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Walmart Economic Impact Analysis 2 December 31, 1996 DISCUSSION The Economic Impact Analysis contains the following findings: Impact on Existing Businesses Municipal Resource Consultants (MRC), the firm that tracks San Leandro's sale tax information, was able to provide Kosmont with sales tax data for three cities in California with recent Walmart openings. The data showed that "Food Store taxable sales" suffer a significant decline. A large portion of Walmart's inventory is consumable household items such as cleaning products, paper goods and personal grooming items. These purchases are transferred from grocery stores to Walmart stores. "Drug, Miscellaneous Retail and Apparel Store" sales are not significantly different before and after the Walmart openings. "Department Store" (which includes Walmart) sales increase significantly in the first year and then level off. Therefore, if there is a directly competing department store, those sales could transfer to the Walmart store and negatively impact the existing store. Based on this information, Kosmont determined that a new Walmart would not adversely affect downtown businesses with the exception of downtown grocery stores who will see a decline in taxable sales (cleaning products, paper goods, etc.). K-Mart, which is a direct competitor with Walmart, will likely be adversely impacted by a Walmart opening. Current sales levels at K-Mart are below industry standards and a new competitor could force K-Mart to close. It is important to note that these same impacts are expected for K-Mart if Walmart located in San Leandro or outside the City's boarders in Hayward or Oakland. In addition, some transfers can be expected from general merchandise outlets at both Greenhouse Marketplace and Bayfair Mall. Generally, those retailers offering household consumables and furnishings will be more impacted than those selling apparel and specialty items. Impact on San Leandro if Walmart Locates Outside the City The report looked at two potential Walmart locations outside the City, one at the former Price Club location in Hayward and one west of the intersection of I-880 and 66th Avenue. Both of these locations are within the primary trade area (i.e., San Leandro residents will travel to either location to shop at a Walmart if it does not locate within the City). As noted above, the study concluded that San Leandro businesses will be impacted if the Walmart locates inside the City or immediately adjacent to the City. While these impacts may be somewhat reduced for grocery stores, K-Mart will be affected in the same way as it would if the Walmart were located in San Leandro. The report estimates Walmart will probably generate anywhere from $200,000 to $225,000 in net new sales tax for the city in which it locates. Impact on West Gate/Highest and Best Use for the former Costco site The Kosmont study concludes that locating a Walmart store at West Gate is probably the best solution for stabilizing the center. This conclusion is based on the fact that West Gate needs a retail anchor at the south end of the center to provide spin-off benefits to the existing tenants located between Home Depot and the former Costco site. The absence of a retail anchor is likely to have 96