By Carol Cole-Frowe
A new study shows the University North Park Tax Increment Financing District No. 2 is outpacing revenue projections done before its approval in May 2006.
The "Retail Sales Cannibalization Study," done by Eric S. Lander of Canyon Research Southwest Inc. of Buffalo, N.Y., was distributed to Norman city councilmembers after their Tuesday study session.
Lander was scheduled to be in Norman to discuss the study at the Finance Committee meeting Thursday, but was prevented from flying in by heavy fog in the area.
Methodologies used in the study included:
· Comparison of City sales tax revenues before and after activation of the University North Park TIF Project Plan
· Quantifying Norman's retail pull factor
· Providing retail sales opportunity gap analysis for Norman
· Estimating supportable retail sales in Norman
Lander wrote in the study that new retailers in the 465-acre University North Park project area "haven't cannibalized existing retail sales in Norman. In fact, the contrary is true. The new retailers have served to diversify and strengthen Norman's retail base, improving the city's retail drawing power, creating improved synergy among similar retail categories and generating increased retail sales."
In the study "Estimated Tax Revenue for University North Park" prepared by Dr. Alexander Holmes in February 2006, Holmes projected that in the first three years of the TIF, it would produce revenues of $1,635,781. To date, it has produced revenues of $2,587,423.
Norman has had 4.4 million square feet of new retail space built between 2000 and 2007, with taxable retail sales increasing during that time by 44 percent to $1.45 billion for 2007. UNP accounts for 401,345 square feet of retail space. There has been 2.25 million square feet of retail space built since 2003, when Norman's population topped 100,000 and became more attractive for national retailers.
And Lander indicates even with the new retail space, Norman is operating at an occupancy rate of 95.57 percent.
The first phase of the University Town Center is anchored by a Super Target that opened in October 2006, with Kohl's, TJ Maxx and Office Depot. Prospective anchors listed by Lander include Macy's, Marshalls and Dick's Sporting Goods.
Some of the other potential lifestyle tenants could include specialty retailers like Book-A-Million, Pottery Barn, Restoration Hardware and Willams-Sonoma. Apparel store prospects include Ann Taylor, Banana Republic, Bebe and Brooks Brothers.
The study indicates that sales tax revenue excluding that from UNP has grown at a faster pace than prior to the inception of the UNP TIF.
Norman's retail pull factor is 1.38 or 38 percent higher than the state average, from the Oklahoma Trade Pull Factors for Fiscal Year 2004, published in March 2006 by Southwestern Oklahoma State University. Lander's study estimates Norman's retail pull factor has increased to about 1.50, based on current retail sales.
Much of the retail pull factor is attributed to out-of-town visitors and University of Oklahoma students, faculty and staff.
There is retail sales "leakage" by Cleveland County residents, with the county's pull factor at .86.
"Norman can further strengthen its retail pull factor by capturing retail sales by Cleveland County residents now escaping to Oklahoma County," the study indicated.
The RMP Opportunity Gap -- Retail Stores Report 2008 suggests leakage in retail categories within a 5-, 7- and 10-mile radius of UNP supports power center and lifestyle center development without an adverse effect on Norman retailers.
The power center categories with the greatest potential include home electronics and appliance stores, hardware stores, office supplies and sporting goods.
Specialty food services, department stores, jewelry stores, furniture and home furnishing stores and clothing and accessories stores are prospective lifestyle center tenants.
"A host of junior anchors, high-end specialty stores, restaurants and entertainment venues are absent within Norman," Lander wrote. "Norman's strong retail pull and a growing population warrants continued near-term development of the power center component. While the nation's current poor business climate for high-end specialty retailers hampers feasible development of the lifestyle center over the next two to three years, the developer's anticipated 2012 opening appears reasonable and achievable."
Lander is expected to attend the January meeting of the City's Finance Committee, scheduled for 5:30 p.m. Jan. 15, 2009, at City Hall.
Carol Cole-Frowe 366-3538 ccole@normantranscript.com
