Santa Cruz City Council Studies How to Recover $1.8 Billion a Year in Lost Shopping

A decade ago Santa Cruzans protested the opening of Borders, claiming the corporate book chain would put local retailers out of business.

Borders left in February, the company later declaring bankruptcy. And Tuesday night, the city's managers were trying to figure out how to bring business back downtown - almost any business.

In a study session, the city council discussed a report it commissioned which showed that the city is losing 85 percent of its retail dollars to other shopping areas, over the hill and around the county.

They also learned in the report by Michigan-based consultant Robert Briggs that stemming the retail bleeding could bring as much as $237 million back into the city over the next five years, creating more than 900 jobs and $2.4 million of tax revenue.

"We can have an economic boon without the economy changing just by capturing some of that money being spent somewhere else," Chamber of Commerce Director Bill Tysseling told the city council during the public's part of the session.

He added that he thought the most important thing he took from the Briggs report was that the city should think of its retail area "as this valuable resource" that needs to be nurtured.

Briggs' report, which cost the city $32,000, claimed that the city is losing $1.8 billion a year  to other merchants because of a number of factors, including confusing streets, bad signs, troublesome parking, no convention center and lack of a big anchor store downtown.

It also pointed out serious threats from neighbors, such as Scotts Valley and Capitola, where corporate chains want to set up shop to scoop up the money from Santa Cruz shoppers.

Gibbs said that adding 91,500 square feet of new retail downtown would help attract the much-needed revenue. Half of that could be filled by finding tenants for the empty Borders and Rittenhouse buildings. The rest could be gained through expansion of current properties, said Bonnie Lipscomb, the city's Director of Economic Development.

Her report suggests adding 25-30 new businesses downtown.

The attitude of this council was a huge turnaround from a decade ago when the city's vehement protest against Borders was documented in a movie called Indies Under Fire. Santa Cruzans were so against corporate chains, they objected to Starbucks and Costco, both of which found their way here and haven't shut down other retail, as predicted.

In fact, Costco was celebrated Tuesday as the largest contributor to the city's retail tax base, bringing in 175 percent more than predicted.

Several business people urged the city to pursue Gibbs's recommendations to bring more business downtown and keep retail dollars in Santa Cruz, while some hoped to turn downtown into a more idyllic pedestrian mall.

"You've hired a great consultant, you've got a great staff, they've done a terrific job, listen to them," urged Doug Ley, whose Redtree Properties owns the now-empty 22,500-square-foot building that housed Borders.

"Don't make this like every other consulting report that comes along where you read it and you study it and you throw it in the can and nothing ever happens," added Ley. "This is a great opportunity. We appreciate the effort. Now act on it."

Ley spoke adamantly against a pedestrian mall, saying it is death to retail and would make downtown "nothing more than a place to congregate."

Last month the city council quickly lit into one of the suggestions, to make Pacific Avenue two way. However, just as quickly, they learned that fire trucks couldn't pass if cars were also parked.

Street plans are back on the drawing board.

Tuesday the council adopted the report and heard other steps already taken toward accomplishing its suggestions. The city hired an urban broker to solicit businesses and has a major lease pending, but the prospective tenant was not revealed, and a major hotel outside downtown in escrow.

It has continued patrols by private security guards funded with police department money not being used to hire sworn police officers.

It has helped fund a bus/trolley between downtown and the Beach Boardwalk, hoping to lure tourists from the beach to spend elsewhere.

It is discussing more convention space with hotels, such as the Dream Inn.

Councilmembers had some of their own suggestions, one of which pointed out the real threat to retail.

Hilary Bryant suggested that the city take another look at parking fees. Tony Madrigal liked the pedestrian mall in Santa Monica and appreciated how its trees were lit up and decorated all year long and wished Santa Cruz could do the same.

Madrigal also suggested adding free Wi-Fi to the whole downtown, but Mayor Ryan Coonerty, whose family has owned Bookshop Santa Cruz since 1966 feared that Wi-Fi would allow shoppers to use stores as display rooms to see merchandise and order it cheaper on the Internet.