Visalia ready to rack Nordstrom warehouse
Visalia may be on its way to landing the biggest business deal in the city’s history, but it won’t be just Visalians benefitting from a Nordstrom’s West Coast warehouse.
Last month, the Visalia City Council approved a Jobs Incentive Agreement for the upscale retail giant that would bring 1,800 jobs and $3.8 billion in economic development to Visalia and Tulare County as a whole. Based on numbers shared by city staff about the demographics of its industrial districts, bringing the Nordstrom fulfillment center to Visalia would provide 600 well paying jobs to residents living in Exeter, Farmersville, Woodlake and Lindsay who would then spend their additional income in both Visalia and the towns in which they live.
“What’s good for Visalia is good for all of the surrounding towns,” said Vice Mayor Warren Gubler. “Visalia is the jewel of the Valley. Dollar for dollar I’m willing to match anything that Fresno is willing to put out there. By matching we can get past the money and get to the intangibles. Visalia, and the Valley, is the last great area to develop in California.”
Under the agreement, Visalia would rebate 75% of sales and use tax revenues in the first 10 years and 50% thereafter to pay back $11,067 to Nordstrom for the first 1,000 full time jobs and $10,000 for the next 875 full time jobs. The rebates will not kick in until a minimum of 500 full time jobs are created. Visalia’s rebate would total $20.75 million over 20 years. This compared with Fresno’s plan to rebate 75% of sales and use tax for the first three years and 50% thereafter to pay back $11,067 for every full time employee up to $10 million with a minimum threshold of 700 full time jobs. Fresno rebate would total $18.75 million over 14 years. On Dec. 17, Fresno increased its agreement by $2 million to account for the land in Visalia being $2 million less than the proposed property in Fresno. The deal essentially came down to Visalia, Fresno and a Nevada-based property.
“Have we ever done anything like this?” Councilmember Amy Shuklian asked.
Deputy City Manager Eric Frost replied, “We’ve never had anything this big.”
As of press time, the City of Fresno had not upped its offer. In fact, the Visalia City Council canceled its Dec. 30 special meeting intended to amend its Jobs Incentive Program agreement to counter any additional concessions granted by Fresno.
“We are talking about five years worth of industrial job growth in one project alone,” Frost said.
Councilmember Bob Link said the agreement was a safe bet to pay for itself due to the conservative projections historically provided by City staff.
“This is a legacy project,” Link said. “If that’s the trend of young people we are entering a new era. And this project will say to other companies, ‘Visalia is a good place to do business.’”
The fulfillment center not only brings jobs, but good jobs. Paul Saldana, President and CEO of the Tulare County Economic Development Corporation, pointed out that Nordstrom is a Fortune 500 company and is ranked 14 on the list of the Top 100 Companies to Work For. The base salary for those employed at the fulfillment center would start $12.50 an hour and would be full-time and include benefits.
“This maxes out at 1,800 jobs which means 600 new jobs for Visalia and 600 new jobs for Tulare County,” Mayor Steve Nelsons said. “This is a win-win for Tulare County. If I was choosing to live in Visalia or Fresno, it’s a slam dunk decision. I don’t think Fresno has the quality of life we have in Tulare County and specifically Visalia.”
City officials from several Tulare County cities addressed the Council in support of the project, including Farmersville City Manager John Jansons.
“I wanted to express my support for the project,” said Jansons, a former economic development manager. “Economic progress and economic vitality is really a regional issue. I applaud you for your leadership in trying to bring this project to Tulare County.”
Saldana, provided the Council with an economic impact analysis of Nordstrom’s facility. For Visalia, the direct impact is estimated to be $39.6 million overall, including $25 million in sales tax revenue after the rebate, $9.5 million to Measure I (the City’s public safety sales tax measure), $5 million in property tax, $1.4 million in utility revenue. The County of Tulare should see a net benefit of $29.7 million, Visalia Unified would receive $13.5 million in property tax revenues and special districsts, such as cemeteries, memorial and community services districts will share a portion of $4.4 million.
Furthermore, Saldana said Visalia offers everything a distribution company would need including access to labor, streamlined permitting, market accessibility, affordable land and a central location in California.
“Visalia is the best strategically located site and a great setting for associates to work and live,” Saldana said.
If Visalia is selected, the 1 million square foot ecommerce and distribution warehouse would be located 55-75 acres on the northwest corner of the industrial park at at Riggin Avenue and the extension of Kelsey Street. Jones pointed out that the Visalia-Porterville metropolitan area ranked No. 10 in the nation for logistics, and the Central Valley was the only California region on the list.
“It makes sense to locate here given the logistical strength of this area,” Jone said. “I think we can generate even more interest [in our industrial park] by having this here.”
Developer Pat Daniels of CapRock Partners has been working on attracting the online warehouse to the Visalia industrial park since early summer. He “aggressively priced” the property $2 million less than the proposed property in Fresno and said this is one of the most high-growth industries anywhere in the United States.
“Today is a very prideful day for all of us,” Daniels told the Council.
In 2015, Nordstrom expanded its West Coast retail locations adding a full-line store in Torrance, Calif., and Nordstrom Rack locations in Long Beach, Thousand Oaks, Cerritos and Emeryville, Calif. The company’s total net sales for the third quarter increased 6.6% over 2014 to $3.2 billion.
Nordstrom operates 323 stores in 39 states, including 121 full-line stores in the U.S., Canada and Puerto Rico; 194 Nordstrom Rack stores; two Jeffrey boutiques; and one clearance store. Additionally, customers can shop online through Nordstrom.com, Nordstromrack.com and HauteLook. The company also owns Trunk Club, a personalized clothing service online at TrunkClub.com and its five clubhouses. Nordstrom, Inc. is publically traded on the NYSE under the symbol JWN.
Councilmember Greg Collins said the city had “other partners” to “sweeten the deal” if need be, but said Visalia’s quality of life, spacious parks and vibrant downtown should be enough to swing Nordstrom’s decision in their favor.
“I know this opportunity has generated a lot of excitement … and I know we want to create a competitive environment but I don’t want to get into a race to the bottom,” said Collins, who wanted to avoid the City giving too many concessions.
Shuklian motioned to approve the agreement and Gubler seconded prior to the unanimous vote.
“We have talked for years about sales tax not being as high because of Internet sales,” Councilmember Amy Shuklian said. “To have an opportunity to have Internet sales providing sales tax for the City is a good thing. When it does happen, I still have my Nordstrom card. I’m ready for you guys.”