Shifting Sands of Elk Grove's Economic Development Plans - 25,000 SEPA Jobs Go MIA While City Pursues Retail

February 7, 2018 |

Anyone who has watched the City of Elk Grove's economic development plans over the last several years would rightfully say they are unclear what it is the city hopes to pursue.

We were all reminded of this during the most recent Elk Grove City Council meeting on January 24. It was at that meeting that economic development director Darrell Doan outlined the city's latest business development scheme - the recruitment of high-end retailers.

While the recruitment of retailers might seem to be a worthy endeavor, this new emphasis is in part a departure from recent efforts that were dedicated to the development of the city's supposed job-oriented development area, the Southeast Policy Area. Elk Grove has gone from putting all their eggs in one basket to moving them all to another.

That area, known as SEPA, which roughly lies on the south side of existing city limits, is a 1,200-acre development that is the largest undeveloped portion of land within current city limits. When that area was going through the planning phase, it was promised to be the new jobs hub in Elk Grove that was going to solve the well-documented jobs to houses imbalance.

In fact, it was almost two and a half year ago to the day that former Mayor Gary Davis stated (see video posted below) that the 1,200-acre SEPA would be home to 25,000 new jobs, thereby doubling the number of jobs in the city. Even though the national and local economy has steadily improved with historically low unemployment rates, not one new position has been recruited to the area.

The one employer that was have been said attracted to Elk Grove because of SEPA, Fremont, California-based NRC Manufacturing, has yet to move any of their promised jobs to the city and with each passing year, the prospect is dissipating. In fact, the joke around Elk Grove is NRC stands for Not Really Coming.

Of course, the city could claim that the SEPA was a successful part of the recruitment of the Wilton Rancheria to locate their proposed $500 million casino resort at the adjacent site of the unfinished Outlet Collection at Elk Grove shopping center. Even if this were the case, the 2,000 jobs that the casino would bring to the city would barely make up 10-percent of the jobs promised by the SEPA development.

While talk of correcting the jobs to home imbalance has all but disappeared during conversations from the Elk Grove City Council dais, the new flavor of the month for economic development has been shifted to talk of recruiting high-end retailers. The most significant reason given for this shift has been the importance of collecting more sales tax revenues.

During his presentation to the city council on January 24, Doan noted that while online sales are growing, more than 90-percent of retail purchases are made at brick and mortar outlets. It is for this reason, Doan said, the city should now focus its economic development efforts on the recruitment of more retailers.

Doan and a host of others like to compare Elk Grove to regional rival Roseville which has a major regional mall and an adjacent so-called lifestyle center that are significant draws to their city. These facilities are significant tax revenue generating machines, and Elk Grove should emulate this model by recruiting high-end retailers Doan advised the city council.

It was with some interest that a recently published story in the Sacramento-based Comstock's business magazine discussed how Roseville, which has grown dependent on these shopping centers is preparing itself for the loss of revenues as, you guessed it, shopper continually migrate away brick and mortar stores to online shopping.

As noted in the story, "People don’t spend as much money in brick-and-mortar stores as they once did, and most of the shopping we do online isn’t locally taxed. “The sales tax issue affects every city,” [Roseville City Manager Rob] Jensen says. “But it particularly affects Roseville because we’re a regional destination for shopping.”    

Before Elk Grove hatches another economic development scheme and wastes millions of taxpayers dollars on more consultants, feasibility studies, and sales tax kickback incentives for developers, the city council would be wise to provide more oversight and come to the realization this scheme is about 15 years behind the times. Oh yeah, if you think the half-cent sales tax and the increased sales from all these high-end retailers who for some inexplicable reason will buck international seismic retail trends and suddenly locate here will bail you out of coming cash shortfalls, just call your friends in Roseville.

Really, it is astounding given the nearly 10 years that the Outlet Collection at Elk Grove shopping center has sat unfinished, that the city somehow thinks pursuing more retail is the key to economic development. 

Two and a half years ago it was the SEPA and the 25,000 high paying jobs, and today it is the recruitment of high-end retail to Elk Grove. What will it be a year from now?

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D.J. Blutarsky said...

Listening to the words of the City Council and their highly paid economic development guns reminds me of trying to keep up with the Baskin Robbins Flavor of the Month when I was a kid. Only now, I'm a grown-up and paying taxes, this isn't ice cream, and these well scripted face-saving stunts are getting old!

So let me see if I got this right? The city relies too much on retail sales tax; NRC is not really coming; the casino is in litigation in a regional market that appears to be over saturated with casinos; the mall is not returning calls; and the city is pushing brewpubs and high-end retail. Yep, that will do the trick!

I'm ready for some butter brickle and a sales tax increase on the November ballot to bail us out of this jam!

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