Lone Tree has hit on a winning financial formula: A small population and large retail base.
“A huge amount of our revenue comes from people outside the city — even outside the state — so the burden doesn’t all fall on the citizens of the city,” city finance director Kristin Baumgartner said.
The city’s reputation as a shoppers’ haven is a big part of the reason Lone Tree residents don’t pay a municipal property tax.
While it’s not dramatic, Lone Tree is on an upward economic trajectory. In 2012, the city collected about $21.2 million in sales tax revenue. It conservatively projects taking in $22 million in 2013.
City leaders don’t see that balance tipping anytime soon.
“We are in an enviable position right now, and I don’t see that changing in the next five years,” Mayor Pro Tem Jackie Millet said. “Cabela’s alone is a significant additional destination retailer, and we can’t forget all the other restaurants and shops that will be opening in the RidgeGate area.
“All the Schwab employees coming into the city are also going to be driving additional retail tax dollars to the city.”
About 2,200 employees will work at the new Charles Schwab campus upon its 2014 completion, which eventually could house up to 5,000.
While Lone Tree’s residential base is forecast to grow from its current 11,000 to about 40,000 residents, most of the new housing will be built on the as-yet undeveloped east side of RidgeGate, where initial construction is three to five years distant. The city’s full build-out, dependent on a myriad of economic factors, could be 15 to 30 years in the future.
The mix of uses on RidgeGate’s east side was part of pre-annexation discussions with the developers of the six-square-mile area that straddles both sides of Interstate 25 south of Lincoln Avenue.
“We wanted to be able to achieve that same kind of balance of retail and residential people have come to expect,” she said. “That and stewardship of our existing businesses is going to be key to our continued success.”
Baumgartner oversaw the creation of the proposed 2014 city budget, which was to be considered for adoption during the council’s Dec. 3 meeting.
“The good news is, we don’t have anything drastic that’s changing in our 2014 budget,” she said. “The city is continuing to maintain all its services at the same level they have in the past. We’re not seeing any huge jumps in our revenue sources. It’s just kind of continuing to be a steady flow of income.”
City sales tax revenue has steadily climbed since the national financial crisis of 2008 — when it took a small negative tick. In every year since, it’s increased about 5 to nearly 6 percent.
Much of that comes from its retail heart: The upscale, 1.6 million-square-foot Park Meadows shopping center.
“Obviously, the mall being in the city generates a ton of sales tax; that’s a huge driver,” Baumgartner said.
Cabela’s impact on the city’s bottom line still is an unknown; the 110,000-square-foot store opened Aug. 15 at the city’s southern border. Store officials say its performance to date exceeds expectations, but they aren’t ready to make any firm predictions about Cabela’s sales tax revenues.
“I think we’re being conservative on what we’re projecting out for Cabela’s since we don’t have a history to show us how they’re going to actually do,” Baumgartner said. “That’s why I think our 2013 (overall sales tax projection) is somewhat conservative.”
The bustling retail market contributes to a low commercial vacancy rate. While Lone Tree-specific figures are not available, the retail vacancy rate in the south/southeast metro area stands at 5.1 percent. Nationally, that rate stands at about 8.6 percent.
Baumgartner attributes that in large part to the discriminating nature of both the mall’s management and the city’s design and building requirements.
Though Baumgartner credited the mall’s management for its success, Park Meadows’ general manager Pamela Schenck-Kelly turned it back to the city.
“I would attribute a lot of the retail success to the location and demographics — not only of Lone Tree but of the surrounding area,” she said, “and to the Lone Tree City Council. Not just every retailer has been able to go to Lone Tree. They have standards and integrity. I’ve found them to be very flexible as long as you meet their standards.”
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