Whole Foods delay to cost city of Longmont estimated $1M in 2016 tax revenue

LONGMONT — Natural-foods grocer Whole Foods Market on Friday announced that it is delaying the opening of its under-construction Longmont store by 11 months to December 2016, a move that city officials expect will cost the city about $1.04 million in sales-tax revenue in 2016.

The store had originally been planning a January opening at Longmont’s Village at the Peaks shopping center, the $90 million, 490,000-square-foot redevelopment of the former Twin Peaks Mall site.

Heather Larrabee, executive marketing coordinator, said in a phone interview Friday that there is no risk that Whole Foods will not open at all.

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“There is not that risk,” Larrabee said. “We are 100 percent definitively opening. We understand the community has been waiting for a Whole Foods Market, and we appreciate their patience. So we want them to know that.”

Whole Foods has inked a 20-year lease with Village at the Peaks developer NewMark Merrill Mountain States. But the company noted in Friday’s announcement that the new timeline for the Longmont store is in line with Whole Foods officials’ remarks during a Nov. 5 fourth-quarter earnings conference call regarding plans to grow “at a more moderate pace,” particularly in the Rocky Mountain region.

The Longmont store would be Whole Foods’ 21st in Colorado. Since 2007, the chain has grown from nine stores to 34 in the Rocky Mountain Region, which includes Colorado, Idaho, Kansas, New Mexico and Utah.

“Scaling the business so quickly, along with evolving to meet customer needs in the face of competition presents a fresh opportunity to focus on how we can do things better to create the kind of experience customers expect from us, and we embrace that,” Rocky Mountain Regional president Bill Jordan said in a prepared statement. “We are 100 percent committed to the Longmont community and are excited to open our doors next December.”

The city of Longmont is contributing $27.5 million toward construction of Village at the Peaks. Jim Golden, director of finance for the city, said in an email Friday that the Whole Foods delay does not impact the redevelopment and reimbursement agreement between the city and NewMark Merrill.

Last year, Longmont raised $30.7 million through the sale of certificates of participation — secured by four key city buildings — to cover the money pledged to NewMark as well as capitalized interest and payments for the first couple of years before Village at the Peaks begins generating the full tax revenue streams expected to pay off the debt. Golden said city projections right now show that Longmont should still have a surplus of funds available from Village at the Peaks to make its debt payment of $1,272,455 that is due in 2016.

The city’s debt is to be paid off by revenue from the Twin Peaks Metro District and tax-increment revenue from the Village at the Peaks project. Of the $1.04 million in tax revenue expected from Whole Foods in 2016, about $636,000 of that would have been available to become part of the tax increment. In total, the city had projected $160,000 from the metro district and $1.84 million in sales-tax-increment revenue from Village at the Peaks, providing about $2 million available to make the nearly $1.3 million payment. Without Whole Foods, the city would still have about $1.36 million to make the payment. Golden noted, however, that that figure depends on other stores at Village at the Peaks opening on time.

Golden said that the city does have some contingency funds to make the 2016 debt payment if tax-increment revenue falls short. That includes about $200,000 in unspent proceeds from the original certificate of participation sale, as well as $117,000 of budgeted property-tax revenue for the general fund that has not been committed for expense elsewhere.

“The city has always been aware that 2016 would be a challenge given that it is the first year that the debt service is contingent on tax-increment revenues and the opening dates for all of the new businesses at (Village at the Peaks),” Golden said. “We will continue to adjust our projections as each business opening occurs.”

The new Whole Foods is slated to be 40,000 square feet, a figure that NewMark Merrill Mountain States principal Allen Ginsborg notes is less than 10 percent of the total size of the Village at the Peaks project. He said he’s confident that the shopping center will still be able to get off to a strong start, and isn’t anticipating other stores that have signed leases to delay their openings based on Whole Foods’ delay.

The 12-screen Regal Cinemas movie theater opened last month, along with Gold’s Gym, Sports Authority and Wyatt’s Wet Goods liquor store. A Pie Five pizza restaurant, Chuck and Don’s pet-supplies store, Party City and T-Mobile have been among the stores to open since, with 30 tenants in all to be open between now and March, according to Ginsborg.

“It’s a surprise,” Ginsborg said of Whole Foods’ delay. “I can’t say I’m not disappointed. But they’re clearly a big organization, and they have to do what is best for their organization, and I have no control over that.

“Nobody will be happier than me when Whole Foods opens, I can assure you that.”

Ginsborg said it’s not uncommon for shopping centers to experience delays of various stores when they are first built, citing Sam’s Club at Village at the Peaks as an example. Sam’s Club originally delayed its construction start date by about four months. However, Ginsborg said, Sam’s had initially anticipated a longer delay than that before they eventually broke ground. Sam’s is under construction and is now planning a June opening.

“I’d love to have the center 100 percent leased the day it opens,” Ginsborg said. “You kind of have to build these things anticipating the start is going to be slow.”