Downtown tax take soars in Scottsdale

Sales tax receipts in downtown Scottsdale are rising almost as quickly as the hotel, condominium and retail development in the area.

The five districts of downtown collected an extra $64.5 million in 2006, and one area on Main Street saw an increase of nearly 40 percent in gross revenue, according to newly released city tax records for 2006. Gross revenue, or revenue prior to taxes, for the entire downtown area increased about 18 percent compared to 2005.

City leaders say the upswing is fueled by new projects such as the W Hotel, new stores at Scottsdale Fashion Square and the Waterfront, and a collective effort by art galleries to reach the public.

“Every month is better than the next,” said John Little, downtown director. “This is not an anomaly or unusual spike. This is every sector, every district. That adds up to a trend.”

The downtown districts are divided into Fifth Avenue, Marshall Way, Main Street, Old Town, and Brown and Stetson. The numbers reflect income reported from retail shops, restaurants, bars, hotels and motels.

Main Street reported the biggest increase from 2005 at $31.7 million, followed by Brown and Stetson at $23.4 million. Fifth Avenue saw a $4.2 million increase, Marshall Way $3.9 million, and Old Town $1.1 million. Scottsdale Fashion Square went from $699.9 million to $755.5 million.

Little said the buzz is evident with the new kinds of stores moving in downtown. Sony opened a store at Fashion Square this week. Cilantro, a gallery featuring art from Guadalajara, moved in on Craftsman Court and Covet, a sneaker and fashion store, opened there two weeks ago.

“Fresh ideas want to be here,” Little said.

Randy Krebs, owner of Covet, said he and his wife visited Scottsdale several times before deciding to open a store here. After staying in the James Hotel (now the Mondrian), Krebs said he knew it was time.

“I said this is an indicator, an opportunity to bring a different mix to the area,” he said.

And he didn’t think a strip mall or shopping center would be enough.

“We immediately wanted to be in a downtown location,” Krebs said. “The street has more flexibility if we want to do parties with DJs, or a space for a barbecue in the back to give something back to our customers.”

The biggest jump among the downtown districts was West Main Street, which took in $80.3 million in 2005 and $112 million in 2006, a 39.5 percent increase.

“What’s happening aside from the tourists is that so many people have moved here, and they’re decorating their own homes,” said Marilynn Spiegel, director of Joan Cawley Gallery on Main Street. “They’ve discovered that the Main Street arts district is so much more.”

Because many Main Street gallery owners opened up a couple of decades ago, Spiegel said they have an established clientele.

“The artists are very good, and we stand behind the artists,” she said.

The numbers are expected to increase when the stores open at SouthBridge, an urban village with shops, restaurants and living space along the south side of the canal between Goldwater Boulevard and Scottsdale Road.

Some business owners are staking their livelihood on the SouthBridge development.

David Kish, who owns Entertaining the Idea of Tea on Fifth Avenue, passes out slips of paper promoting the project.

“We hope the new people moving into all the new condos down here are going to save us,” he said.

Kish said his numbers went up slightly in 2006, but haven’t met expenses and he had to cut his budget to keep going. He said Scottsdale residents don’t know the area has changed in the past couple years and don’t come back enough to find out.

“We’re all struggling. We’re just hanging in there right now,” he said. “I’m going to give it until the end of the year. If the locals show me they don’t need tea, I’ll close my door.”