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Cities welcome ‘big box’ taxes, variety

Retail revolution

Posted: Friday, February 17, 2006


  Daryl Vitzthum pulls a pallet of merchandise down an isle of Home Depot during the store's grand opening in December 2003. Two more large retailers plan on opening in Kenai. Photo by M. Scott Moon

Daryl Vitzthum pulls a pallet of merchandise down an isle of Home Depot during the store's grand opening in December 2003. Two more large retailers plan on opening in Kenai.

Photo by M. Scott Moon

After several years of complaints about boarded-up stores in Kenai, the city suddenly is a hotbed of retail action.

Home Depot and Safeway already are there and now Wal-Mart and Lowe’s have announced plans to build.

In neighboring Soldotna, Fred Meyer and Safeway operate large retail stores, prompting many to wonder what all the big retailers do for the local, Kenai Peninsula economy?

Both Soldotna and Kenai city officials already welcome the tax revenue brought by the large Safeway grocery stores as well as the revenue brought in by Fred Meyer in Soldotna and Home Depot in Kenai.

Wal-Mart and Lowe’s are certain to add big dollars to the coffers.

Safeway, Home Depot and Sears are viewed by acting Kenai City Manager Chuck Kopp as “a significant infusion into the entire Kenai Peninsula economy.”

Simply considering sales tax revenue, retailers in the respective cities add 5 percent to each sale, with 3 percent going to the Kenai Peninsula Borough and 2 percent to the cities, according to Kopp.

He predicts Wal-Mart will bring an additional $1 million a year in sales tax, plus $100,000 in property tax and $200,000 in lease revenue for Kenai.

Beyond that revenue, Kopp sees the big retailers as aiding peninsula residents in other ways.

“Roughly one-half of our residents shop in Anchorage, on average once a month, making the trip to hit a big box store,” Kopp said.

“That money is going to the Anchorage economy.

“We need to keep our money at home, not have it going to Anchorage,” he said.

Calling them “economic anchors,” Kopp said the big retailers increase the amount of traffic driving past smaller shops as people come to town to shop.

He also pointed to the jobs the big retail stores bring.

The jobs, Kopp said, are welcome and are not strictly for the working class. They are for high school and college youth as well as for senior citizens, “people who would otherwise be unemployable.”

The Fred Meyer and Safeway stores in Soldotna bring in a large amount of that city’s tax revenue, but according to City Manager Tom Boedeker, “less than half the sales tax revenue comes from the larger stores.”

Soldotna Mayor Dave Carey said if the smaller businesses “focus on a smaller group of items of high quality — which also means higher cost — they survive.”

He views health care as being a major segment of the retail trade in Soldotna.

Boedeker agrees, saying all the pharmacies in Soldotna are doing well.

“It doesn’t seem to matter which pharmacy, you’re going to stand in line,” he said.

Carey also said the local geography aids Soldotna businesses.

“We’re fortunate that (retailers) are all along the same route. It makes it easier for people to remember them and stop,” he said.

Overall, Boedeker said Soldotna has “a healthy mix of thriving businesses — large and small.”

Regarding the anticipated arrival of larger retailers, Boedeker said what happens to the smaller businesses depends on the mind-set of the consumer.

“It’s a question of whether the people value what small business does,” he said.

Carey said he very much welcomes the jobs the Kenai and North Kenai development will bring.

“Many employees will live (in Soldotna),” he said.

“Young families will come. That’s what we need (for growth),” Carey said.

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