Emporia has room to grow, retail-wise, according to a consultant who presented findings Wednesday to Emporia city commissioners.
During their work session Wednesday morning, commissioners heard a report on the proposed Tax Increment Financing and Transportation Development District plans for the Emporia Plaza project at 24th Avenue and Industrial Road.
At the meeting were representatives of Development Strategies and Piper Jaffray, which conducted retail capacity and financial feasibility studies for the project. Also present was Tom Thoreson, representing developer D.J. Christie.
The studies are based on estimates that show a sales leakage of $115 million from the area. The leakage is determined by subtracting the amount of sales captured in the area — $457 million — from $572 million, the total income of the area’s residents.
“(Emporia) is a place where something like a Lowe’s and some of these smaller stores could thrive, because the competition is much further away,” said Bob Lewis of Development Strategies. “... The buying power in the area is $115 million more than” the area’s total sales, using 2008 dollars.
“So there’s still money left on the table,” Lewis said. “Where is that $115 million being spent? Topeka, Wichita, somewhere else. ... This means you’ve got room to grow.”
Lewis said the Emporia Plaza project can succeed by recapturing the leakage, and that there is room in the market area for additional restaurants and retail stores. He also said there is sufficient demand in the market for a Lowe’s store.
The Development Strategies study estimated that the Lowe’s will cause an 11 percent shift of sales from other related businesses in the area. The plaza project overall will cause a 4 percent shift.
Lewis said the accuracy of the study depends on what competitors do and on effective marketing and management of the site and the stores.
Also discussed at the meeting was the financing of the project. According to the plan, developer D.J. Christie will pay for the initial development costs itself, to be reimbursed by the city with bonds once the stores are open for business.
Commissioner Jeff Longbine clarified some items under discussion.
“There are a couple of things the public really needs to understand,” he said. “We’ve got projections on what we think the district will create as far as borrowing potential based on interest rates, coverage and sales totals, and then we’ve also got a number that will be eligible reimbursable expenses that we will recover at a later date.
“I think the thing we have to keep in mind is that the city is under no obligation to make up any shortfalls in either one of those scenarios,” he said. “... The district is going to generate what it generates. Ideally, we would love to see it generate more than either one of the studies show. But worst case scenario, if it generates less, the revenue to pay off those bonds or reimburse (the developer) for pay-as-you-go is only going to be what the district generates. ...”
Thoreson addressed the developer’s faith in the project.
“... One thing I would add is that the people who really have the true stake in this is where I really put the credibility in terms of ‘what can this market stand’ or ‘what will it produce,’ and I always look to the tenant,” he said. “... They’re opening the store, they’re hiring employees, they’re buying a million dollars of inventory and putting it in the store, and they’re expecting to be here for a long, long time. We wouldn’t have that interest unless we truly believed that this was a viable market and one that will sustain their operation.”
Thoreson said the risk for the project will be assumed by the developer, and the project wouldn’t even exist if there were any doubts about its viability.
“... We as developers wouldn’t be taking this risk. ... The developer, in this particular case because we’re considering pay-as-you-go in light of what’s happening with the bond market, (is) going to have to get a conventional loan, and we’re going to have to sign notes that we have guarantees in order to pay that money back, and that’s millions and millions of dollars, and if we don’t perform on that, we essentially lose our homes. We’re not going to take that risk unless we believe in this project.”
In other discussion, commissioners heard a presentation from City Engineer Mike Novak on an ordinance to change how storm water is dealt with in the city. The ordinance is part of the Environmental Protection Agency’s Clean Water Act, and will bring Emporia into compliance with federal law regarding storm water runoff.
“This will change significantly how many things are done that affect storm water ... so that those runoff waters from rainstorms are cleaner than they are today,” Novak said.
The act includes six control measures the city is required to come into compliance with — public education, public participation, construction site runoff, post-construction runoff, pollution prevention and illicit discharge.
The ordinance will affect the way many businesses deal with storm water runoff. These include car washes, carpet cleaners and lawn care and landscaping companies.
Novak said the city will focus on educating the public on the requirements of the ordinance, which will be put on the agenda for approval at an upcoming meeting.
Also discussed were repairs needed at the Soden’s Grove bridge. According to Novak, several stones at the base of the bridge have slipped and need to be stabilized.
The project is estimated to cost $35,000, and the city will send bids to four or five contractors experienced with bridge repair.
“We need to be quick in order to get that stabilized,” Novak said. “The longer we wait, the more risk there is.”