One year later, RGV Outlets put Mercedes on the retail map

Kyle Arnold
November 2, 2007 - 10:10AM
The Monitor

MERCEDES - A year ago today, Rio Grande Valley Premium Outlets opened to fanfare. It had been more than a decade since city officials started working on plans for the retail center. Shoppers poured in, packed parking lots and slammed stores as the busy Christmas season headed into full swing. And city officials crossed their fingers that the mall would be successful enough to boost sales tax revenues and the city's operating budget.

A year later, it's easier to maneuver through store aisles, and parking spots are plentiful even on the weekend, but outlet operators say the shopping center has been even more successful than anticipated. The city of Mercedes now has more money in its budget to buy a fire truck and police cars, and local businesses say more people are streaming downtown. "It slowed down a little at first, but it's picked up," said Dalia de la O Carr, manager of the 51-year-old El Fenix Café in downtown Mercedes. "There are a lot more people downtown, driving through and asking for directions."

Officials say the outlet center has landed the city on the retail map. "We have a lot more interest in the city as a shopping destination," said Albert Gonzalez, director of the Development Corp. of Mercedes. "We did a trade show three weeks ago in San Antonio and we had tons of interest." Business at local gas stations and restaurants has significantly picked up during the year, Gonzalez said. Nearby, a La Quinta Inn should open soon, and Willie's Appliances is building a shopping center just feet away. And several more local landowners are dividing properties to sell.

Chelsea Properties, the mall's owner, won't release sales figures for the venue, but sales tax calculations for November 2006 through September 2007 show the 100 retailers at the mall sold a total of $120 million worth of merchandise, almost $11 million a month. The mall has been so successful owners are already planning an expansion of 40 stores nearby, said Michele Rothstein, a spokeswoman for Chelsea Properties. The company won't start releasing those new stores' names until January. "You'll probably see more designer fashions," Rothstein said. "There could be some stores that were just waiting to see what happened and others that weren't expanding at the time." The company has always had an option on the second phase, but announcing plans within such a short period of the opening is a testament to the popularity of the mall, she said. "There is great buzz about the property through the industry," she said. "We wouldn't have decided to expand this quickly if it wasn't successful."

The new mall has had little negative effect on other retail in the area. In fact, retail sales in Hidalgo County increased 10 percent over the previous year in the mall's first six months of operation and other major retail cities like McAllen, Mission, Edinburg and Harlingen recorded increases in retail trade as well, according to the Texas Comptroller's Office. In total, the state collected $9.6 million in sales taxes from retail sales at the mall, starting from its opening date through the fiscal year's end in September. The state gets about $7.2 million of that, and the other $2.4 million technically goes to the city. But the city signed an agreement with the mall's developers to give back half the sales taxes it collects through the next 10 years to reimburse part of the $50 million it took to raise the structure.

Mercedes residents and services are set to expand with a new fire truck, an undetermined number of police cars, a street sweeper and an industrial washing machine for the fire department - a handful of one-time purchases the city plans to make because of its budget surplus now, said Assistant City Manager Michelle Leftwich. She said the city originally expected about $800,000 in sales tax revenue during fiscal year 2007.

Gonzalez said the revenue has doubled the budget of the Development Corporation, allowing him to add more staff and expand the agency's services."We're going to be able to do a lot more and hopefully we will keep growing," Gonzalez said.

Kyle Arnold covers business, the economy and general assignments for The Monitor. You can reach him at (956) 683-4410.