Customers walk in and out of Mervyns in Cochrane Plaza in Morgan Hill. The California-based department store has gone bankrupt and will be closing its remaining 149 locations.
Morgan Hill
As stores hand the city their walking papers, sales tax revenues continue to decline and the projections look increasingly dismal.
The most recently announced closure is Ross, leaving Cochrane Plaza on Cochrane Road west of U.S. 101 with three large vacancies, including the old Target space on the west and Mervyns on the east.
What's more troubling is that, unlike Target, which left the plaza last year for greener pastures at Cochrane Commons east of U.S. 101, and Mervyns, which filed bankruptcy, Ross's reason for leaving is simply business.
"Why is the store closing? It's pretty obvious. Mervyns is leaving, Target's gone," store manager Paul LeBarre said. LeBarre said sales at the discount clothing store have been "OK," and that Ross "might very well pull back into Morgan Hill at a later date, but who knows when or where."
Ross Stores, Inc.-owned dd's Discounts, which opened last year in the Morgan Hill Plaza on the southwest corner of Monterey Road and Dunne Avenue, might have filled Ross's Morgan Hill retail desires, LeBarre said.
Ross will close sometime in January or early February, LeBarre said, adding that he didn't have any other details and would know more after the holiday shopping season concluded.
Economic forecasts aren't making the season any brighter. According to a preliminary Black Friday shopping survey conducted by BIGresearch for the National Retail Federation, seven million fewer people said they would shop this weekend, which is typically the jumping off point for holiday shopping.
According to the survey, up to 128 million people will shop today, Saturday and Sunday, with 49 million people saying they would definitely hit the stores and another 79 million were waiting to see the weekend deals before making any decisions.
In Morgan Hill, sales tax revenue is down 5 percent, according to City Manager Ed Tewes. Finance Director Jack Dilles said the loss is attributable not just to retail, but transportation and construction sales, too. He also said that Cochrane Commons, Cochrane Plaza's nemesis, helped the city overall.
"We were able to keep more sales tax dollars than we would have otherwise," Dilles said.
Morgan Hill Business Assistance and Housing Services Director Garrett Toy admitted that Mervyns and Ross closing spelled trouble for Cochrane Plaza.
"In Cochrane Plaza, those are some pretty large tenants," he said. "It makes it that much more difficult to lease out spaces."
Toy said it was hard to say when the spaces would be filled.
The property manager and owner are trying to find other tenants, Toy said, but the question is which tenants are still in the market.
"A lot of retailers are sitting around watching what happens," he said.
Toy said he expected that when the market shakes out in a year or so, the retailers will come back. And, as far as Toy knew, Wal-Mart still plans to open a store there.
"Our understanding is that they will open at some point in 2009," Toy said. "The last time we talked to them, they were planning to move ahead. They haven't contracted with a contractor yet."
As of Nov. 25, the city projects a sales tax revenue loss of $735,000 this fiscal year, or about a quarter of the $3.3 million budget deficit in the city's general fund.
Barbara Petro, owner of the Cochrane Plaza furniture and accessories store Consignment Living, said the situation there was the fault of the city. Opening Cochrane Commons down the road is fine, but "they have to protect other tax money," she said. "Cochrane Plaza was viable with Target here."
Petro said she would like to see the city marketing the plaza better - or, at least, allowing her to market. Last year, the city requested she remove a banner that was displayed at Cochrane and U.S. 101.
Petro said she estimated a sales drop of about 30 percent after the old Target left Cochrane Plaza, and expects another 20 to 30 percent drop come February, after both Mervyns and Ross shut their doors.
Most shoppers, as they geared up for the Black Friday blitz, had gotten used to the idea of Mervyns store closing but were shocked and dismayed that Ross will soon close its doors.
"It's disappointing," longtime Morgan Hill resident Lee Paz said, looking out over Cochrane Plaza Tuesday afternoon.
"All these shops will be gone soon, and it'll just be a dead space," Wilma Flaherty predicted sadly, waving a hand to the ancillary restaurants and shops between Mervyns and Ross. Flaherty, a 75-year-old native Morgan Hill resident, said she remembers when Cochrane Plaza was the big shopping center in town.
But Flaherty, who will be buying gift certificates from local stores this holiday season, said she didn't think anything could be done by the city or anyone else to save Cochrane Plaza from desertion.
"This is like the Great Depression. Everything is at a standstill," she said.
Mayfair Hair and Nails, which has operated in the stripmall between Mervyns and Ross for 12 years, has seen clientele drop about 50 to 60 percent since last year, said manager Tina Phung. They just signed a 10-year lease.
"We didn't know the economy was going to get as bad as it did," said Phung, who added that she's worried about how the business will fare in the next year. "We thought we'd be OK."
Longtime Morgan Hill resident BJ Tichinin wasn't so sure.
"People on the city council had better get hopping," she said. "The economy is affecting everyone. Our town needs to get more creative and focused. This is an adorable town, and it's not the town's fault."
Natalie Everett
Natalie Everett Natalie Everett is the education and city reporter for The Times. Reach her at (408) 779-4106, ext. 201, or neverett@morganhilltimes.com.
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