Village Businesses at Risk

By Richard Riehl

Carlsbad’s Voters Guide for the February 23 Special Election promises the city will benefit from a $2.6 million revenue windfall each year if a new shopping center is built near the Agua Hedionda Lagoon. But the projected bonanza omits the caveats contained in a report that bypassed state and city approvals normally required of such projects.
The 9212 Report cites the analysis of RSG, a consulting firm hired by the city to examine the shopping center developer’s promises. It found projected revenues were, “not based on valid data sources, appear significantly overstated, and should not be used for budgeting purposes. The tourism-related fiscal revenues to the City, estimated at $3.0 to $5.2 million, (by Kosmont, billionaire developer Rick Caruso’s consulting firm) are not supported due to invalid assumptions.”
While that explains the city’s more conservative $2.6 million estimate, voters should keep in mind it’s an estimate only. The unexpected arrival of the 2008 Great Recession, together with the recent gloomy news from the stock market, prove high hopes are sometimes dashed by harsh reality. That’s especially true if they’re built on a shaky foundation of questionable facts, self-serving interests, and wishful thinking.
Here’s just one example of Caruso’s bogus promises. He claims 10 percent of mall visitors would stay at a local hotel overnight to shop and dine elsewhere in Carlsbad, defining as “visitors” those who come from outside city limits. That would include Oceanside, San Marcos and Vista residents, as well as others from cities within a short driving distance. Unless they’re shopping addicts, nearby residents are unlikely to look for a hotel to give themselves extra time to shop downtown or visit the city’s other three malls.
How will the mall affect businesses in The Village? The RSG analysis shows 47 percent less surplus demand than Caruso’s estimate for shopper goods over the next 8 years, 70 percent less for food sales, and 58 percent less for eating and drinking. The report finds, “The retail service surplus demand is overstated but still positive,” but concludes with the warning, “A large retail project, the San Marcos Creek District, was excluded from the analysis and represents significant portions of the Specific Plan methodology that are inconsistent with best practices for estimating retail demand.”
If I were an owner of a downtown business, I would take no comfort in those words, nor with Caruso’s claim my customer base would be unaffected by his mega mall. His promise of free transportation from his mall to my shop or restaurant downtown will also allow local mall-bound shoppers to park free downtown, walk past my shop, and hop on a trolley to Caruso’s shopping center, avoiding the heavy traffic and high parking fees there.
Although the RSG analysis promises there will be some (my emphasis) economic benefits, the city’s 9212 Report minimizes concerns about the developer’s gross exaggerations. The Voters Guide makes no mention of them at all.
The city’s website gushes about the questionable revenue projections, “If the city’s numbers are wrong, the city will see an even greater economic benefit.” That explains the thinking of the collection of Pollyannas we call our city council.
Watch here for Part 2 of this article next week, a second consulting firm’s analysis of Caruso’s promises to Carlsbadians.

Richard J. Riehl is a Carlsbad, California resident, retired university administrator, and award-winning columnist for the former daily newspaper, the North County Times.
Richard writes a blog titled The Riehl World
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