May 26, 2007
Saturday

This letter is not meant to support or oppose the jewelry store ordinance. It is simply food for thought. I am a property owner in the Newtown area.

My concerns with the ever increasing number of jewelry stores are:

They provide no sales tax revenue during the months they are closed and as a result other year around businesses / citizens must shoulder a greater percentage of the tax burden.

Jewelry stores sell high end items, many of which exceed the Single Unit Sale amount for the purposes of sales taxes. Most other use retail stores in the downtown / Newtown area sell items that do not reach this level. As a result, a percentage of the total sales of jewelry stores do not generate any sales tax revenue.

The continued proliferation of jewelry stores in Ketchikan threatens to "typecast" our community. Word of mouth referrals due to visitor satisfaction from a positive visit are the best marketing tool to attract future visitors. We don't want visitors going home saying that there was nothing to see in Ketchikan but a bunch of jewelry stores.

Some have suggested that we have an abundance of jewelry stores because tourists are creating a demand. I believe that it is important to remember that:

The average markup for a jewelry store is 200-300% or more. This means that low volume sales can still equal high profits.

Cruise ship tourists who do not take shore-side excursions are considered Captive buyers . They have X amount of time on their hands, limited or no transportation, and spend most of their time walking the streets shopping / sightseeing. Most have jewelry stores in their communities and did not travel to Alaska with the expressed interest of buying jewelry. Many who buy jewelry do so primarily as an impulse purchase.

Most communities that depend on tourism have faced similar problems. Carmel, California is a good example. This seaside town with a population of 4058 people was considered a victim of their own success. At last count they had 120 Art Galleries, or one for every 34 residents. This aesthetic overkill drove up property values, drove out the mom and pop stores, limited city sales tax revenues, and typecast the community as a place to go to buy art, nothing else.

A three bedroom home in Carmel now goes for approximately 2 million. Needless to say a few property owners made out like bandits, and everyone else who could not afford the rents / property taxes / home costs, etc, left long ago. If you Google Carmel you will see that the City is now claiming that they are going bankrupt.

To my knowledge there are no jewelry stores in the Newtown area. If this is true, and the ordnance passes at least a few additional jewelry stores would still be allowed. Also, an unlimited number of new stores could be created that sell jewelry as long as they keep jewelry to no more than 40% of their total merchandise.

I can understand the concerns of the property owners in the Newtown area (I am one of them). On the one hand I am opposed to government regulation, and changing the rules after the game has been played. On the other I have no loyalty to those who live elsewhere, come here for a few months to make their riches and would leave in a second if the going got tough.

The only reason this reached the initiative stage is because the Mayor and Assembly members lacked the intestinal fortitude to make the hard decisions (the reason for most initiatives).

Dear Mr. Mayor and Assembly, if you want to clean up Newtown then maybe you should consider giving people like Mr. Ferry a tax incentive for their part in keeping the area from turning to dirt. Personally, I will be paying off loans for the next 20 years for the work I am doing on my Newtown property, and I have no doubt that the tax man will be there with a higher bill the moment I finish.

Since the City government has no problem spending hundreds of thousands of dollars on outside companies to tell you which way tourists should walk, or how much employees should be paid, you should not have a problem giving a tax break to locals trying to make our town a better place. I won't hold my breath for local government to do anything that may cost them a few dollars in revenue - in the end locals simply do not rate as high as the tourists to many of our elected officials.

Regarding the initiative, keep in mind that City Government can cancel it if they adopt/pass regulations essentially similar in nature. This would allow the City to address the concerns of both groups. What do you think the chances are of that happening?

I wish the best for the true-local business / property owners.

Rodney Dial
thedials[at]kpunet.net
Ketchikan, AK


Received May 25, 2007 - Published May 26, 2007

About: "Lifelong Alaskan who loves Ketchikan"

 

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