CID sales tax revenue rises during downturn

Revenue from a 1/4-cent sales tax levied by retail shops, restaurants and bars in downtown Springfield's Community Improvement District grew 8.9 percent year-over-year, but still fell short of annual budget projections.

The two-year-old tax generated about $122,000 in annual revenue during fiscal 2008, which ended June 30, compared to about $112,000 in fiscal 2007, said Rusty Worley, executive director of the Urban Districts Alliance. Tax revenue goes toward maintenance activities, parking coordination and downtown enhancements, such as banners and the new Friday Night Farmer's Market on the square.

The CID budgeted $133,000 in projected sales tax revenue last year in anticipation of Hollywood Theaters opening in September, Worley said. The 14-screen, first-run downtown movie theater, however, didn't open until early November, and Worley said the district also lost sales tax revenue from Wheeler's Furniture, which consolidated its downtown location with the south Springfield store in mid-2008.

"Losing Wheeler's kind of offset some of the gains we had with the theater," he noted.

Steady growth

Despite a fragile economy that has sapped consumer confidence, Worley said businesses in the district exhibited steady sales growth across all sectors in fiscal 2008. Total taxable sales last year were $48.8 million, up 8.5 percent - or about $3.8 million - compared to fiscal 2007.

"I don't think anybody expected a real big spike, but I think we were all pleasantly surprised to see the uptick," said Dale Moore, a Missouri State University facilities analyst who is vice chairman of the CID Board of Directors. "I think it's a reflection of good business practices."

The district's 10 top-grossing retailers experienced a 15 percent spike in sales last year, and the top 10 restaurants posted an 11 percent increase in year-over-year sales, Worley said, though he declined to disclose which businesses made those lists. Clubs and pubs gained the most ground with a 20 percent jump in total taxable sales last year, but the top five nightspots only averaged a 4 percent annual increase, Worley said, noting that profit margins may have even shrunken in some cases.

"This is looking at the total taxable sales," he reminded. "It doesn't look at their expenses or their profitability. Their revenues may be up 12 percent, but with minimum-wage increases and other things, their expenses may be up as well."

Envy, a women's clothing store that opened last fall at 323 E. Walnut St., is doing its part to drive sales inside the district, according to Manager Morgan Montgomery. She said the store has consistently exceeded revenue projections in its first year, although she declined to disclose specifics.

"Our sales have been phenomenal," she said.

Garments at Envy sell for $40 or less - a price point that has attracted college students, Montgomery said. Columbia-based Envy also operates stores in Lawrence, Kan., home of the University of Kansas, and Manhattan, Kan., where Kansas State University is based.

On the dining front, St. Michael's Sports Bar & Grill co-owner Nick Russo said the restaurant's gross sales have increased by about 11 percent during the past year, as has its profitability. Russo credits his wife, Jenny, who doubles as the eatery's manager and cook, for keeping seats filled at St. Michael's.

"We've not seen any impact based on the economic downswing," Russo said. "Some of it has to do with our price point. ... And there's something to be said for consistency. That's why no one's got (Joe) DiMaggio's record yet."

More options

MSU's Moore said that broadening and sustaining downtown's entertainment and retail options is key to generating sales tax revenue in the district, which encompasses 400 parcels in an area that stretches from Mill to Elm streets and Kimbrough to Main avenues. The greatest potential lies in the Heer's redevelopment project on Park Central Square, eventual tenants in the College Station Car Park and the university's plan to develop IDEA Commons on property surrounding the Jordan Valley Innovation Center, he said.

"That (sales tax revenue growth) speaks to the fact that people are very much drawn to downtown," Moore said.

Property owners within the district - established in 1999 - approved the tax with a 54-7 vote in February 2007; the tax took effect July 1 of that year and will expire in 2017.

"We heard from the property owners that they would prefer eliminating the front-footage (property tax) assessment ... and implementing the 1/4-cent sales tax," Worley said. "It's been some relief to the property owners not to have that front-footage assessment, and we don't see that 1/4-cent as being a negative toward purchase decisions."

In light of last year's figures, the district board has lowered its projected sales tax revenue to $123,000 in fiscal 2009.[[In-content Ad]]