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Windsor study finds $208 million in city retail ‘leakage’

WINDSOR – Residents of Sonoma County’s fourth-largest municipality are spending an estimated $208 million a year shopping outside the town, according to a draft study. Windsor wants a good handle on how much its residents want to buy compared with how much existing local businesses are selling, according to Assistant Town Manager Christa Johnson.

When projected demand for retail opportunities exceeds the supply, it’s an imbalance economists call “leakage.” Windsor in March commissioned Marketek to prepare an economic development strategic plan partly to find ways to address that leakage. The plan would be a roadmap for bringing in higher-paying jobs, boosting household income, diversifying the economy and providing local options that residents want, according to town documents. A draft plan is set to be presented to the Town Council on Dec. 3.

“One of reasons we embarked on an economic development strategic plan is that we know we have retail leakage, and we want to know what the council wants to do about it,” Ms. Johnson said. “Some communities want go with big box stores and car dealers, but we may have other priorities.”

Retail leakage was one of the key challenges identified by an American Institute of Architects team of national urban revitalization experts who visited Windsor this summer. The team addressed ways to spur sustainable growth along the town’s backbone Old Redwood Highway corridor. One suggestion was to reduce the need for residents to use their automobiles to get what they need. A final report from the Sustainable Design Assessment Team is due shortly.

Other North Bay cities have used retail leakage studies in long-range planning for future real estate development. For example, Petaluma a few years ago found demand for 1 million more square feet of retail space in the city limits to keep residents from shopping in Marin County, Rohnert Park and Santa Rosa, and that information prompted interest in building four large shopping centers. Leakage has been factoring into public discussions of redevelopment of former apple-processing facilities in northeast Sebastopol.

Retail surplus and leakage projections don’t take into account purchases made by employees of local businesses who live elsewhere or tourists and visitors, but urban planners and retailers consider such figures a good way to find out what’s missing.

Missing local sales means missed sales-tax revenue for town government. Such revenue in Windsor increased from $322,000 in fiscal 1992-93 just after the town’s founding to $3.49 million in the 2006-07 fiscal year, according to town figures. Sales-tax funding declined 3.9 percent in the first half of fiscal 2007-08, largely because of a decline in purchases related to home construction.

The town also has been looking at raising funds for municipal services via an increase in the transient occupancy tax, which is Measure N on the November ballot, and an increase in traffic-impact fees on development.

In its retail supply-demand analysis for the leakage study, Marketek compared actual retail sales from government and private sources with spending patterns from the U.S. Consumer Expenditure Survey. Then the firm compared the estimated leakage with Urban Land Institute sales-per-square-foot benchmarks for various categories of goods and services at shopping centers. The agency concluded from that data that the retail sales occurring outside the town’s market area would support nearly 925,000 square feet of new space now and another nearly 300,000 square feet over 10 years.

The types of goods and services found to be most lacking are general merchandise stores, restaurants and drinking establishments and clothing stores. Estimated to be in surplus are food and beverage stores and shops for hobbies, sports, books and music.

“Yeah, there is retail leakage, but I think we compare pretty well with other cities,” said Hal Beck, executive director of the Windsor Chamber of Commerce. The business group has been helping the town and the Old Downtown Windsor Business Improvement District in stakeholder discussions for the economic development strategic plan. “We’re looking to make this as well-rounded a shopping and dining place as possible,” he said.

Retailers that residents and businesses have noted as needed additions to the town are a specialty grocer such as Trader Joe’s, a general retailer along the lines of Target, kitchen and bath stores with upscale everyday products and an upscale home appliance dealer, according to Mr. Beck.

“We don’t have vacancies for those kinds of operations,” he said.

Local officials have been wooing retailers such as Trader Joe’s, which has a store in north Santa Rosa, and Fresh & Easy Neighborhood Market, a Southern California-based sister company to the global corner-store giant Tesco of the United Kingdom. Trader Joe’s has been rumored to be looking at a proposed freeway-fronting shopping center at the north end of the town as well as the current Windsor Vineyards facility, once the vintner relocates to the Sonoma County airport area just south of Windsor.

Fresh & Easy had been considering locations in Windsor and Cotati but settled on a location in Napa before pausing its expansion plans.

Mr. Beck thinks that any new power retail center should go at the south end of the town, largely because the widening of Highway 101, which is in its very early stages, will stop a mile and a half short of the north Windsor site, potentially creating a traffic bottleneck until the Arata Lane interchange is upgraded. “I think the north end of Windsor should be reserved for local-serving businesses,” he said.