As city staff prepare a proposed contract to present to the city council as a possible agenda item, the importance of retaining consultant group Kosmont Companies looms in the background.
The Los Angeles-based firm was selected by the city back in 2011 to prepare a report identify the city’s sales tax leakage to other areas and propose a plan of attack to help plug that leak.
With the old contract having expired, the new one would include a scope of service that would be defined to help the city cultivate its economic development needs. The contract, capped at $150,000 based on as-needed services or projects, would help cultivate retail businesses already present in Ridgecrest as well as to attract outside businesses.
“Any economic development guy worth his salt would tell you that you need to protect and grow your existing market before you go running out and try to get new stuff ,” Economic Development Manager Gary Parsons said. “We need to help our retailers in town look for new opportunities, how to sell and market their products and help with them improving their facilities.”
The report identifies what areas of the retail sector the city sorely lacks and what the city already has. According to the final report, the city captures sales tax revenue from food markets (131 percent) and retail building materials (104 percent).
Every other area is considered by Kosmont to be leaking, especially “soft goods” or apparel and other retails. Apparel lists were listed near the bottom, with the city only collecting four percent of the sales tax revenue.
“The highest need – because we have the highest leakage – is women’s clothing,” Parsons said.
A nice cherry on top of everything that Kosmont could potentially offer to ramp up the health of the city’s retail sector would be a benefit to Measure L.
“It will drive and improve Measure L, which of course goes back into streets and police,” Parsons said. Parsons said that the Kosmont Companies contract would not be funded with Measure L revenue.
Measure L raises the sales tax by ¾ of a cent as a means to help fund police and streets for five years.
Key Contact Info
Another aspect of the Kosmont report is its vast “black book” of contact information for key people in potential retail targets as well as a list of retailers who have locations in Kern County but are absent in Ridgecrest.
“If a retailer has ten operations in Kern County and they don’t have one here, they become a logical choice to look at,” Parsons said. “And why not, because they obviously have a distribution system in Kern County to get their products to the store. And we’re not exactly the smallest city in the county.”
Kosmont is also helping to develop a black book of the retailers’ key contacts for the city to utilize.
“They know the retailers, they know the site developers and the commercial people because Kosmont works with them on a global basis,” Parsons said. “They’ve been helpful with that, even up to now.”
Potential Markets, Room for Growth
Another asset the report revealed was a larger market beyond the immediate city limits, according to Parsons.
The city is listed as a primary market area with 27,000 customers to sink their money into the retail market. The larger secondary market area blows that number up to 68,000 potential consumers willing to spend their money in Ridgecrest.
“We’re drawing from all over the eastern area all the way from Bishop down to California City,” Parsons said.
But even with that market base of potential customers, there is still a need to improve growth in various markets.
“We need to try and help capture some of the areas that people wouldn’t realize,” Parsons said. One example given was car sales and automotive related businesses. Ridgecrest currently has two automobile dealerships, Toyota and Ford.
“Expanding and helping them grow is another way to help (capture sales tax),” Parsons said. “They’re doing and are very efficient dealerships, but they need more land and space.” Parsons said the city as an example, “wanted to see them grow.” “But the major area that stands out is clothing,” Parsons said.
A Numbers Game
The Kosmont report also identified a large rate of retail vacancies, listed at 18.4 percent and higher than other areas. L.A. County and Bishop retail vacancies were listed at six percent compared with Ridgecrest.
However, a lot of that vacant space is concentrated in the larger buildings like the old Mervyn’s building on North China Lake Boulevard.
“When you take a look at that number and take a look at the other data we got – such as the survey that identifies the buildings’ sizes and you look at large buildings in town, that
accounts for approximately 70 percent of the vacancy rate,” Parsons said. Removing them from the equation would reduce the vacancy rate below the Kern County average. The goal would be to utilize the buildings.
“That usually means larger retailers or inventive ways of filling a building,” Parsons said. “Sometimes people have used mini-malls or different types of buildings within those structures or more inventive ways of how to get retailers into town.”
It all requires a long term vision, but Parsons said that Kosmont has been a good selection, especially should their plan help net any of the lost sales tax leakage.
“I think when we get done with next year we’ll be able to show some of the improvements in both the sales tax and the employment levels, so council may have a easier time saying let’s spend a little bit more,” Parsons said. “That’s how you get it done.”