Officials, Watchdogs At Odds Over RDA Springbacks To Staters In GT

GRAND TERRACE—Four months after Stater Bros. moved its supermarket into new and 72 percent larger quarters at 22201 Barton Road in the Grand Terrace Town Square than it occupied at Mt. Vernon and Barton Road during the previous 37 years, there are sharp differences between city officials and skeptical Grand Terrace residents over whether the $1.2 million in incentives the city offered the grocer to make that transition are justified.
In what would prove to be one of the last major uses of its redevelopment agency, the city in October 2010 entered into an economic development agreement with Stater Bros. to facilitate the transition from the 25,000 square foot location at Barton and Mt. Vernon  to the 44,000-square-foot digs in Grand Terrace Town Square. Under the terms of that agreement, Stater Bros. said it would create around 140 temporary construction jobs and 77 permanent full-time jobs and the city consented to paying Stater Bros. $2,500 per job, or up to $192,500 per year over five years. Another clause in the agreement called for the city utilizing up to 45 parking spaces at Grand Terrace Town Square for local ride-sharers, for which it would pay Stater Bros. $12,500 per quarter, or $50,000 per year.
Thus, the city through its redevelopment agency agreed to spring back to Stater Bros over the five year period, $1,212,500 if the grocer met all of the performance criteria.   Stater Bros. invested $17.5 million to build the 44,000-square-foot market and has acquired property around the site to add up to 80,000 square feet of additional retail space at the Town Square.
The new Stater Bros. had its grand opening on August 24, but a third of a year later, some Grand Terrace residents are questioning the wisdom of providing incentives to the corporation and expressed uncertainty about whether the company is providing the community with the promised improvements and employment.
A continuing point of confusion is whether or not a quarterly compliance audit of Stater Brother’s performance was done. This week the Sentinel received from Grandpa Terrace, a Grand Terrace resident who runs a community interest blog,  a list of questions submitted by his readers, including  “Did they [Stater Bros.] hire 75 employees?  How many of those employees live in Grand Terrace?  How many of those employees are full and part time?  What has been the change in sales tax revenue to the cIty?  In relation to an increase to our local financial stability, what has the net increase of wage earnings earned by Grand Terrace citizens been? Has Stater’s earned their 1.2 million RDA funds?”
Grandpa Terrace closed with the statement, “The public should be assured Staters has earned that money before the public pays for this in taxes as well as in increased prices.”
Mayor Walt Stanckiewitz this week told the Sentinel that the quarterly report on Stater Bros. performance under the economic development agreement was not immediately available but was “about due. As to how many full time jobs and full time equivalent jobs were created, I believe they exceed what they were supposed to do.  They are supposed to employ 70 to 75 full time equivalent workers. I believe there were  65 or 67 part time workers at the old store. How do you convert full time to the part time equivalent? I am confident they are meeting that goal.”
The success of the store is apparent in the level of customer traffic there, the mayor said.
“It is, I think, now one of their most popular stores,” Stanckiewitz said. “It has outpaced my wildest dreams, what Staters has done. I go through the store three or four times a week and I personally see customers from Moreno Valley and Redlands there that never shopped in Grand Terrace before. They are coming here because it is the nicest Stater Bros. around.”
Stanckiewitz said the redevelopment agency’s activity at Grand Terrace Town Center was limited to the incentives to Stater Bros. and was at a level less than what the city council had striven for. The city had wanted to use further incentives to bring in other retailers, he said, but had not done so because of multiple considerations.
“I’m glad that [Stater Bros. chairman] Jack Brown got tired of waiting and said we will buy the land,” Stanckiewitz said. “There will never again be another  75-year anniversary store. The fact is, there is nothing like it. We’ve got a one-of-a-kind.”
Stanckiewitz said that the $1.2 million springback was to take place “over five years, not up front but   retroactively and quarterly. Our redevelopment agency is gone now, so the city will handle it directly.”
In legislation passed last year and just upheld by the state Supreme Court under challenge from hundreds of California’s cities, municipal and county redevelopment agencies have been dissolved in the Golden State.
Stanckiewitz said the money the city will pay out will not impact the general fund, since the payments to Stater Bros. are “performance based.” He said the amount of revenue to be brought into the city by the larger store through increased sales tax revenue will at some future point be greater than the money the city shells out. “The last time I did that calculation was before the store opened,” Stanckiewitz said. “If nothing gets built in that center, and Staters is the only thing there, we will get our money back in the eight to ten year range. But their numbers are way beyond what they forecast and I am hoping they will bring in more business and that we will be paid back in increased property and sales tax before the program is over [i.e., in fewer than five years]. This is a performance-based incentive contract.”
Moreover, Stanckiewitz said, it is increasingly likely that the city will not pay Stater Bros. the full $1,212,500 specified in the agreement, but rather $962,500. That is because the grocer will not be building and reserving the 45 parking spaces in the Grand Terrace Town Square for car-poolers as was proposed under the agreement.
“They are thinking they need those parking spaces for their own customers given how successful the store is,” the mayor said. “There were a certain number of spaces they paved beyond what was normally required for them to open the store. That was built into the incentive package because we   have other business in town or places in town that are having parking issues. The city was going to take possession of those spaces and use them as a Park-and-Ride. In five or so years,  as the center filled out, they would revert back to parking for the commercial customers. But that day has come quicker than we anticipated and they probably will not be used for Park-and-Ride [carpooling parking]. We won’t be paying for that. This was an RDA [redevelopment] project that did not cost us anything.”
One consideration and concern about the springback of sales tax revenue to Stater Bros. is that as a grocery store, only a limited amount of its merchandize is taxable. The quarterly audit of sales tax revenue into the city will also be impacted by the sales tax generated by a new Dollar Tree store in town, which is heavily laden with taxable sales items.
Sylvia Robles was an unsuccessful council candidate in the 2010 Grand Terrace municipal election in which Stanckiewitz was elevated from an incumbent council position to mayor. Both Stanckiewitz and Robles ran on platforms that had as their central themes reform of the city’s redevelopment agency. In a statement to the Sentinel this week, Robles indicated her belief that reliable sales tax income figures could not be had to make any useful comparisons to see if the incentives provided to Stater Bros. were proving cost-effective for the city’s taxpayers.
“I am not aware of any compliance audit,” she said. “If there is one, it would not include sales taxes captured by Stater Bros as a result of its new grocery store. Sales tax revenues are confidential and the Board of Equalization does not release them. There are job subsidies. That is an ancillary feature and not $1.2 million, which is an aggregate number. I recall about $70,000 estimated per month.”
Robles continued, “The only thing I can comment on — without production of any compliance audit document —  is that redevelopment agencies are not required to provide any quantitative data that they actually produce  higher sales taxes or jobs.  The rationale for funding entities with RDA subsidies is to increase sales tax revenues to help support a city’s general fund.  Since sales tax revenues are secret or suppressed by the Board of Equalization, I do not see how one can audit new revenue generation compliance.”
Grand Terrace community development director Joyce Powers, who oversaw the city’s redevelopment agency and the Stater Bros. agreement, this week told the Sentinel, “There are reports that we have given them $1.2 million, but that is inaccurate. They can request it if they meet certain performance standards under the agreement but to date, no such requests have been made and no funds have been paid to Stater Bros.”

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