San Ramon Continues to See Dip in Sales Tax Revenue

Though the airwaves are buzzing with news of an upswing in the economy, a dip in sales tax revenue means that things aren't looking up just yet for many cities, including San Ramon.

The city saw a 4.41 percent dip in sales tax revenue between April and June this year compared to the same three-month period in 2009, according to a San Francisco Business Times report using data from the California State Board of Equalization.

San Ramon's drop in the state's 1 percent sales tax is the third greatest decline among Contra Costa County cities during that period, with steeper falls reported only in Pittsburg, down 34.77 percent, and Orinda, down 17.03 percent.

Most cities in the county experienced an increase, including neighboring Danville, up 2.67 percent and Lafayette, up 0.67 percent during that period. As a whole, the county saw a 0.58 percent increase, the report stated.

Administrative Services Director Greg Rogers said the numbers should be interpreted with caution because the city only has up-to-date sales tax analysis through Dec. 31 of last year. Data after that is not accounting for one-time adjustments and late payments from the state.

Factoring in a $2.4 million one-time adjustment from the state, the city saw a 9.6 percent dip in sales tax revenue comparing the three-month period ending Dec. 31, 2009 with the same quarter the previous years, he said.

This year's, the city's budget is $7.4 million, a $1.8 million decline from the 2006-07 fiscal year, when $9.2 million was generated.

"When the economy peaked before the recession our sales tax revenue was about 20 percent higher than what it is today," Rogers said. "We slipped about 10 percent a year."

The forecast for sales tax revenue, which most recently made up 21 percent of the general fund and 7.2 percent of the city's total revenue, is "flat," Rogers said.

"We think the economy has had its decline and it's kind of at the bottom for us," he said. "We're hopeful that there will be a recovery at some point but we're being very cautious and not calling for a recovery. We're just hoping it doesn't get worse."

Behind property tax, sales tax is the city's second largest revenue source for the general fund, according to Economic Development Director Marc Fontes. Unlike Concord and Walnut Creek, San Ramon does not have car dealerships, which make up a significant chunk of revenue.

In San Ramon, the largest revenue categories for the quarter ending Dec. 31, 2009 were restaurants, which generated 14 percent, food markets and service stations, which made up 10 percent each and department stories, which constitute 9 percent, according to Rogers.

"In general what we've had is a broad-based decline in retail sales and you pretty much see it across the board in various categories and that's what we've had happen over the last couple of years," he said.

They city's largest corporate retailers including Target, Whole Foods, Safeway and Rite-Aid declined to release sales information.

Sales for the month of June at Max's Diner, which is located on Crow Canyon Place and pays between $50,000 to $60,000 in sales tax revenue per quarter, have declined 10 percent since the same month last year, said owner Matt Parhizkar.

"(Sales are) not good but okay," he said. "Because of the economy, we don't expect it to be very good"

Hop Yard Alehouse & Grill, which has been on Market Place for more than 15 years, is also "down a small margin" comparing December 2009 to 2008, according to manager Dave Smith. However, sales in the first three months of this year were "a little bit up from last year."

"Fewer people are going out to lunch but in the coming year I think we'll see it slowly going back up," he said.

Fontes said the dip in sales tax is attributed to the "general economic conditions" like unemployment and less spending capacity.

He added that the economic development department has seen a slight decrease in its budget like other departments in the city and is working to obtain additional retail sales space at three properties.

The first potential property shares a two-acre parcel on San Ramon Valley Boulevard with Budget Rent-A-Car. The has been "vacant for many, many years," according to Fontes, and was approved by the Planning Commission Tuesday night.

Another property, also on San Ramon Valley Boulevard, is the Ace Auto Repair and Tire building. The city has been working with property owners on the possibility of renting about 10,000 square feet of the space that has been vacant for more than a few years.

The third property is the 55,000 square foot space on Alcosta Boulevard left vacant after Le Asia Supermarket, which closed its doors a few months ago.

Adding a total of 80,000 square feet of filled retail space could easily mean $200,000 to $300,000 a year for the city, Fontes said.

"We are being proactive with some of the specific property owners to try to increase our retail base and we look forward to continuing those efforts this year and next year," he said.