05-11-07 Central Park Primary Factor for Fredericksburg's High Annual Sales Figures Compared to Other Virginia Cities

Date published: 5/11/2007

Fredericksburg consistently exceeds Virginia cities of comparable size in its annual sales figures, a statistic City Manager Phillip Rodenberg attributes to one factor -- Central Park.

Fredericksburg sets pace among small cities for taxable sales

 By PAMELA GOULD

 Fredericksburg consistently exceeds Virginia cities of comparable size in its annual sales figures, a statistic City Manager Phillip Rodenberg attributes to one factor--Central Park.

"Central Park is such a workforce for us it gives us capabilities beyond our population," Rodenberg said.

Fredericksburg recorded $1.06 billion in taxable sales for 2006, surpassing all cities of comparable size in the state including Fairfax, which had $1.03 billion in sales, according to the Virginia Department of Taxation.

The state levies a 5 percent sales tax with two exceptions--groceries and medicine. Food for home consumption is taxed at 2.5 percent. Over-the-counter medicines are exempt.

The city has held the lead in taxable sales for at least the past six years--staying ahead of Fairfax and far outpacing Hopewell, Staunton and Salem, all of which have slightly larger populations.

Fredericksburg's taxable sales were more than six times the taxable sales of Hopewell, nearly three times that of Staunton and more than double that of Salem, according to the state data.

Between 2001 and 2006, Fredericksburg saw an average increase in taxable sales of 9 percent.

The counties surrounding Fredericksburg saw slightly greater sales growth in that same period.

Between 2001 and 2006, Stafford recorded an average increase of 9.62 percent; Spotsylvania an average of 9.36 percent.

Stafford's biggest jump--16.5 percent--came between 2003 and 2004, a statistic Economic Development Director Tim Baroody attributed to the opening of Stafford Marketplace along Garrisonville Road in North Stafford.

Both Spotsylvania and Fredericksburg saw what one could term "the Wal-Mart Supercenter effect."

When Wal-Mart opened one of its one-stop shops in Central Park in October 2002, the city saw its biggest surge in sales over the next year--an increase of 21.2 percent.

And in 2003, city homeowners saw their tax rates drop 24 cents.

Likewise, when Wal-Mart opened a Supercenter in Spotsylvania, kicking off Southpoint II in March 2005, that county saw its biggest sales surge over the next year--a 16.5 percent hike.

Between 2001 and 2006, the three jurisdictions have maintained a fairly steady share of the taxable sales in the region, the data shows.

Stafford's share has hovered between 26 and 28 percent over that period, Fredericksburg's between 31 and 36 percent, and Spotsylvania's between 38 and 42.

While the three no doubt compete for sales tax revenue, Bob Carter, assistant economic development director for Stafford, sees the data as good news for the region because at the same time all three continue growing in sales.

"The pie keeps getting bigger, which is the great story," he said. "We're not doing better and Spotsylvania doing worse. Everybody's doing better."

Spotsylvania had its first $1 billion sales year in 2003, Fredericksburg in 2004.

Baroody predicts this will be the milestone year for Stafford with the recent opening of a Giant supermarket in Celebrate Virginia North and the opening before year's end of a Best Buy at Stafford Marketplace and a Super Target in Carter's Crossing off U.S. 17.

Rodenberg agreed with the assessment that the region as a whole is growing and that's good for all but noted the ebb and flow that come with new retail outlets.

"Resilience" was his term of choice, noting that sales in the city may initially lag when a retail center such as Stafford Marketplace or Cosner's Corner opens, but then city sales rebound.

"There's a newness," Rodenberg said. "It may capture some group's attention for a while, but we get back on track."

He noted that Fredericksburg has had its periods leading the pack.

"We were the regional leader for a while," he said. "We're trying to distinguish ourselves with Celebrate Virginia."

Rodenberg said the city is looking to the tourism complex to keep its tax base strong.

"We need something that distinguishes us and says this is only at our exit," he said. "For a city that can't grow, Celebrate Virginia South is key to our destiny. It helps keep the wolf from our door."

The state returns 1 percent of the 5 percent sales tax back to the jurisdictions.

Taxable sales provide the second largest revenue source for the city--exactly 19.43 percent of the budget in 2006, according to budget manager Mark Whitley.

Central Park accounted for 59 percent of that revenue in 2004; the downtown area another 18 percent, according to data compiled in the city's JumpStart 2010 report.

While jurisdictions place the sales-tax revenue into their general funds rather than designating it for a specific expense, Rodenberg said the city would be hard-pressed to undertake major projects without it.

"For a small city such as Fredericksburg, a healthy sales-tax base enables us to take on the large capital projects that we've seen come along," Rodenberg said. "But for the sales tax, we would never have built James Monroe High School."