Getting rich off retail?

For the third year in a row, Ventura made a major push to market our community at the annual "Global Real Estate Convention" sponsored by the International Council of Shopping Centers. The event, held at the Las Vegas Convention Center, was attended by more than 50,000 retailers, developers and shopping industry professionals.

Mayor Weir, Deputy Mayor Fulton and Councilmember Summers all participated, along with City staff and leaders of the Ventura Chamber of Commerce. Through a booth and a full schedule of meetings, Ventura made its case to retain and expand our offering of national retailers.

It is an eye-opening opportunity to track retail trends as well as do business. While attendance was down only slightly this year, it may mark the beginning of the end of the era of national retail expansion.

Over the past two decades, consumers have fueled an unprecedented growth of retail offerings. America's once dominant department stores and the malls they spawned have been augmented by "power centers," "lifestyle centers," resurgent downtowns and even newly created downtowns like the one in Brea, California. The result is that Americans have nearly ten times as much store space for every man, woman and child as Europeans. (see chart below.)The total square footage of Walmart stores alone now exceeds the size of Manhattan.

Ventura has continued to do well in retail competition, even in the face of ramped-up competition. We have the second highest per capita sales in Ventura County (Thousand Oaks is number one, with a median household income nearly 50% greater.) But Venturans still complain about limited shopping alternatives. Some yearn for a Walmart, others for a Nordstrom. And nearly everyone is a critic when it comes to the offerings at the Pacific View Mall, complaining about the long-vacant buildings on the north end (and many also griping about getting another Target in town, instead of a store we don't currently have in our community.)

On the immediate horizon the news is mixed. Wood Ranch will be occupying the vacant restaurant on the south end of the Pacific View Mall. The mall owners, Macerich, have been working successfully on retaining and replacing inside tenants as leases expire. They've also lined up major tenants to replace the vacant buildings on the north end (we hope to now proceed with a long-promised joint planning effort on the long-term development of the north end, including moving forward on this first phase.)

We are also working with the Montalvo Sewer District and affected landowners on an extension of Olivas Park Drive to open the way for additional retail development behind our existing Ventura Auto Center. Downtown, while not a huge sales tax generator, continues to make progress as independent retailers and restaurants attract a growing clientele.

On the other hand, Ventura hasn't landed a major electronics retailer, the biggest hole in our local offerings. Best Buy seriously entertained coming to the north end of the mall, but that ran aground on their insistence on signage on the south end of the mall. Was the problem pointy-headed bureaucrats or a small-minded Design Review Committee? No, actually it was the veto of the other majors in the mall who have veto power over signage on their end.

In the longer run, we may be facing a shrinking -- rather than growing -- retail marketplace. Newsweek recently reported that "in the fourth quarter of 2007, the national retail-vacancy rate rose for the 11th straight quarter to 7.5 percent—the highest level since 1996, according to research firm Reis, Inc. With new projects coming online—34 million square feet of retail space will be completed in 2008—the rate is expected to spike further to 8 percent. In the parlance of the trade, many chains are simply over-stored."

That, of course, varies widely, region to region and town to town. But according to the Conference Board which collects the Consumer Confidence Index, that "now stands at a 16-year low. Weakening business and job conditions coupled with growing pessimism about the short-term future have further depleted consumers' confidence in the overall state of the economy."

Add to this the growing share of sales taking place over the Internet and it looks pretty grim for solving our city's budget challenges by attracting more retailers. Moreover, there is an increasing recognition that Americans are over-spending and under-saving compared to our competitors in Europe and Asia.

As Americans adapt to higher oil prices, higher food prices and diminishing job growth, we may be facing a pronounced shift in consumer spending. While that may not be good for local sales tax revenue, it may be good for a sustainable and prosperous economy in the long run.

Oil at $200 a barrel

That's what Goldman Sachs' oil industry analyst is predicting.

The New York Times reports today that Arjun Murti, who was derided when he predicted a few years ago that oil would go to $100 a barrel, now says it will soon hit $200 a barrel -- and stay above at least $100 through 2011.

Consumers are already reeling at prices over $4 a gallon at the pump. But since worldwide demand continues to outstrip supply,unless the economy goes in the tank, it's going to cost even more to fill our tanks. What the Wall Street Journal calls "the world's premier energy monitor" is preparing a report "reflecting deepening pessimism over whether oil companies can keep abreast of booming demand."

There are lots of theories about the doubling of oil prices over the past year. Is it a temporary spike? Speculative bubble? Greedy conspiracy? Or the end of the world as we know it?

Take your pick. But one thing seems certain: not since the 1970's has America faced a more substantial challenge to the way we live.

Since the Vision process in 2000, Ventura has been moving toward a new model. Call it "smart growth." Call it "new urbanism." Or just call it "good planning." But the goal is to curb sprawl, reinvest in older urban areas and reduce our reliance on cars by making it more convenient and pleasant to walk, bike and use public transit.

How are we doing? Transit ridership is up. Some hardy bicyclists actually commute to work on two wheels. The sidewalks in Downtown and the Westside are often crowded.

But in other ways, our landscape has not changed nearly as quickly or as much as the price of gas. Outside the primarily commercial core of downtown and the older Westside neighborhoods, Ventura is still primarily a suburban town dependent on cars to get around.

We've made a symbolic gesture in our house. Wednesdays my three kids and I now walk instead of drive to school and work. We pick up two of my kids classmates along the way. It's about a mile -- and we could take the bus down Main. But I like the exercise and my kids still have a stigma about public transit, even though they've used it when we travel.

There are now five Toyota Pruis' on our block in Midtown (two are ours.) But the "infill" projects approved in Downtown and Midtown in recent years are stalled because of the economy. Whether loved or hated by the neighbors, they aren't getting built. It's hard to measure whether "smart growth" will make a difference if we aren't having any growth at all.

Will life ever return to normal? If by normal we mean gas at $2 a gallon, the answer is clearly "no." Can we continue to live suburban lifestyles with gas at $4 a gallon -- and up? That remains to be seen.

Getting through the recession

It's not officially a "recession" yet, but the signs of the downturn are spreading. This week, the City Council unanimously took another decisive step to ensure Ventura's financial sustainability.

Earlier this year, the Council cut operational spending by $1.9 million and cancelled or deferred projects totalling $2.35. Hiring was frozen.

On Monday, the Council adopted nearly $4 million in recommended reductions for next year's budget (which begins July 1.) Some of those savings will be implemented immediately, others will be phased in. Decisions on the remaining $300,000 in recommended cuts was carried over until May 29. On that date, the Council will also consider our recommendation for a one-week closure of City Hall between Christmas and New Year's Day and shifting to a schedule where City offices have longer hours, but are closed every other Friday.

These actions will ensure a balanced budget next year, based on current financial projections. But no one knows how long or how severe this recession will be. The Federal Reserve and international financial institutions moved aggressively to meet the threats to global credit markets and Congress is moving toward final action on a package designed to stem the rising tide of home foreclosures. But with gas and food prices up sharply, consumer confidence has plummeted.

So we need to look ahead to a longer-term plan for weathering the recession. That's why the City Council is undertaking a community dialogue on our priorities.

Nearly everyone agrees we need to tighten our belt. But when it comes to actual cuts, the howls are heard. Imposing new or higher fees to recover costs has proven unpopular, to say the least. There is no shortage of voices insisting on their viewpoint -- but the diversity of opinions is bewildering, especially since little of it is grounded in actually understanding Ventura's budget realities.

Is the community hopelessly divided on how we should manage our budget -- or is there a sensible consensus? We need to find out.

Bickering and feuding is no way to get through tough times. Now is the time to find a way to pull together. Click on the City's website on how you can participate in this important opportunity to shape the kind of community we want -- and the kind of community we will leave to the next generation:

http://www.cityofventura.net/bridge/government_resources/budget.asp