Amusement revenue struggling in Glendale, while construction soaring
City watching what has amounted to two economies during coronavirus
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I have a commitment never to fail. Failure is not an option. If it takes working 15-20 hours a day seven days a week, that’s what I do, that’s what we do as a team.”
Oscar’s Pier 83 owner Ron Skehan
A lot of these mega-industrial projects are earning considerable construction sales tax, and it couldn’t have come at a better time for the city.”
Glendale Councilor Joyce Clark
INSIDE THE NUMBERS
FY20-21 General Fund Revenues (Through August 2020).
Even with a 2020 wrecked in many sectors by the coronavirus outbreak and its multilayered fallout, Glendale has some eye-popping trends when it comes to construction. A look at the Fiscal Year 2020-21 general fund through August shows actual revenue driven by tax collection through construction is up 94%, almost double from a year prior.
Propelling that growth have been the mega manufacturing complexes going up on the far west end of town. Buzz words like “multinational corporations,” “hundreds of new jobs” and “aggressive construction” have led investors, like Mark Anthony Brewing president John Sacksteder, whose $250 million, 916,000-square foot facility to produce White Claw hard seltzer is among the new companies in town, celebrating the “advanced manufacturing capabilities of the City of Glendale.”
There’s another page to that fiscal year outlook, though.
Because of the ongoing pandemic, which is experiencing another statewide surge entering the holiday season, tax revenues through hotels (down 15.8%) and restaurants and bars (down 15.7%) are struggling, as is the tax revenue stream through the “amusement” category. That sector constitutes ticket sales and the like, including everything from Gila River Arena and State Farm Stadium events to movie theater tickets or even registration fees for Glendale-based marathons.
Amusement tax revenue has declined 92% from a year ago and, dollar-wise, is down $1,129,168, which is almost the exact opposite of the construction tax revenue’s growth of $1,033,223 over the same period.
The yin and yang make for two economies within Glendale.
The good news is that, combined, the city’s overall tax revenues are up 6.2%, and that’s in a year with coronavirus.
The better news? Knowing exactly why.
BARS/RESTAURANTS
In the spring, coronavirus safety protocols forced the immediate closure of restaurants and bars, among other retail and entertainment outlets.
“There was a lot of scrambling,” remembers Ron Skehan, who first opened Oscar’s Pier 83, 18589 N. 59th Ave. Suite 111 in Glendale, back in 2004.
The seafood restaurant with a nautical theme was shut down for the mandated 15 days, but was allowed to provide takeout. His restaurant’s website at the time didn’t even offer ways to order online.
Even when allowed to reopen, safety measures mandated reducing the restaurant’s dine-in seating to 40 from 72. Mr. Skehan says he lost $98,000 in mean revenue during the lockdown.
One thing he did have, however, was determination.
“I have a commitment never to fail,” he said while sitting inside his restaurant during a lunch hour many months later on Nov. 18. “Failure is not an option. If it takes working 15-20 hours a day seven days a week, that’s what I do, that’s what we do as a team.”
The massive and immediate business model change also brought about, unpredictably, opportunity.
Oscar’s Pier has since added an outdoor patio, first out of necessity but now it’s become a feature that draws the majority of lunch-hour customers on this day. His new online ordering option allows for curbside takeout — another new regular feature.
Even revenue generated from orders through the delivery service Uber Eats has tripled since the pandemic started, Mr. Skehan says.
“This pandemic that we’re in creates opportunities for other avenues to generate cash flow,” he said.
He also notes an infusion of funds through the emergency Paycheck Protection Program set up to aid small business during the pandemic also helped. Oscar’s Pier received three months’ of payroll, which added up to $98,128, meaning his allocation brought virtually to the dollar what he had experienced in lost revenue.
Mr. Skehan’s restaurant has the same number of employees today — 13 — as he did prior to the pandemic.
For him, at least, the city’s restaurant revenue figures happily don’t apply.
“Our numbers aren’t matching up with it,” he said. “Instead of turning tail and locking their doors and running, we retooled, reinvented the wheel, followed the guidelines, and we came out so successful that we didn’t even do a price increase on our menu this year, and we’re about 15% over last year coming out of this initial lockdown. We’ve been open for dine-in since May 11.”
As for a bounce back in the city’s amusement revenue, that sector is the most difficult to predict with mass gatherings involved in ticketed events still undecided.
CONSTRUCTION
The city had long anticipated rapid industrial growth on the 1,340-acre Woolf Logistics Industrial Campus and the entire west Glendale region, and it’s come to fruition in large order.
The Loop 303 corridor, which encompasses land between Loop 303 and Luke Air Force Base, has become a ballyhooed draw for manufacturing facilities.
A Red Bull facility was announced in March 2019 and is expected to be operational by January. Growth has expanded to include Ball Corp., which manufactures Red Bulls’ cans, and Raüch Fruchtsafte, a fruit juice company. And, of course, there’s White Claw.
“A lot of these mega-industrial projects are earning considerable construction sales tax, and it couldn’t have come at a better time for the city,” Glendale Councilor Joyce Clark said in an Oct. 27 workshop, pointing to city policies that encouraged development of industrial, commercial manufacturing along Loop 303. “We will weather the results of COVID in terms of revenue generation far better than many other Valley cities.”
The health of the construction tax revenue has mitigated losses in other sectors, as has the upward swing that those sectors now struggling had experienced prior to the pandemic.
“Prior to COVID hitting, they were all actually booming, so that’s also helping,” Assistant City Manager Vicki Rios said. “The economy was really bristling along and we were coming in higher than where we thought we were going to be in terms of budget. So that also is helping.”
As optimistic as a restaurant owner like Mr. Skehan is about turning a corner in 2021, Ms. Rios sees similar trends.
“We’re actually seeing restaurant/bar sort of recover based on (monthly updates). So I expect it not to be booming but I think it will be relatively flat, meaning we’ll probably get the same revenue in 2021 that we saw in 2020,” she said. “Obviously it is a big number to have $9 million in construction revenue. But again overall it’s still a relatively small part of the city’s revenue. It’s really a combination of the two. It’s a combination of we do have more construction revenue which is helping offset these losses, but in addition to that it was really going very well before the virus hit.”
Steve Stockmar News Editor | Sun Life Magazine & Arts & Entertainment
YourValley.net @stevestockmar
Meet Steve Steve Stockmar joined Independent Newsmedia, Inc., USA, in 2017, and has been an Arizona journalist for almost 30 years. He serves as editor of Sun Life Magazine and contributes to West Valley communities where he focuses mostly on arts & culture, education, and profiles of neighbors making a difference.
Community: Every season Steve serves as a “buddy” with the Miracle League of Arizona in Scottsdale, has volunteered his time with Family Promise in Glendale, and previously served on the Ghostlight Theatre board in Sun City West.
Education: Graduated from Northern Arizona University in Flagstaff with a Journalism major and English minor.
Random Fact: Steve once won a 50-player live Texas Hold ’Em poker tournament.
Hobbies: Anguishing over his beloved Chicago Cubs and Bears; listening to Beatles and Grateful Dead music.
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