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Kosmont Companies Presents Walnut City Council With Sales Tax Report

Melanie C. Johnson

The city has hired consulting firm Kosmont Companies to help Walnut come up with ways to lure more businesses.

While Walnut has an average household income of $114,000 annually, the city is losing potential sales tax revenue that could be spent in town to neighboring communities with more retail.

That was the gist of a report Kosmont Companies gave to the City Council last week during a study session.  The city hired Kosmont several months ago to collect data and help come up with a plan to generate more sales tax revenue.

Community Development Director Tom Weiner said that the city has been pretty effective at getting businesses to come to town but wants to up its efforts.

“We don’t want to rest,” he said.  “We want to keep pushing and pushing.  When we have a vacant space, we want to take full advantage.”

The city’s newer and more high profile businesses include Chase Bank and Panera Bread.  A drive-through Starbucks is planned for Valley Boulevard at Lemon Avenue.

Despite those successes, several shopping centers around town have vacant storefronts.  The True Value Hardware in the Walnut Hills Village shopping center closed in April.  That shopping center, which is anchored by Albertsons grocery store, has several vacancies. 

And to add to that, SUPERVALU, Inc., Albertsons’ parent company, recently announced several planned closures for the grocery chain, including the Walnut store.

Councilman Antonio “Tony” Cartagena said at the study session that the city needs to look for other grocery stores to go in when Albertsons moves out.  He said he has spoken to some Asian residents, many of whom shop in neighboring communities to buy the ethnic foods they couldn’t find at Albertsons.

“We need to concentrate on grocery stores and put up something they really need,” he said.

Other council member mentioned the possibility of a specialty market such as Sprouts or Henry’s.

Ken Hira, Kosmont senior vice president, said that grocery stores don’t bring in much sales tax revenue because all of the goods sold aren’t taxable, but they are an example of a need all cities must provide for residents.

“Albertsons is actually going to be an opportunity for your city,” he said.

Kosmont provided the council members with some figures about sales and property tax.

Walnut’s sales tax ratio is 15 percent of the property tax, meaning the city does not capture as much local consumer spending as it could, said Joe Dieguez, Kosmont’s vice president.

Compare that to Diamond Bar, with a 66 percent sales tax ratio, West Covina at 41 percent, and La Puente at 47 percent.

For taxable retail sales per capita, Walnut is at $3,377, which is low compared to neighboring cities, Dieguez said.  This figure indicates that retail sales are lower than the spending potential based on household and average household income, he said.

Diamond Bar’s taxable retail sales per capita is $4,219, West Covina $9,210, and Pomona $4,586.

Mayor Pro Tem Tom King suggested maybe talking to neighboring City of Industry about doing some sort of joint powers authority for retail development projects in areas where the two cities meet.

Hira said city officials need to be creative in their efforts to drum up more retail opportunities.

Walnut’s biggest draw is its income, Hira said, adding that the city should go for upscale stores, restaurants, and a movie theater.

He suggested the city look into a high-end movie theater such as those in the Cinepolis chain.  Movie theaters don’t bring in a tremendous amount of sales tax dollars, but they can attract patrons from neighboring communities, he said.

Hira also discussed possible incentives the city could offer potential developers and the challenges of the vacant parcels available from grading to configuration.

“We have to fit the real estate with the demand and the need,” he said.

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