By CRISTINA JANNEY
Hays Post
Doug Williams, executive director of Grow Hays emphasized the need for retail development, including a new planned shopping center on North Main in Hays, during the agency's quarterly luncheon Tuesday at the Bob and Pat Schmidt Community Center.
Williams highlighted several recent retail successes, including the new 7Brew, Cervs on Vine and the new Chick-fil-A, which is under construction.
Grow Hays has received $4 million in federal American Rescue Plan Act funding to develop a retail center north of Home Depot.
Williams said four national retail chains are in talks with Grow Hays to locate in the proposed shopping center.
No announcements have been made as to which four stores are considering the site.
Williams said Grow Hays estimates the four retailers could generate $14 million in annual sales.
“You take that times the sales tax rate that we have locally, very impactful,” he said. “The other thing I would say is that these retailers fit niches that really aren't being served very well locally, and a lot of business that they would be doing is going someplace else, whether it be Salina or Garden City or Wichita or online.”
Williams said he did not think the businesses in talks would compete with existing Hays businesses.
The combined impact of the sales and property tax would be about $759,000, Williams said.
He additionally estimated about 78 new jobs with an annual payroll of more than $2 million for a total economic impact of $3.29 million annually.
“In addition to the employment that these people make money, they spend that money. It circulates through the economy, so the economic impact is large, and that's why we're so committed to make it happen,” Williams said.
The proposed shopping center would be 46,000 square feet with room for expansion. The buildings would be on the east side of the lot, with parking on the west.
However, challenges remain to create a financially feasible project, Williams said.
“The cost of development has far outrun what retailers are willing to pay in rent,” he said.
Without the grant or any other assistance, the project would cost about $413 per square foot to build. None of the retailers in question would be willing to pay that, Williams said.
Implementing a community improvement district would further lower the gap. That would charge people who purchase goods or services at the shopping center an additional 2% sales tax for a set period of years. Williams estimated that it would raise an additional $276,720 in revenue.
However, that still leaves the project short.
This leaves the project with four limited options.
• Raise rents
• Reduce construction costs
• Find additional grants
• Lower interest rate financing
Williams said the national chains will not accept higher rents. They are looking for rents in the $18-per-square-foot range. Grow Hays anticipates it will work with local contractors to lower construction costs.
He said grants are becoming more scarce, and Grow Hays continues to seek lower-interest-rate financing.
“We think it needs to happen for our community, for all the reasons we've talked about, for sales and property tax revenue, for jobs and the opportunities those present, for the economic growth we hope to have, and the quality of life things,” Williams said.
Why retail?
Williams also talked generally about the importance of retail in Hays.
The city, county and school district collect $18.7 million in sales tax annually.
A typical house in Hays is valued at $250,000. The homeowner pays about $3,300 a year in property taxes. Without sales tax, that would be $1,500 more per year, Williams said.
“Think how people would scream,” Williams said, “so it makes a big difference in terms of quality of life, and in terms of what we pay.”
Hays has a pull factor of 1.61. This relates to the amount of sales in a community. A pull factor of 1 is neutral. A pull factor above 1 means more people are coming into your community to shop, bringing in more revenue than is going out.
“Everybody who drives by and stops and buys gas or buys a meal or stays overnight or goes shopping somewhere, that is a contribution that we locally don't have to make. That's a big reason why sales tax is important, and why retail is important,” Williams said.
Hays consistently ranks among the top five cities for pull factors in the state.
Williams said additional retail choices improve the quality of life in the community and help employers recruit new workers, including some of the largest employers in Hays, such as HaysMed, USD 489 and Fort Hays State University.