December 18,2015-
Visalia and Fresno are going head to head as finalists in a competition to land a Nordstrom e-commerce distribution center that could offer more than 1000 jobs and up to 1875 long term.
The news had been hush-hush in Visalia the past few months until Fresno officials made it public Wednesday, on the eve of a Fresno City Council meeting. At that meeting to be held Thursday December 17, the Fresno council is being asked to approve a sales tax sharing agreement with the company as part of a potential deal according to their council agenda. The news was out Wednesday in both the Fresno Business Journal and Fresno Bee.
Now that the negotiations have become public Visalia Mayor Steve Nelsen says the city will also consider a sales tax agreement at an upcoming council meeting. Nordstrom wants an answer from Visalia by the end of December.
“Now that the cat is out of the bag- our staff, who has been working with the company for 6 months, will bring us a proposal and we will see if it makes sense for Visalia” says council member Greg Collins.
For his part vice mayor Warren Gubler is ready to go toe-to-toe with Fresno over the prize plumb. “If we need to arm wrestle with the mayor of Fresno, I am ready to do whatever it takes to complete for these jobs.”
Gubler says Visalia is on the radar for companies looking to expand. ”We were in the running for the big Tesla battery plant last year”, says Gubler, ”before Nevada came up with more incentive money than California could.”
E-commerce sales are taxed at the point of distribution and such sales tax agreements are common now that so much more commerce is done over the web. Nordstrom does $2.4 billion in internet sales annually.
Decision Next Week
Visalia City Manager Mike Olmos says he expects the Nordstrom matter to be on the open door agenda Monday December 21.”We will let Nordstrom know our decision after that meeting
Olmos describes the incentive request at $10,000 per employee on up to 1875 jobs on build-out.”This is on the one hand a steep request but this money that the company generates is not currently in our coffers.” The upshot – what have we got to lose? “The impact in terms of the jobs and payroll generated will impact all of Tulare County.”
Nearby Dinuba has an ongoing sales tax agreement with Best Buy electronics who ships goods bought over the internet from Dinuba to the entire Western US. The city collects almost $2 million a year from web-based sales shipped out of the local distribution center, by far the largest sales tax generator to that town.
Collecting sales tax is big deal for cities even as internet sales rise and brick and mortar sales fall. Visalia sales tax is not rising as fast as it was.Meanwhile, the internet sales trend accelerates with the city considering other options to raise money as people spend more of their money on non-taxable services.
“I think getting the money from these companies is better than adding another quarter cent for Visalians to pay” argues Gubler.
Going Head To Head
Both Visalia and Fresno share some common attractions to distribution firms including, cheaper land than much of the urban areas, a large pool of trained labor, midstate location next to Hwy 99, one-day shipping through UPS and FedEx to most of the state and plenty of available properties zoned for such massive enterprises. The Nordstrom complex is said to be one million square feet.
There is plenty of upside. Nordstrom wants to build a second phase distribution center that would supply its brick and mortar stores in the West as well, adding 875 more jobs.
Among the properties being considered in Visalia is the 480 acre Central California Logistic Center, a master planned industrial park enjoying full EIR entitlements, important to fast track building permitting,critical to these companies. The Visalia Industrial Park is already home to a number of Fortune 500 companies and was recently improved with over $130 million in road and infrastructure improvements to speed truck access to Hyw 99.
Companies already here like VF Corp, the international clothing giant vouch for Visalia saying “VF chose to do business in Visalia in large part because of its central location to the ports of Los Angeles and Oakland. Visalia represents the ideal location from which to receive and process goods.”
Visalia is in Seismic Safety Zone 3, which is the lowest risk seismic zone California has to offer.
Fresno is a much larger community and offers the advantage of a large airport with direct connection to Seattle, the Nordstrom corporate headquarters. Visalia’s airport can compete for air shipments however,with regular UPS and FedEx flights.
Selling Visalia
Bigger cities have their downsides as well with Visalia’s quality of life, its walkable and vibrant downtown and “crown jewel of the valley “ status unmatched by Fresno. Crime is an issue as a measure of reputation with Fresno last year recording 48 homicides – 30 of those deaths gang-related. Visalia recorded 9 homicides.
Visalia city manager Mike Olmos says he believes Visalia is “a notch up”.
“We told Nordstrom if they want to evaluate our town they need to look at the whole community,not just the industrial park.”
“ Visalia has much to offer including its small town feel,a business oriented but friendly attitude, with good schools,a 92% graduation rate at VUSD, nice parks and a growing trail system,a great hospital and safe environment to live in.”
Nordstrom has 77 stores in California,more than half of them in Southern California, about an hour closer to Visalia. Neither town has a full service Nordstrom but Fresno does have a Nordstroms Rack.
Fresno is offering to give Nordstorm 75% of the sales tax revenue generated for the first three years and 50% after that until the sales tax adds up to $10 million.
Nordstrom has toured Visalia with their building contractor in tow.The town is known to fast track large building projects cutting months off typical building time schedules and making opening day happen faster.