permits, and Fees Revenues Associated with New Development
Net New Employment
510
255
$7.74
Total New Licenses, Permits, and Fees Revenues Associated with New Development
$1,974
(a) Service Population estimated based on ABAG estimates. Service population equals the resident
population plus one-half the employment population.
Fines, Forfeitures, and Penalties Revenues. The City collects revenues on fines, forfeitures,
and penalties. The City budget projects that in Fiscal Year 08/09, the City will collect
approximately $603,000 in fines, forfeitures, and penalties revenues, which translates into
approximately eight dollars per service population. As the proposed project would generate a
58
255-person net service population increase, the City can expect to generate approximately $2,100
in additional fines, forfeitures, and penalties revenues. Table 25 shows the projected annual fines,
forfeitures, and penalties revenues from the proposed project.
Table 25: Projected Fines, Forfeitures, and Penalties Revenues
2009
Dollars
$603,000
Total Fines, Forfeitures, and Penalties Revenues
Resident Population
Employment
74,974
58,925
32,097
Total Fines, Forfeitures, and Penalties Revenues Per Service Population
$8.04
New Fines, Forfeitures, and Penalties Revenues Associated with New Development
Net New Employment
510
255
$8.04
Total New Fines, Forfeitures, and Penalties Revenues Associated with New Development
$2,052
(a) Service Population estimated based on ABAG estimates. Service population equals the resident population
plus one-half the employment population.
Business License Revenues. The proposed expansion would increase the business license fee
revenues for the City of Petaluma. Currently, all relevant business types that would be present in
the projected development pay between 0.016 percent and 0.048 percent of total gross receipts, or
a maximum $45 for annual license renewals. This analysis assumes that all of the businesses
within the proposed project would pay $45 per year for business licenses totaling $1,100 in
annual City revenues. Table 26 shows the projected annual business license fee revenues from
the proposed project.
Table 26: Projected Business License Revenues
Business License Revenues
Annual Business License Revenues per New or Existing Business
2009
Dollars
$45.00
New Business License Revenues Associated with New Development
Number of New Businesses
Revenue Per Business
24
$45.00
Total New Business License Revenues Associated with New Development
$1,080
59
Transient Occupancy Tax Revenues. Since the proposed project does not include a hotel, or
additional residential units, the City should not anticipate additional transient occupancy tax
(TOT) revenues associated with the new development.
Projected General Fund Costs
This portion of the analysis estimates the costs for the City of Petaluma to extend ongoing
services to the proposed project site. This analysis focuses on the impacts to the City General
Fund, that is, the City’s primary discretionary fund, which pays for key public services.
Following are the costs analyzed within this report.
Police Services. The Police department in Petaluma provides protective services to all City
residents and workers. In total, the City spends approximately $16.1 million of discretionary
funds on police services annually, which translates into approximately $214 per service
population. Since the proposed project would generate a 255-person net service population
increase, the proposed project would generate an increase of approximately $54,700 annually in
police services.
In reviewing this finding, it is important to note that, according to Captain Dave Sears of the City
of Petaluma Police Department, the proposed project probably would not lead to a significant
increase in service demand for police. There would likely be additional traffic and shoplifting
calls, but these calls should have a minimal impact on service demand. The Captain indicated
that new residential units generate significantly higher service demand than commercial uses.
Since this project does not contain a residential component, the estimate for new service demand
associated with the proposed project is relatively conservative. Table 27 shows the projected
police costs associated with the proposed project.
60
Table 27: Projected Police Costs
FY 08/09 Budget Expenditures
Administration
Communications
CAD/RMS
Crime Prevention
Investigation
Patrol
Auto Theft
Traffic Safety
Parking Enforcement
Records
Total Police Department Expenditures
Resident Population
Employment
2009
Dollars
$1,651,450
$1,308,700
$379,750
$438,800
$1,072,650
$9,060,850
$143,300
$1,124,500
$298,450
$588,650
$16,067,100
74,974
58,925
32,097
Total Police Department Expenditures Per Service Population
$214.30
New Police Departm ent Expenditures Associated with New Development
Net New Employment
510
255
$214.30
Total Police Department Expenditures Associated with New Development
$54,683
Fire Services. The Fire Department in Petaluma provides fire protection services to all City
residents, and dispatch services for all EMS calls within the City. In total, the City spends
approximately $7.8 million of discretionary funds on fire services annually, which translates into
approximately $104 per service population. As the proposed project would generate a 255-person
net service population increase, it would also result in an increase of approximately $26,500
annually in fire services.
According to Chief Larry Anderson of the City of Petaluma Fire Department, the proposed
project would not likely lead to a significant increase in service demand for the Fire Department,
as the project does not include a residential component and constitutes infill development;
existing stations should be able to serve the project. Table 28 shows the projected fire costs
associated with the proposed project.
61
Table 28: Projected Fire Costs
Administration
Disaster Preparedness
Hazardous Materials
Prevention
Suppression
Suppression - Apparatus
Suppression - Building/Grounds
Suppression - Communications
Suppression - Supplies
Suppression - Training
Total Fire Department Expenditures
Resident Population
Employment
2009
Dollars
$569,750
$6,650
$138,850
$306,250
$6,529,900
$105,550
$28,450
$2,000
$56,750
$37,650
$7,781,800
74,974
58,925
32,097
Total Fire Departm ent Expenditures Per Service Population
$103.79
New Fire Department Expenditures Associated with New Development
Net New Employment
510
255
$103.79
Total Fire Departm ent Expenditures Associated with New Development
$26,485
(a) Service Population estimated based on ABAG estimates. Service population equals the
resident population plus one-half the employment population.
Public Works. The Public Works Department provides engineering, traffic, and maintenance to
public infrastructure within the City. Currently, the City spends approximately $4.3 million
annually on Public Works services, or approximately $57 per service population. With the
addition of 255 net new service population persons, the proposed project would generate
approximately $14,500 in costs to the City annually. Table 29 shows the projected Public Works
Department costs associated with the proposed project.
62
Table 29: Projected Public Works Expenditures
Total Public Works Expenditures (a)
2009
Dollars
$4,259,700
Total Service Population (b)
Resident Population
Employment
74,974
58,925
32,097
Total Public Works Expenditures Per Service Population
$56.82
New Public Works Expenditures Associated with New Development
Net New Employment
510
255
$56.82
Total Public Works Expenditures Associated with New Development
$14,497
(a) Does not include CIP expenditures.
(b) Service Population estimated based on ABAG estimates. Service population equals
the resident population plus one-half the employment population.
Community Development Department. The Community Development Department for the City
of Petaluma is responsible for providing planning and building services for the City. Currently,
the City spends approximately $370,100 annually on these services, or approximately five dollars
per service population. With the addition of 255 net new service population persons from
development, the proposed project would generate approximately $1,300 in costs to the City
annually. Table 30 shows the projected costs to the Community Development Department
associated with the proposed project.
Table 30: Projected Community Development Expenditures
Total Community Development Expenditures
Resident Population
Employment
2009
Dollars
$370,100
74,974
58,925
32,097
Total Community Development Expenditures Per Service Population
$4.94
New Community Development Expenditures Associated with New Development
Net New Employment
510
255
$4.94
Total Community Development Expenditures Associated with New Development
$1,260
63
General Government. General Government refers to the administrative functions of the City,
including the City Clerk, City Manager, City Attorney, Administrative Services, Finance, and
Non-Departmental functions. This analysis assumes that as non-general government functions
increase within the City, General Government functions would increase proportionately. In this
case, the General Government functions account for approximately 6.5 percent of all General
Fund expenditures. Thus, a $100,000 increase in other City services would result in a $6,500
increase in General Government services. Table 31 shows the General Government expenditures
as a percentage of non-General Government expenditures, and shows that given the estimated
costs of non-General Government functions from the increased service population, General
Government costs would be approximately $6,300 annually.
Table 31: Projected General Government Expenditures
2009
Dollars
$147,400
$399,850
$234,700
$1,283,800
$341,100
$2,406,850
City Council
City Attorney
City Clerk (a)
Finance
Human Resources
Total General Government Expenditures
Total Non-General Government General Fund Expenditures
$36,802,800
Total General Government Expenditures as a Share of Non-General Governm ent Expenditures
New General Government Expenditures Associated with New Developm ent
6.5%
$6,339
(a) Does not include elections expenditures, as the proposed project does not include new residential units.
Parks and Recreation and Animal Services. Although the City of Petaluma provides park and
recreation and animal services to the city, these services are almost solely used by residents.
Since the proposed project does not include any new residential development, the City should not
anticipate additional service costs resulting from the proposed project.
64
Projected Net Fiscal General Fund Balance
As shown at the bottom of Table 32, this analysis estimates that the proposed project generates a
net fiscal surplus of approximately $681,100 annually to the City of Petaluma General Fund,
owing largely to the sales taxes generated. This surplus represents 1.8 percent of the City’s
General Fund budget, indicating that the proposed project would have a relatively significant
positive impact on the City’s overall fiscal position.
Table 32: Net Fiscal Impact
Revenues
Sales Tax Revenues
Property Transfer Tax Revenues
ILVLF Revenues
Franchise Fee Revenues
Licenses, Permits, and Fees Revenues
Fines, Forfeitures, and Penalties Revenues
Business License Revenues
2009
Dollars
$714,218
$17,041
$6,288
$33,595
$8,134
$1,974
$2,052
$1,080
SUBTOTAL: Revenues
$784,382
Costs (a)
Police
Fire
Public Works
Community Development
General Government
2009
Dollars
$54,683
$26,485
$14,497
$1,260
$6,339
SUBTOTAL: Costs
$103,263
Net Fiscal Impact
$681,119
(a) As the development does not include any new residential units, the
analysis assumes that increases to the Parks and Recreation and
Animal Services Departments will be zero, since workers who do not
live within the City are not likely to use these services.
Source: BAE, 2009.
65
Non-General Fund Revenues and Costs
This chapter of the analysis evaluates the potential impacts to non-General Fund costs and
revenues including development impact fees, other public revenue benefits, and public
contributions.
Development Impact Fees
In addition to providing ongoing municipal services to the new development, the City of
Petaluma may also need to increase its capital facilities, including fire suppression and law
enforcement facilities, in order to maintain current service standards and serve new development.
The City uses development impact fees to fund these improvements.
AB1600 Requirements. The fee per new development must meet the nexus requirements set
forth in AB 1600. AB 1600, adopted in 1987 as the “Mitigation Fee Act,” requires that new
development only pay its fair share of capital facility needs. Cities generally update their fees
every few years to keep in compliance with AB1600 requirements as infrastructure and facility
needs change.
Projected Development Impact Fee Revenues. In May 2008, the City of Petaluma adopted a
series of impact fee mitigation studies that set citywide development impact fees. Table 33 shows
the development impact fees that the City would collect from Deer Creek Village. Fees are
estimated to total approximately $9.2 million.
As AB1600 requirements limits the amount of development fees a city can charge based on the
nexus between new development and capital facility needs, and the City recently adopted the
current fee structure, the City should not suffer any capital facility shortfalls between need and
fees collected resulting from the proposed development.
In addition to the above development fees, the May 2008 City of Petaluma Traffic Mitigation Fee
Program Update states that “development projects adjacent to major new roadway connections,
such as Rainier Avenue, Caulfield Lane and Copeland Street, will experience higher
transportation costs for their projects because they will be responsible for dedicating right-of-way
28
and building the portion of public roadways that traverse and/or are adjacent to their properties.”
The dedication and improvements will result in significant additional City benefits. However, as
the amount of land dedicated and types of improvements have not yet been specified, it is not yet
possible to quantify the additional City benefits.
28
May 2008. City of Petaluma Traffic Mitigation Fee Program Update. Page 2.
66
Table 33: Projected Development Impact Fee Revenues
Building
Sq. Ft
303,295
11,800
Total
Fee
$18,804
$696
Square Foot
Square Foot
11,800
303,295
$24,544
$1,088,829
$261
$249
1,000 square feet
1,000 square feet
303,295
11,800
$79,160
$2,938
Retail Uses
Office Uses
$144
$138
1,000 square feet
1,000 square feet
303,295
11,800
$43,674
$1,628
Law Enforcement Facilities
Retail
Office
$217
$208
1,000 square feet
1,000 square feet
303,295
11,800
$65,815
$2,454
Library Facilities
Commercial
Office
$111
$106
1,000 square feet
1,000 square feet
303,295
11,800
$33,666
$1,251
Open Space Acquisition
Commercial
Office
$1,127
$1,078
Unit
1,000 square feet
20
11,800
$22,540
$12,720
Park Land Acquisition
Commercial
Office
$608
$581
1,000 square feet
1,000 square feet
303,295
11,800
$184,403
$6,856
Park Land Development
Commercial
Office
$1,041
$996
1,000 square feet
1,000 square feet
303,295
11,800
$315,730
$11,753
Public Facilities
Commercial
Office
$248
$237
1,000 square feet
1,000 square feet
303,295
11,800
$75,217
$2,797
Traffic (Locally Preferred) (a)
Office
$15,198
Commercial/Shoppin $14,723
1,000 square feet
1,000 square feet
303,295
11,800
$4,609,477
$173,731
Fee Type
Aquatic Center Facilities
Land Use Type
Commercial
Office
Fee
$62
$59
Commercial Linkage
Commercial
Retail
$2.08
$3.59
Community Center Facilities
Commercial
Office
Fire Suppression Facilities
Unit of
Measurement
1,000 square feet
1,000 square feet
Wastewater (b)
$1,023,754
Water Capacity
Non-Residential
Any Land Use
$18,078
$45,195
1" meter/business
2" meter/business
Storm Drain
Commercial
$9,000
Acre
Parking
Commercial
$20,000
space
Public Art
Commercial
1%
construction budget
GRAND TOTAL
21
3
$379,638
$135,585
36.29
$326,610
n/a (c)
$53,500,000
n/a
$535,000
$9,179,272
(a) Provides a more conservative estimate.
(b) Estimates from City allow for water conservation credits.
(c) Only applies to projects in the Central Petaluma Specific Plan area.
67
Other Public Revenue Benefits
The City could also anticipate additional benefits from property tax increment accruing to the
Redevelopment Agency or through developer land dedication, exactions, or developer-funded
improvements.
Redevelopment Funds. Since the proposed project is located within the Petaluma Community
Development (PCD) Area redevelopment area, the City’s redevelopment agency will receive
additional benefits from the property tax increment. According to the City’s redevelopment
consultant, Seifel Consulting, the redevelopment agency collects the property tax increment,
which equals one percent of the net new assessed value. The redevelopment agency then passes a
portion of the increment through to other agencies, including the County for administrative
services, the County General Fund and County Library, which set up contractual pass through
agreements with the redevelopment agency, and other taxing entities. As Table 34 shows, the
redevelopment agency retains approximately 49 percent of the total property tax increment,
which amounts to approximately $311,000 in 2009, and increasing in following years assuming
an increase in property values over time.
Table 34: Projected Redevelopment Agency Revenues
Property Tax Increment
New Assessed Value (a)
Basic Property Tax as a Percentage of Assessed Value
Total Property Tax Increment
Less: County Admin Share
Less: Other Taxing Entities Share, Statutory Pass Throughs (b)
Less: Contractual Pass Throughs (c)
Redevelopment Agency's Share of Property Tax Increment
Total Redevelopment Agency Revenues
2009
Dollars
$62,881,107
1.0%
$628,811
1.278%
20.000%
29.280%
49.442%
$310,897
(a) Assessed values based on construction costs and estimated land value increment since
inception of redevelopment. See Appendix H for details.
(b) Other taxing entities include all government entities entitled to a share of the base
property tax if this were not a Redevelopment Area, excepting those with contractual
agreements as shown in next item footnote. City share of this 20% is shown in Table 20.
(c) County General Fund and County Library contractually get pass throughs equal to
96 percent of their base allocations (28.6 and 1.9 percent respectively).
Assessor's Office; Merlone Geier Partners; Seifel Consulting; BAE, 2008.
Developer Contributions. Other than the dedication requirements specified in the traffic
mitigation fee study, there are currently no other specified developer contributions that would
benefit the City.
68
Public Contributions to Proposed Project
Finally, this analysis examines the cost to the City of public contributions. Such contributions
could include land write downs, tax rebates or refunds, below market or contingent loans, site
acquisition or preparation costs, fee waivers or payments, and unfunded infrastructure and public
improvement costs. According to Community Development Director Mike Moore, the City is not
planning to extend any of these payments to the Deer Creek development. Thus, no public
contribution costs should accrue to the City.
Summary of Non-General Fund Revenues and Costs
The City’s development impact fees have been recently updated, so the fees of approximately
$9.2 million should cover the public costs associated with the Proposed Project. The Petaluma
Community Development Commission should also benefit substantially from the property tax
increment, since the project is in the Petaluma Community Development Area. The City will also
benefit from the developer’s land dedication for the eventual completion of a new highway
interchange. Currently, the City has no plans to make any public contributions such as land
write-downs, tax rebates or refunds, below-market or contingent loans to the project, or to pay for
any other costs associated with the development of the project.
69
Appendices
70
Appendix A: Trade Area Census Tracts
County
Sonoma
Sonoma
Sonoma
Sonoma
Sonoma
Sonoma
Sonoma
Sonoma
Sonoma
Sonoma
Sonoma
Sonoma
Sonoma
Sonoma
Sonoma
Sonoma
Sonoma
Tract
1501
1502.01
1502.02
1503.02
1503.03
1503.04
1506.01
1506.02
1506.03
1506.05
1506.06
1507.01
1507.02
1508
1509.01
1509.02
1510
71
Appendix B: Unemployment and Labor Force Trends in Civilian Labor Force
Petaluma
2000
2001
2002
2003
2004
2005
2006
2007
November
2008 (a)
Sonoma County
Labor
Force (a)
Employment
Unemployment
Unemployment
Rate
Labor
Force (a)
Employment
31,200
31,800
31,700
31,300
31,500
31,500
31,800
32,200
30,200
30,700
30,300
29,800
30,100
30,200
30,600
31,000
1,000
1,100
1,500
1,600
1,400
1,300
1,200
1,300
3.0%
3.3%
4.6%
5.0%
4.5%
4.0%
3.6%
4.0%
253,100
257,900
258,100
254,800
256,100
256,200
258,100
262,000
244,600
248,400
244,900
240,900
243,400
244,700
247,800
250,500
8,500
9,500
13,100
13,900
12,700
11,400
10,400
11,600
3.4%
3.7%
5.1%
5.5%
5.0%
4.5%
4.0%
4.4%
33,200
31,300
2,000
5.9%
270,500
252,900
17,500
6.5%
Change, 2000-2007
1,000
Number
3%
Percent
800
3%
Unemployment
Unemployment
Rate
300
30%
8,900
4%
5,900
2%
3,100
36%
Notes: Civilian Labor Force refers to workers by place of residence. Sum may not equal parts due to independent rounding. Data
represent annual averages of monthly employment data. Uses benchmarks from March 2007.
(a) Preliminary.
Sources: California Employment Development Department; Bay Area Economics, 2008.
72
Appendix C-1: Petaluma Taxable Retail Sales Trends, 1997 to 2007 (Adjusted for Inflation)
City of Petaluma Sales in 2007 $000 (a) (b)
Apparel Stores
Food Stores
Building Materials and Farm Implements
Auto Dealers and Auto Supplies
Service Stations
Other Retail Stores
1997
$27,833
$54,344
$46,031
$56,002
$17,251
$34,198
$161,112
$46,288
$62,493
1998
$30,055
$60,076
$46,166
$58,862
$18,294
$35,063
$197,818
$42,459
$67,684
1999
$28,842
$65,420
$48,142
$62,602
$18,365
$36,880
$253,726
$51,899
$81,254
2000
$30,521
$65,632
$49,229
$66,977
$20,956
$43,042
$293,227
$62,082
$91,448
2001
$29,826
$67,659
$53,825
$70,635
$18,070
$37,517
$304,741
$60,320
$89,690
2002
$28,059
$66,170
$56,250
$71,186
$19,510
$40,078
$317,920
$52,156
$91,445
2003
$28,499
$63,365
$57,889
$73,529
$18,053
$41,509
$327,462
$56,385
$92,112
2004
$39,092
$59,682
$59,309
$74,528
$17,220
$44,843
$329,118
$65,233
$100,600
2005
$47,089
$56,334
$59,642
$76,872
$17,664
$45,000
$322,471
$67,967
$100,964
2006
$50,415
$55,087
$59,829
$80,498
$16,457
$40,328
$302,244
$81,019
$98,521
2007
$65,163
$51,054
$58,100
$84,687
$13,324
$46,226
$268,358
$87,978
$83,053
$505,551
$556,477
$647,132
$723,115
$732,284
$742,775
$758,803
$789,623
$794,004
$784,398
$757,943
Deer Creek Village Retail Types (c)
$298,151
$316,200
$341,507
$367,805
$367,223
$372,699
$374,956
$395,272
$403,566
$401,135
$401,607
Petaluma Sales per Capita in 2007 $ (d)
Apparel Stores
Food Stores
Service Stations
Other Retail Stores
1997
$558
$1,089
$922
$1,122
$346
$685
$3,228
$927
$1,252
1998
$588
$1,176
$903
$1,152
$358
$686
$3,871
$831
$1,324
1999
$550
$1,247
$918
$1,194
$350
$703
$4,838
$990
$1,549
2000
$560
$1,203
$902
$1,228
$384
$789
$5,375
$1,138
$1,676
2001
$538
$1,221
$971
$1,274
$326
$677
$5,497
$1,088
$1,618
2002
$503
$1,187
$1,009
$1,277
$350
$719
$5,705
$936
$1,641
2003
$511
$1,135
$1,037
$1,318
$323
$744
$5,868
$1,010
$1,651
2004
$697
$1,065
$1,058
$1,329
$307
$800
$5,871
$1,164
$1,795
2005
$836
$1,000
$1,059
$1,365
$314
$799
$5,724
$1,206
$1,792
2006
$893
$976
$1,060
$1,426
$291
$714
$5,354
$1,435
$1,745
2007
$1,148
$900
$1,024
$1,492
$235
$815
$4,729
$1,550
$1,464
Retail Stores Total
$10,130
$10,890
$12,340
$13,256
$13,210
$13,328
$13,598
$14,086
$14,094
$13,894
$13,357
$5,974
$6,188
$6,512
$6,743
$6,624
$6,688
$6,719
$7,051
$7,163
$7,105
$7,078
Retail Stores Total
Population
49,907
51,102
52,443
54,550
55,435
55,730
55,804
56,057
56,337
56,455
56,743
(c) Excludes Building Materials, Auto, and Service Station categories.
(d) Per capita sales calculated based on State Board of Equalization reported sales and annual Department of Finance population estimates benchmarked to the decennial Census.
Sources: State Board of Equalization; 2000 U.S. Census; State Department of Finance; Bay Area Economics, 2008.
73
Appendix C-2: Sonoma City Taxable Retail Sales Trends, 1997 to 2007 (Adjusted for Inflation)
City of Sonoma Sales in 2007 $000 (a) (b) (c)
Apparel Stores
General Merchandise Stores (c)
Food Stores
Building Materials and Farm Implements (c)
Service Stations
Other Retail Stores
Retail Stores Total
Sonoma Sales per Capita in 2007 $ (c) (d)
Apparel Stores
General Merchandise Stores (c)
Food Stores
Building Materials and Farm Implements (c)
Service Stations
Other Retail Stores
Population
1997
$5,421
$17,167
$21,983
$27,022
$3,491
$15,681
$20,799
$9,820
$15,284
1998
$5,198
$17,534
$23,472
$30,202
$4,773
$15,699
$22,562
$9,611
$15,986
1999
$6,270
$18,009
$24,195
$31,300
$4,654
$17,302
$26,284
$13,782
$17,275
2000
$7,354
$17,530
$24,621
$34,269
$6,290
$17,445
$24,613
$17,577
$18,535
2001
$7,852
$18,799
$26,413
$36,859
$6,458
$17,390
$28,261
$16,944
$20,306
2002
$8,343
$18,982
$27,523
$38,091
$5,200
$17,875
$28,399
$15,124
$20,179
$136,667
$145,038
$159,069
$168,234
$179,282
$179,717
1997
$611
$1,936
$2,479
$3,048
$394
$1,768
$2,346
$1,107
$1,724
1998
$575
$1,939
$2,595
$3,339
$528
$1,736
$2,495
$1,063
$1,768
1999
$688
$1,975
$2,654
$3,433
$510
$1,898
$2,883
$1,511
$1,895
2000
$793
$1,890
$2,655
$3,695
$678
$1,881
$2,654
$1,895
$1,998
2001
$827
$1,979
$2,781
$3,881
$680
$1,831
$2,975
$1,784
$2,138
2002
$881
$2,004
$2,905
$4,021
$549
$1,887
$2,998
$1,596
$2,130
2003
$785
$1,839
$2,842
$4,254
$479
#
$2,747
$1,712
$4,004
2004
$770
$1,811
$2,814
$4,306
$463
#
$2,583
$1,995
$4,193
2005
$780
$1,744
$2,771
$4,478
$532
#
$2,129
$2,009
$4,359
2006
$779
$1,734
$2,697
$4,277
$576
#
$1,794
$2,092
$4,431
2007
$870
$1,823
$3,014
$4,174
$624
#
$2,319
$2,106
$3,970
$15,413
$16,037
$17,446
$18,138
$18,876
$18,969
$18,662
$18,935
$18,802
$18,380
$18,900
8,867
9,044
9,118
9,275
9,498
9,474
2003
$7,508
$17,599
$27,192
$40,709
$4,584
#
$26,289
$16,380
$38,317
$178,580
9,569
2004
$7,476
$17,589
$27,336
$41,830
$4,493
#
$25,096
$19,381
$40,730
$183,930
9,714
2005
$7,633
$17,059
$27,110
$43,807
$5,208
#
$20,831
$19,653
$42,639
$183,940
9,783
2006
$7,667
$17,072
$26,546
$42,100
$5,669
#
$17,657
$20,598
$43,621
$180,929
2007
$8,612
$18,049
$29,835
$41,311
$6,174
#
$22,954
$20,844
$39,292
$187,071
9,844
9,898
(c) A "#" sign indicates data supressed to preserve confidentiality due to four or fewer outlets or sales of more than 80% of the category in one store. Suppressed sales have been combined with Other Retail Stores,
so evaluation of changes in the Other Retail category should take this into consideration.
74
Appendix C-3: Novato Taxable Retail Sales Trends, 1997 to 2007 (Adjusted for Inflation)
City of Novato Sales in 2007 $000 (a) (b) (c)
Apparel Stores
Food Stores
Service Stations
Other Retail Stores
1997
$21,846
$144,664
$28,278
$47,101
$8,260
$17,285
$54,561
$32,190
$75,915
1998
$19,787
$160,014
$31,413
$50,201
$9,297
$18,563
$66,681
$28,238
$96,566
1999
$19,161
$170,754
$33,605
$53,313
$10,547
$21,697
$73,922
$29,445
$101,164
2000
$23,304
$177,782
$33,288
$57,761
$12,149
$22,681
$80,915
$31,310
$97,977
2001
$23,658
$174,263
$33,807
$59,494
$11,851
$24,690
$86,412
$26,871
$93,001
2002
$22,420
$175,437
$33,734
$62,251
$12,366
$24,678
$92,243
$28,465
$71,385
2003
$22,655
$172,301
$32,320
$62,280
$12,110
$24,540
$87,846
$33,805
$74,315
2004
$23,326
$174,775
$30,937
$63,577
$12,018
$28,094
$107,664
$41,139
$83,384
2005
$22,256
$175,886
$30,882
$64,549
$12,719
$27,345
$106,480
$48,970
$89,783
2006
$25,972
$177,516
$32,992
$65,985
$12,353
$26,405
$105,546
$62,228
$91,692
2007
$26,815
$175,419
$33,440
$69,521
$12,650
$25,356
$98,845
$66,375
$87,040
$430,098
$480,760
$513,609
$537,167
$534,045
$522,979
$522,172
$564,915
$578,870
$600,688
$595,461
$343,348
$385,841
$410,241
$424,942
$420,763
$402,271
$400,521
$416,112
$423,420
$432,914
$430,241
Novato Sales per Capita in 2007 $ (d)
Apparel Stores
Food Stores
Service Stations
Other Retail Stores
1997
$486
$3,218
$629
$1,048
$184
$384
$1,214
$716
$1,688
1998
$434
$3,509
$689
$1,101
$204
$407
$1,462
$619
$2,118
1999
$415
$3,702
$729
$1,156
$229
$470
$1,603
$638
$2,193
2000
$489
$3,733
$699
$1,213
$255
$476
$1,699
$657
$2,057
2001
$490
$3,606
$700
$1,231
$245
$511
$1,788
$556
$1,925
2002
$460
$3,598
$692
$1,277
$254
$506
$1,892
$584
$1,464
2003
$465
$3,533
$663
$1,277
$248
$503
$1,801
$693
$1,524
2004
$471
$3,529
$625
$1,284
$243
$567
$2,174
$831
$1,683
2005
$441
$3,487
$612
$1,280
$252
$542
$2,111
$971
$1,780
2006
$509
$3,476
$646
$1,292
$242
$517
$2,067
$1,219
$1,796
2007
$508
$3,326
$634
$1,318
$240
$481
$1,874
$1,259
$1,650
$9,566
$10,543
$11,136
$11,278
$11,052
$10,726
$10,707
$11,405
$11,475
$11,763
$11,291
$7,637
$8,461
$8,894
$8,922
$8,707
$8,250
$8,213
$8,401
$8,393
$8,478
$8,158
Retail Stores Total
Retail Stores Total
Population
44,960
45,600
46,123
47,630
48,323
48,760
48,769
49,532
50,447
51,066
52,737
(c) Excludes Building Materials, Auto, and Service Station categories.
75
Appendix C-4: Rohnert Park Taxable Retail Sales Trends, 1997 to 2007 (Adjusted for Inflation)
City of Rohnert Park Sales in 2007 $000 (a) (b) (c)
Apparel Stores
Food Stores
Service Stations
Other Retail Stores
1997
$7,132
$83,655
$28,544
$41,740
$18,525
$81,691
$15,709
$23,698
$56,427
1998
$4,052
$94,386
$30,823
$48,622
$14,331
$89,441
$19,033
$22,041
$51,131
1999
$8,614
$93,341
$32,622
$51,185
$28,018
$101,315
$17,115
$26,833
$46,893
2000
$10,202
$95,554
$33,826
$54,739
$30,261
$107,416
$24,527
$31,893
$66,439
2001
$9,952
$100,136
$34,770
$57,392
$32,782
$108,464
$24,710
$30,120
$61,296
2002
$11,670
$125,658
$37,413
$59,606
$55,924
$107,829
$18,793
$28,422
$59,831
2003
$11,212
$188,377
$38,990
$64,179
$49,841
$111,215
$21,276
$31,039
$60,612
2004
2005
2006
2007
#
$202,731
$41,831
$70,177
$46,774
$122,875
$20,343
$30,391
$74,193
#
$211,870
$41,709
$73,606
$41,627
$109,310
$19,018
$32,327
$81,619
#
$214,634
$41,110
$74,832
$36,529
$103,094
$19,758
$35,132
$80,343
#
$217,032
$37,170
$75,291
$40,211
$76,206
$27,947
$38,814
$61,219
$357,121
$373,861
$405,937
$454,857
$459,623
$505,146
$576,742
$611,320
$613,089
$607,438
$575,897
$317,714
$332,787
$361,989
$398,437
$404,793
$457,931
$524,427
$560,586
$561,744
$552,548
$509,136
Rohnert Park Sales per Capita in 2007 $ (c) (e)
Apparel Stores
Food Stores
Service Stations
Other Retail Stores
1997
$176
$2,066
$705
$1,031
$457
$2,017
$388
$585
$1,393
1998
1999
$205
$2,221
$776
$1,218
$667
$2,411
$407
$639
$1,116
2000
$242
$2,262
$801
$1,296
$716
$2,543
$581
$755
$1,573
2001
$235
$2,369
$823
$1,358
$775
$2,566
$585
$713
$1,450
2002
$277
$2,978
$887
$1,413
$1,325
$2,555
$445
$674
$1,418
2003
$264
$4,442
$919
$1,513
$1,175
$2,622
$502
$732
$1,429
2004
2005
2006
2007
$98
$2,285
$746
$1,177
$347
$2,165
$461
$534
$1,238
#
$4,798
$990
$1,661
$1,107
$2,908
$481
$719
$1,756
#
$5,017
$988
$1,743
$986
$2,589
$450
$766
$1,933
#
$5,012
$960
$1,747
$853
$2,407
$461
$820
$1,876
#
$5,074
$869
$1,760
$940
$1,782
$653
$907
$1,431
$8,819
$9,049
$9,659
$10,769
$10,873
$11,971
$13,599
$14,467
$14,518
$14,185
$13,464
$7,846
$8,055
$8,614
$9,434
$9,576
$10,852
$12,365
$13,266
$13,302
$12,903
$11,903
Retail Stores Total
Population
40,495
41,314
42,025
42,236
42,272
42,198
42,412
42,256
42,229
42,824
42,772
(c) A "#" sign indicates data supressed to preserve confidentiality due to four or fewer outlets or sales of more than 80% of the category in one store. Suppressed sales have been combined with Other Retail Stores,
(d) Excludes Building Materials, Auto, and Service Station categories.
(e) Per capita sales calculated based on State Board of Equalization reported sales and annual Department of Finance population estimates benchmarked to the decennial Census.
76
Appendix C-5: Sonoma County Taxable Retail Sales Trends, 1997 to 2007 (Adjusted for Inflation)
Sonoma County Sales in 2007 $000 (a) (b)
Apparel Stores
Food Stores
Service Stations
Other Retail Stores
1997
$135,292
$582,220
$321,708
$388,070
$161,053
$432,281
$690,425
$297,848
$644,054
1998
$139,357
$655,693
$330,763
$417,957
$176,015
$462,556
$815,006
$267,108
$685,297
1999
$144,793
$718,882
$348,222
$441,990
$201,763
$542,477
$968,080
$312,384
$741,903
2000
$162,552
$753,903
$365,665
$475,884
$232,059
$580,471
$1,114,306
$367,198
$842,307
2001
$174,696
$777,063
$383,476
$496,558
$227,132
$600,338
$1,145,340
$370,082
$839,301
2002
$179,581
$789,126
$390,265
$507,672
$249,830
$613,612
$1,146,561
$338,312
$848,897
2003
$187,827
$827,183
$398,995
$524,616
$248,690
$635,338
$1,154,591
$387,075
$859,516
2004
$209,478
$841,178
$403,279
$542,924
$251,449
$707,690
$1,149,315
$434,860
$907,733
2005
$231,840
$840,160
$406,883
$565,703
$243,958
$732,541
$1,115,741
$479,693
$951,305
2006
$239,661
$841,011
$406,985
$573,896
$236,820
$732,812
$1,042,668
$521,839
$944,493
2007
$258,991
$845,947
$398,084
$592,801
$222,132
$611,581
$1,033,898
$582,426
$858,737
$3,652,952
$3,949,753
$4,420,494
$4,894,345
$5,013,986
$5,063,856
$5,223,831
$5,447,907
$5,567,825
$5,540,184
$5,404,597
$2,664,679
$2,867,639
$3,140,031
$3,412,841
$3,498,565
$3,578,984
$3,682,165
$3,863,732
$3,972,391
$3,975,677
$3,788,273
1997
$312
$1,341
$741
$894
$371
$996
$1,590
$686
$1,484
1998
$315
$1,483
$748
$946
$398
$1,046
$1,844
$604
$1,550
1999
$322
$1,599
$775
$983
$449
$1,207
$2,154
$695
$1,651
2000
$354
$1,644
$797
$1,038
$506
$1,266
$2,430
$801
$1,837
2001
$376
$1,673
$825
$1,069
$489
$1,292
$2,466
$797
$1,807
2002
$383
$1,684
$833
$1,084
$533
$1,310
$2,447
$722
$1,812
2003
$399
$1,757
$847
$1,114
$528
$1,349
$2,452
$822
$1,826
2004
$442
$1,776
$852
$1,147
$531
$1,495
$2,427
$918
$1,917
2005
$488
$1,767
$856
$1,190
$513
$1,541
$2,347
$1,009
$2,001
2006
$502
$1,763
$853
$1,203
$497
$1,536
$2,186
$1,094
$1,980
2007
$540
$1,764
$830
$1,236
$463
$1,275
$2,155
$1,214
$1,790
$8,414
$8,936
$9,835
$10,672
$10,793
$10,809
$11,095
$11,505
$11,710
$11,616
$11,267
East Washington Place Retail Types (d)
$6,138
$6,488
$6,986
$7,442
$7,531
$7,639
$7,821
$8,160
$8,355
$8,336
$7,898
Population
434,133
442,025
449,455
458,614
464,543
468,501
470,829
473,521
475,461
476,956
479,668
Retail Stores Total
Sonoma County Sales per Capita in 2007 $ (d)
Apparel Stores
Food Stores
Service Stations
Other Retail Stores
(c) Excludes Food, Building Materials, Auto, and Service Station categories.
77
Appendix C-6: California Taxable Retail Sales Trends, 1997 to 2007 (Adjusted for Inflation)
California Sales in 2007 $000 (a) (b)
Apparel Stores
Food Stores
Service Stations
Other Retail Stores
Retail Stores Total
California Sales per Capita in 2007 $ (c)
Apparel Stores
Food Stores
Service Stations
Other Retail Stores
Population
1997
$12,289,592
$38,930,895
$16,972,823
$30,114,227
$10,267,178
$18,754,496
$40,524,458
$20,590,076
$43,109,705
1998
$12,706,968
$42,004,330
$17,455,065
$32,546,359
$11,411,754
$20,974,482
$45,930,127
$18,794,027
$46,673,805
1999
$12,337,931
$45,814,292
$18,496,636
$34,948,302
$12,896,294
$23,961,220
$52,827,017
$21,876,691
$52,052,619
2000
$13,570,706
$48,409,654
$19,408,915
$37,458,301
$14,358,213
$26,201,904
$59,921,922
$26,628,562
$57,272,036
2001
$14,159,860
$49,910,072
$19,908,166
$38,972,373
$14,100,349
$27,985,893
$64,277,633
$26,043,887
$55,535,499
2002
$14,956,350
$51,691,252
$20,203,857
$40,596,418
$14,907,403
$29,929,600
$68,038,905
$25,509,708
$55,711,516
$231,553,449
$248,496,918
$275,211,003
$303,230,214
$310,893,732
$321,545,008
1997
1998
1999
2000
2001
2002
2003
$16,187,177
$53,905,842
$20,695,907
$42,707,771
$16,106,674
$32,730,879
$71,502,347
$29,554,037
$58,079,012
2004
$17,804,640
$56,635,384
$20,816,646
$45,437,888
$17,225,272
$38,985,973
$74,306,213
$34,396,928
$62,065,078
2005
$19,198,983
$58,264,661
$21,678,197
$47,620,432
$17,841,129
$40,689,358
$75,516,360
$39,569,986
$65,206,923
2006
$19,972,158
$59,691,512
$22,021,568
$49,583,796
$17,508,584
$40,098,124
$72,090,047
$43,893,427
$67,008,050
2007
$20,855,890
$59,897,350
$22,461,059
$51,658,575
$16,720,852
$32,656,324
$70,779,978
$47,084,940
$64,910,134
$341,469,645 $367,676,027 $385,588,035 $391,869,271 $387,027,109
2003
2004
2005
2006
2007
$382
$1,209
$527
$935
$319
$582
$1,258
$639
$1,338
$389
$1,286
$534
$997
$349
$642
$1,406
$575
$1,429
$372
$1,382
$558
$1,055
$389
$723
$1,594
$660
$1,571
$401
$1,429
$573
$1,106
$424
$774
$1,769
$786
$1,691
$411
$1,450
$578
$1,132
$410
$813
$1,867
$756
$1,613
$427
$1,474
$576
$1,158
$425
$854
$1,940
$728
$1,589
$454
$1,512
$580
$1,198
$452
$918
$2,006
$829
$1,629
$492
$1,565
$575
$1,255
$476
$1,077
$2,053
$950
$1,715
$523
$1,589
$591
$1,298
$486
$1,109
$2,059
$1,079
$1,778
$538
$1,608
$593
$1,336
$472
$1,080
$1,942
$1,183
$1,805
$555
$1,595
$598
$1,375
$445
$869
$1,884
$1,254
$1,728
$7,189
$7,609
$8,304
$8,952
$9,029
$9,170
$9,578
$10,157
$10,514
$10,558
$10,304
32,207,869
32,657,877
33,140,771
33,873,086
34,430,970
35,063,959
35,652,700
36,199,342
36,675,346
37,114,598
37,559,440
(c) Per capita sales calculated based on State Board of Equalization reported sales and annual Department of Finance population estimates benchmarked to the decennial Census.
78
Appendix D: Home Furnishings and Appliances Sales Detail
Sales in 2007 $000 (a) (b)
Furniture and Home Furnishings
Electronics and Appliances
Home Furnishings and Appliances Total
Sales Per Capita in 2007 $ (a) (b)
Furniture and Home Furnishings
Electronics and Appliances
Home Furnishings and Appliances Total
Population, 2002
Petaluma
$9,854
$17,053
Novato
$25,293
$7,238
Rohnert Park
$27,415
$22,263
Sonoma
County
$187,367
$210,995
$26,907
$32,530
$49,678
$398,362
Petaluma
$177
$306
Novato
$519
$148
Rohnert Park
$650
$528
Sonoma
County
$400
$450
$483
$667
$1,177
$850
55,730
48,760
42,198
468,501
(a) Retail sales have been adjusted to 2007 dollars based on the Taxable Sales Deflators calculated by the
State Board of Equalization (BOE).
(b) This table relies on data from the 2002 Census of Retail Trade rather than the CA State Board
of Equalization. Numbers may not exactly match state taxable sales data due to use of different
source data, different classification of individual outlets, and inclusion of non-taxable sales in the
data presented here.
(c) Data not available due to disclosure rules.
Sources: 2002 Census of Retail Trade; State Board of Equalization; Bay Area Economics, 2008.
79
Appendix E: Estimate of Retail Sales in Unincorporated Portion of Trade Area
From 2002 Economic Census
Sonoma County
NAICS Category
Sales
($1,000)
A
Number of
Employees
B
Sales per
Employee
C
=A*1,000 / C
441
442
443
444
445
446
447
448
451
452
453
454
Motor vehicle & parts dealers
Furniture & home furnishings stores
Electronics & appliance stores
Bldng mtrial & grdn equip & supplies
Food & beverage stores
Health & personal care stores
Gasoline stations
Clothing & clothing accessories stores
Sporting goods, hobby, book, & music stores
General merchandise stores
Miscellaneous store retailers
Nonstore retailers
Total Retail Sector
$1,332,598
$178,448
$200,952
$610,256
$1,180,440
$327,631
$299,133
$245,567
$169,726
$735,573
$178,224
$273,400
$5,731,948
3,546
996
875
2,772
5,905
2,173
861
2,027
1,481
2,944
1,402
1,124
26,106
$375,803
$179,165
$229,659
$220,150
$199,905
$150,774
$347,425
$121,148
$114,602
$249,855
$127,121
$243,238
$219,564
722
Food services and drinking establishments
TOTAL
$537,967
$6,269,915
12,865
65,077
$41,816
$96,346
Unincorporated Sonoma County
NAICS Category
Sales
($1,000)
E
Number of
Employees
F
Sales per
Employee
G
=E*1,000 / F
441
442
443
444
445
446
447
448
451
452
453
454
Motor vehicle & parts dealers
Furniture & home furnishings stores
Electronics & appliance stores
Bldng mtrial & grdn equip & supplies
Food & beverage stores
Health & personal care stores
Gasoline stations
Clothing & clothing accessories stores
Sporting goods, hobby, book, & music stores
Miscellaneous store retailers
Nonstore retailers
$83,930
$7,835
$10,043
$152,875
$257,045
$19,337
$44,558
$33,346
$14,698
$1,745
$36,693
$31,196
$693,301
300
51
51
783
1,500
150
150
321
150
8
261
150
3,873
$279,767
$153,599
$196,888
$195,243
$171,380
$129,259
$297,849
$103,861
$98,249
$214,202
$140,586
$208,530
$178,987
722
TOTAL
$76,942
$770,243
1,840
5,713
$41,816
$134,812
Employment
Distribution
D
14%
4%
3%
11%
23%
8%
3%
8%
6%
11%
5%
4%
100%
Employment
Distribution
H
8%
1%
1%
20%
39%
4%
4%
8%
4%
0%
7%
4%
100%
Cells in gray represent estimates, based on employment class size stated in Economic Census. Sales per employee, where
estimated, is derived by taking the sales per employee for each category for the County and adjusting this number and the
employment number by a factor so that the total sales for all retail (excluding NAICS 722, which is classified with services in the
Economics Census) is equal to the total stated in the Census of Retail Trade for unincorporated Sonoma County. This also has the
effect of making the employment numbers roughly equivalent to the total stated. NAICS 722 employment is estimated by taking the
published numbers for all components of the sector, and adding the low end of the estimate for the one compononet NAICS sector
where only an employment range is given.
continued on next page
80
Appendix E: Estimate of Retail Sales in Unincorporated Portion of Trade Area
Unincorporated Sonoma County
by State Board of Equalization Categories
Apparel stores
Food stores
Home furnishings and appliances
Building materials
Service stations
Other retail
Total Retail Sector
Eating and drinking places
Total all SBE retail categories
Sales
($1,000)
I
grouped from E
Number of
Employees
J
grouped from F
Estimated
Taxable
Sales
($1,000)
K
adjusted from I
Taxable
Sales per
Employee
L
=K*1,000 / J
$33,346
$1,745
$257,045
$17,878
$152,875
$83,930
$44,558
$101,924
$693,301
321
8
1,500
102
783
300
150
710
3,873
$33,346
$1,745
$77,114
$17,878
$152,875
$83,930
$44,558
$101,924
$513,369
$103,861
$214,202
$51,414
$175,244
$195,243
$279,767
$297,849
$143,596
$132,534
$110,725
$228,358
$54,812
$186,825
$208,146
$298,256
$317,534
$153,086
$141,293
$76,942
1,840
$76,942
$41,816
$44,580
$770,243
5,713
$590,311
$103,319
$110,147
Inflator, 2002-2007 (BOE Taxable Sales Deflators)
1.066087
Employment
Distribution
N
from H
Estimated
Employment
O
Estimated
Taxable
Sales
P
=M*O
Rounded
(in $1,000)
Q
=P/1,000
8%
0%
39%
3%
20%
8%
4%
18%
43
1
202
14
106
40
20
96
522
$4,790,726
$250,637
$11,078,793
$2,568,542
$21,963,337
$12,058,106
$6,401,619
$14,643,308
$73,755,068
$4,791
$251
$11,079
$2,569
$21,963
$12,058
$6,402
$14,643
$73,755
Eating and drinking places
409
$18,233,157
$18,233
Total all SBE retail categories
931
$91,988,225
$91,988
Unincorporated Trade Area
Apparel stores
Food stores
Home furnishings and appliances
Building materials
Service stations
Other retail
Total retail sector employment, 2000 Census
Inflated
to
2007 $
M
=L*inflator
Total unincorporated retail sector employment from 2000 Census Transportation Planning Package. Trade Area unincorporated
distribution by category assumed to follow distribution for entire unincorporated Sonoma County. Based on data from CA State
Employment Development Department, overall retail employment in Sonoma County has been relatively unchanged since 2000. This
trend is applied to the unincorporated area, with the assumption that employment has remained unchanged since 2000.
30% of total food store sales are taxable.
Taxable sales for food stores has been calculated based on the assumption t
While the drug store component of general merchandise is generally also adjusted, this sector is of insigificant size here and is not
adjusted.
Eating and drinking place employment in unincorporated area based on ratio of unincorporated area to total unincorporated county
applied to 1,840 food service workers as shown above for unincorporated county for major sector combining arts, entertainment,
recreation, accommodation and food services. Employment numbers for Economic Census and 2000 Census are generally similar
where comparisons are possible.
Arts, entertainment, recreation, accommodation and food services, from Census Transportation Planning Package
Workers in unincorporated Trade Area
1,141
22%
Workers in unincorporated County
5,133
100%
Workers in unincorporated County
times proportion for major sector
Estimated workers in unincorporated Trade Area
1,840
22%
409
from Economic Census, above
Sources: BAE 2008, based on data from 2000 Census Transportation Planning Package, 2002 Economic Census, CA Employment
Development Department, and CA State Board of Equalization.
81
Appendix F: Employment by Industry, 2007
Industry Group
Farm
Natural Resources & Mining
Construction
Manufacturing
Wholesale Trade
Retail Trade
Transportation, Warehousing & Utilities
Information
Financial Activities
Professional & Business Services
Educational & Health Services
Leisure & Hospitality
Other Services
Government
Sonoma County
Number
Percent
6,000
3.1%
200
0.1%
14,400
7.3%
22,300
11.4%
7,700
3.9%
24,100
12.3%
4,500
2.3%
3,000
1.5%
9,300
4.7%
23,000
11.7%
23,600
12.0%
20,800
10.6%
6,400
3.3%
31,000
15.8%
Total, All Industries
196,400
100.0%
California
Number
Percent
386,400
2.5%
25,900
0.2%
892,300
5.7%
1,463,200
9.4%
716,900
4.6%
1,688,800
10.9%
505,200
3.2%
472,800
3.0%
906,600
5.8%
2,263,300
14.6%
1,664,300
10.7%
1,553,100
10.0%
513,600
3.3%
2,497,400
16.1%
15,549,600
100.0%
Notes: Annual average wage and salary employment. Workers by place of work, not by place of residence.
March 2007 Benchmark.
Data may not sum due to independent rounding
Source: California Employment Development Department
82
Appendix G: Part vs. Full Time Employment by Key Sectors
Number of W orkers
Part Time
Full Time
Number
Total
Industry Group
Number
% of Total
% of Total
Building Materials
Apparel
Pharmacies
Grocery Stores
Restaurant
Home Electronics
Other Retail
Retail Types not in Project
13,646
56,941
25,355
105,260
391,964
24,227
135,226
245,629
15.9%
42.8%
30.8%
34.1%
43.2%
16.3%
39.0%
28.0%
72,243
75,956
57,046
203,840
514,706
124,194
211,139
633,045
84.1%
57.2%
69.2%
65.9%
56.8%
83.7%
61.0%
72.0%
85,889
132,897
82,401
309,100
906,670
148,421
346,365
878,674
Bank
Fitness Club
Office
45,360
86,744
495,643
20.9%
38.4%
20.1%
172,081
139,277
1,966,666
79.1%
61.6%
79.9%
217,441
226,021
2,462,309
Source: 2000 U.S. Census Public Use Microdata Sample (PUMS); BAE, 2009.
Appendix H: Property Value Estimates
Component
Total Assessed Land Value
Value/Cost
$17,500,000
Site Improvements
Building Improvements
Total Value Improvements
$14,100,000
$39,400,000
$53,500,000
Total Assessed Value
$71,000,000
Pre-and Post Redevelopment Value Split
Estimated Value Pre-RDA
$8,118,893
Estimated Value Post-RDA
$62,881,107
Land value based on purchase price in 2008. Uses cost method for
assuming value of improvements. Pre-RDA value estimated based on
known sale value in 2004, with calculation back to 1988 (baseline for
redevelopment) assuming 2% increase in assessed value each year
per Prop 13. This value is also assumed to be a base value for the
property absent this development, so is not included in fiscal analysis.
This estimate of value thus may have some degree of error, but the
overall fiscal revenue draws largely from the improvements regardless of
how the land value is handled.
Sources: City of Petaluma; Sonoma County Assessor's Office;
Dataquick; Merlone Geier Partners; BAE, 2009.
83

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