Residents question numbers in PC-2 study
More than 25 residents showed up at a town council and planning commission public workshop Tuesday night to comment on the draft economic analysis for Planned Community 2 Tuesday night – and some questioned numbers provided by consultant Steve Wahlstrom of Applied Development Economics, the firm which composed the draft.
Residents and council also questioned some of the assumptions in the draft, such as where the consultants got their figures for the percentage of second homes in Truckee, the projections made about continued growth in the town, and the occupancy figures for local transient lodging.
The draft economic impact analysis for Boca Sierra Estates, released two weeks ago, showed some components of the proposed development would have a positive impact on Truckee but said numbers don’t necessarily add up for other parts, including the 85,000 square feet of commercial space and 80,000-square foot supermarket center.
The report calculated the impact of Boca Sierra Estates if it existed now, rather than on the phased approach which would be required of the project.
Dale Creighton, a planner working for developers of Boca Sierra Estates, said the economic impact report distorted the project because it did not reflect phasing.
“Our project included phasing and the success of each phase before the next came online,” Creighton said. “It’s not fair to do the analysis based on an immediate buildout.”
He also questioned the percentage of second homes the report estimated in Truckee, because it was based on a 1990 census, reflecting that 53 percent of homes in
Truckee were second homes. Creighton said he believes that number has shifted, and more people could be living in Truckee full time.
Community Development Director Tony Lashbrook said the final report would probably include more about the phasing in of retail stores as the town builds out.
The Boca Sierra Estates Specific Plan proposes to develop 789 acres at the intersection of Interstate 80 and the Highway 267 Bypass.
The Hopkins Family, which owns the property, proposes to develop an 80,000-square foot grocery store center west of Highway 267 adjacent to Interstate 80, and an 85,000-square foot commercial village east of the highway. The village would include 45,000 square feet of general commercial retail and 40,000 square feet of office space.
A 15-room destination resort and spa and an 18-hole golf course with pro shop and clubhouse would be located alongside the commercial village.
The proposed project would also develop 600 housing units – with 100 to 150 multifamily residences and the remainder as single family homes.
About 500 acres of the project would be dedicated as open space.
According to the report, the proposed general commercial space at PC-2 would have a significant impact on existing specialty retailers, apparel shops, restaurants and home furnishing establishments.
Existing businesses in those categories could be expected to lose between $3.25 and $8.19 million out of their current $58.7 million captured, the analysis revealed.
“On average, each business will lose between 6 and 14 percent of sales,” the analysis stated. “The existing small businesses will have to compete harder with each other. Some businesses will be able to absorb the losses. For other businesses the lost sales will be devastating, and may lead to store closures.”
Wahlstrom qualified the economic impact report’s statements during the hearing Tuesday. He said current information shows that with 265 homes being constructed each year, Truckee would support the additional retail in 10 years.
During public comment, Truckee resident Fred Zebel questioned the 265-home figure.
“You figured 265 houses per year from 1994 to 1999,” Zebel said. “This was five years of the greatest boom economy this country has ever seen. Did you do any calculations based on previous years?”
Wahlstrom said the only data available on housing is since Truckee’s incorporation in 1993, and acknowledged that there is no guarantee of 265 homes per year.
Steve Frisch, an officer with the Mountain Area Preservation Foundation, questioned the impact of PC-2 on other commercial projects during those 10 years.
“Are we looking at a scenario where this site could grab up all demand for retail for 10 years and grocery stores for 20?” he asked.
Wahlstrom acknowledged that the development would have an impact on future projects.
“Yes, that’s what we are saying,” Wahlstrom said. “It does absorb other growth that’s out there.”
The analysis, which assumes no businesses will relocate as a result of PC-2, said businesses in the development’s commercial space could generate $12.75 million in sales. Of that total, $4.9 million could consist of sales which are currently leaving Truckee, and $4.6 million from new growth created by PC-2. The remainder, $3.25 million, would be captured from existing businesses.
Of the 85,000 square feet of commercial space created by the project, at least 24,500 square feet would be oversupply, the report stated. That number could rise as high as 55,000 square feet, depending on the amount of leakage captured.
“This oversupply indicates that the general commercial space proposed at PC-2 will either lag in performance behind Truckee’s other commercial districts, or be very successful and take business away from the other commercial districts,” the report noted.
Wahlstrom said the problem with the retail portion of PC-2 is that the types of stores allowed to exist there are not the sort which would capture most of the sales currently leaking to Reno.
“The biggest amount of leakage is from auto sales and big box retail stores,” Wahlstrom said. “The difficulty with this type of project is that the type of retail does not fit the type of leakage. You don’t want those types of uses in your community.”
The analysis was based on a buildout of all retail in PC-2 commercial within two years, and did not factor in additional growth outside of the development. Last year, more than 400 homes were built in Truckee.
Grocery store impacts
Figures for the proposed 80,000-square foot grocery store center indicate that it would have to capture $11.4 million in sales from existing Truckee grocery stores in order to be financially feasible. It could capture $1.4 million in sales leakage from the community and $1.3 million from the PC-2 housing, for a net positive impact of $2.7 million.
The analysis details three scenarios which could unfold as a result of the new supermarket opening:
– The new supermarket may underperform for years as it struggles to capture sales away from more established commercial areas.
– The new supermarket will be immediately successful at capturing sales away from the existing stores. Existing stores will stay open and earn reduced revenues.
– One of the existing supermarkets will close due to loss of sales.
The analysis noted that existing Truckee supermarkets would continue to make profits if the PC-2 grocery store is built, although not at the current levels.
If the new store captures $14.1 million in sales the other supermarkets would continue to be above average, with $29.4 million in annual sales.
According to the analysis, sales captured by the existing stores would have to fall below $24.7 million before Truckee would face a possible store closure.
“Their current annual sales are $43.5 million,” Wahlstrom said. “They are gold mines, frankly. Given their size, they are in the top five percent of the nation in sales.”
Wahlstrom said he believes the third scenario is most likely.
“My opinion is that the supermarket would be successful in PC-2 and another supermarket would close,” he said. Wahlstrom said that outcome is most likely if it were Albertson’s that decided to build a store on PC-2. He said Albertson’s does not like its current location on Deerfield Drive very much.
“However, if the supermarket at PC-2 is a Raley’s, then you would probably have three supermarkets,” he said.
In order for the new supermarket to support itself without drawing sales away from the other stores, an additional 5,400 units of housing would have to be built outside of PC-2.
Councilmember Don McCormack questioned figures for the amount of spending by Truckee residents, pointing out that the estimated average weekly grocery spending for each household is only $60 in the analysis.
Wahlstrom agreed to take another look at the figures, but said he was confident in the overall totals.
Residents at the hearing questioned the validity of a 60 percent occupancy rate for the resort were accurate, because the number was based on data drawn from a Lake Tahoe study. Most of the hotels surveyed in the study were on South Shore.
Applied Development Economics will compile a final version of the economic impact analysis, which will be made available to the public at a later date.
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