Tuesday, February 26, 2013

Phoenix Premium Outlets mall could divert revenue from Chandler

Although shoppers may be eagerly anticipating the opening of Phoenix Premium Outlets near the border of Ahwatukee, Chandler and Tempe, Chandler city officials expect the new center to hurt tax revenues.

Chandler is factoring a drop of $750,000 in sales-tax revenue into its 2013-14 budget.

That’s about 15 percent less than the shops, restaurants and movie theater around the Chandler Fashion Center typically bring into the city coffers. The Chandler Fashion Center did not expect to see that large of a drop.

“The mall is pulling from the same group of consumers so that’s where we definitely have to be realistic and know that this will definitely have an impact on the city of Chandler’s revenue,” said Dawn Lang, Chandler management-services director.

Tempe has not evaluated whether the new center will impact the revenues it receives from the Arizona Mills shopping center, spokeswoman Nikki Ripley said. That sort of study is not planned for the near future, she said.

Arizona Mills is owned by Simon Property Group., the same company that is bringing the Phoenix Premium Outlets to the Gila River Reservation.

“We feel that between our Premium Outlets division and our Mills division, they are unique enough that we will only enhance the marketplace,” said Michele Rothstein, senior vice president with Simon Property Group.

“Our merchants are also retailers at the malls,” shes aid. “The goal is not to cannibalize. The goal is to bring in more shoppers.”

The new center will be a positive addition, bringing jobs and more shopping options closer to Ahwatukee residents, Ahwatukee Foothills Chamber of Commerce President Anne Gill said.

Gill said she did not believe that the new mall would hurt local businesses.

“I think it will be new and exciting in the beginning, but local businesses, they’re your neighbors and people like to shop with and support their friends and family and people who know who they are,” Gill said.

Kim Kendall, owner of Clothes Minded, said she was not concerned about the outlet mall taking away business and even hopes that it may bring more customers to her Ahwatukee boutique. “I’m thinking if they’re coming there to shop, they might come here, too,” she said.

Phoenix Premium Outlets is scheduled to open April 4 near the Interstate10/Loop202 interchange. Some of the anticipated 90 retailers include Banana Republic Factory Store, Coach, DKNY, J.Crew and Saks Fifth Avenue Off 5th.

Although there is some overlap of stores between the outlet center and the Chandler Fashion Center, such as Fossil, Skechers and Helzberg Diamonds, property manager Christina Lanoue said she is confident the center will not see a notable drop in sales when the new center opens.

“I think with any new project you’re going to see a little fallout at first,” she said, adding that “fashion conscious” shoppers will keep coming back for the stores and merchandise that the Chandler center offers. “We believe there’s room for both.”

The center has not estimated what kind of impact the new mall may have but does not expect a significant change, Lanoue said.

Sales have increased from 6 to 8 percent each of the past three years and many stores remodeled recently — a sign of long-term commitment to the Chandler Fashion Center, she said.

Chellee Robinson, of Mesa, who regularly goes to the Chandler center, said she plans to shop at the new outlet mall. “Price is a factor,” she said.

But Ronna Ransberger of Chandler said she did not want to make the drive and probably would not shop at the outlet center often.

The impact a new shopping center could have on Chandler’s finances is difficult to project, but the city is expecting the drop to be ongoing, Lang said.

“It is an estimate so we’d adjust accordingly depending on what happens,” she said. “We’re hoping that as time goes on, this will be offset by new ventures.”

About half of Chandler’s general-fund revenue comes from sales taxes, the bulk of which is from retail sales. Sales taxes also make up about half of Tempe’s general-fund revenue.

Chandler planned for $42.3 million in revenue from retail sales tax in its 2012-13 budget.

The $750,000 drop that Chandler is expecting from the new mall is a small percentage of the total revenues but will impact the city’s ability to grow or add new services, Lang said. That amount could pay for nearly 10 positions at the city’s average salary and benefits, Lang said.

The city is projecting a $356,600 surplus for 2013-14.

“The economy is still moving very slowly and we’re still being very cautious at this point,” she said.

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