Simi to Pinpoint Tax ‘Leakage’ From Lost Sales

Staring at their lackluster sales tax receipts, city officials have long known that when residents feel like shopping, they leave town.

They go to Thousand Oaks or the San Fernando Valley, spending their cash in the well-stocked malls of Topanga Canyon Boulevard, and giving other communities the tax money that Simi covets.

Simi Valley leaders now want to know just how much of their potential sales tax receipts are “leaking” into surrounding cities. The City Council on Monday authorized a study that will find out precisely where residents shop, how much they spend and how the city might recapture some of that cash.

“We know there’s leakage,” Assistant City Manager Don Penman said. “What this study will tell us is where it is and how much there is.”

The study could also help lure more stores into town by illustrating the gaps in Simi’s retail landscape. Working with city staff, consultants will examine where residents buy specific items--like clothes or hardware--and show whether local stores are meeting residents’ needs.

“It will give us information we can take to some of these retailers, and that will open the door,” said Deputy City Manager Bob Heitzman.

Sales taxes form the largest single source of cash for Simi Valley’s general fund, accounting for 28%. During fiscal year 1995-96, the city took in $7.5 million. Compare that to neighboring Thousand Oaks, which received more than $15 million during the same fiscal year.

But then Thousand Oaks has The Oaks shopping center, anchored by major department stores and filled with popular national chains. In addition, the Promenade at Westlake recently opened--drawing crowds so large that its parking lots can’t keep up.

Simi Valley is still trying to build a regional mall--a project that has been in the works for more than 10 years. And where name-brand national retailers have been racing to get into the Thousand Oaks market in recent years, they haven’t shown much interest in Simi.

“You know, you can’t shop where there aren’t stores,” Simi Valley Mayor Greg Stratton said before the meeting.

Councilman Paul Miller said that although he can buy most of the things he needs in Simi, some items, such as men’s and women’s dress clothes, are not available.

“You can’t buy a men’s suit in this town,” he said. “In a town of 100,000-plus it’s kind of ridiculous that we don’t even have that.”

Such complaints have fueled the on-and-off drive to build a mall north of the Ronald Reagan Freeway, both to keep sales taxes from migrating elsewhere and to make shopping more convenient for residents. Project developer Victor Grgas, who is trying to attract tenants for the proposed mall, said the study will probably just confirm what he and others already know about the holes in Simi’s retail market.

“The question is whether we can convince stores that they need to be in Simi Valley to meet that market need,” he said.

The city last studied unrealized sales taxes in 1986, although city staffers have periodically updated that study with fresh numbers. For the new report, the Natelson Co. of Encino will not only analyze how the city fares in 40 or 50 different categories of sales, the consultants will also build a database allowing for more thorough and accurate updates by city staff.

The new study will cost about $31,680 and is expected to take about three months.