Holiday Spending

By Corey Ryan, Valley Morning Star, March 22, 2010

The high volume of cars found in the Rio Grande Valley Premium Outlets mall this past holiday season indicated ‘twas the season to be spending. Now the sales tax figures are available to support that notion. But for the rest of the Rio Grande Valley, it appeared to be a slow spending Christmas, albeit not as slow as it was for the country and for the state.

Visitors from across Mexico and the Rio Grande Valley flocked in droves to the Premium Outlets from November’s Black Friday through January’s post-holiday sales, according to sales tax numbers released earlier this month. While sales tax allocations for November 2009 through January 2010 were lower than the previous year in Harlingen, McAllen and Brownsville, Mercedes saw an 8 percent increase, from $1.9 million to more than $2 million this past season, according to Texas Comptroller’s office records.

Harlingen saw the largest difference in holiday spending, an 8 percent, $419,717, decrease from 2008, according to the Comptroller. Sales tax allocations from March, which reflect January’s sales, represented the eighth straight month of decline in Harlingen. Since July, every month has been worse than the previous year.

“I think that residential construction, which is also down everywhere, is impacting everyone’s sales tax numbers.” Harlingen Mayor Chris Boswell said. “Until credit starts to ease up and new housing starts, I think there will be a decrease in sales tax everywhere.” Boswell did not think that the decline in holiday sales had anything to do with the developing outlets mall in Mercedes, he said.

But Mercedes’ sales tax allocations have been growing each year since the outlets mall opened, while Harlingen saw slight increases in 2007 and 2008 before reporting a 4 percent decrease in sales allocations last year. Premium Outlets opened in 2006, immediately resulting in $3.33 million increase in sales tax allocations in the first year, according to comptroller reports.

The outlet mall has developed in three stages since it broke ground, according to the Development Corporation of Mercedes’ web site. The $65 million, 400,000 square foot facility opened in November 2006. Phase II expanded the mall by 150,000 square feet in the fall of 2007. The complex completed phase II in spring of 2008 adding an additional 30,000 square feet.

The outlets mall added 13 new stores in the past year, which had some impact on the increase in allocations, a spokeswoman with the outlets said.

“In this economic environment, shoppers are looking for added value and are finding it at Rio Grande Valley Premium Outlets,” Jessica Miller, spokeswoman for the Premium Outlets, wrote in an e-mail.

Half of the outlets earned sales tax allocations go back to the mall owner, as per the city’s agreement with the Premium Outlets’ management company, the New Jersey-based Chelsea Property Group. That agreement will last through 2016.

“A lot of people who would normally go to San Marcos, those people are now shopping here locally at our outlet,” said Veronica Villegas, the vice-president of the Rio Grande Valley Partnership, a regional chamber of commerce. “I’ve heard from some of the other cities with outlets that shoppers are stopping here. The Mercedes outlet has tapped into that market.”

January’s Texas sales tax collections were down $273 million, 14 percent, compared to January 2009, according to the Comptroller. The month represented the cap to the three-month, holiday season slide that saw sales tax collection decreases each month.

“We are in a national recline and recovery,” Villegas said. “Nationally, the Rio Grande Valley has done better than the rest most everyone else.”