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Competitive Effects and Fiscal and Economic Impacts of Proposed Target Store
Client: City of Scotts Valley (CA)
dashed line separator The City of Scotts Valley retained Gruen Gruen + Associates (GG+A) to evaluate whether the development and operation of a proposed Target store in Scotts Valley, California is likely to produce competitive economic impacts likely to result in urban deterioration and decay. Additional purposes of the study include preparing estimates of the likely fiscal and economic impacts of the operation of the Target store. Another purpose of the study was to identify whether any significant spillover property impacts are likely to occur from the operation of the Target store.

In order to accomplish the study purposes, GG+A conducted interviews with representatives of merchants and shopping centers offerings categories of goods sold in Target stores and also interviewed real estate developers and brokers and municipal officials about the affects of Target stores in other locations with similar demographic and locational features. GG+A also conducted interviews with local municipal staff about the affects of Target on the provision of public services and revenues. GG+A also conducted a literature review of the spillover competitive and property value effects of “big box” stores like Target. GG+A also analyzed sales tax data and other secondary data.

The primary and secondary research was synthesized in order for GG+A to: (A) define the primary trade area;(b) identify and evaluate the supply of retail space within the primary trade area; (c) report and interpret the results of the interviews conducted with representatives of the shopping centers and retailers operating within the primary trade area; (d) estimate the demand for general merchandise goods and general merchandise space and review the supply of general merchandise space within the primary trade area; (e) identify the relationship between the estimated existing and likely future demand for and supply of general merchandise space within the primary trade area; (f) estimate the demand for retail space as a whole and the supply of retail space in the primary trade area; and (g) identify the relationship between existing and potential future demand and existing and potential future supply of retail space in the primary trade area.

Based on the results of the market analysis summarized above, GG+A described the likely competitive effects of the operation of the proposed Target store in Scotts Valley. Based on the results of the market analysis, review of municipal budget, and interviews with municipal staff, GG+A estimated the property taxes, sales taxes and other revenues and police, public works and other public service costs associated with the operation of the proposed Target store. In addition to estimating the net fiscal impacts of the proposed Target store, GG+A used the input-output Implan economic impact model to estimate the one-time construction and ongoing jobs, income and output impacts associated with the development and operation of the operation of the proposed Target store. GG+A also identified and described the potential spillover impacts. Read here.




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