Last October, when Scotts Valley Mayor Derek Timm learned the community had been selected by Target Corp. as the site of one of its next locations, he was elated.
“I called the city manager and said, ‘You’re not going to believe this,’” he said, remembering the exchange with Tina Friend about the company deciding to move into the old Kmart building. “She was driving and she literally missed her exit.”
Now, with the Planning Commission’s remote public hearing about the project slated for 6pm on May 13, the community is gearing up to have its say on the development.
Just before the novel coronavirus arrived, in November 2019 Timm found out Kmart execs were finally pulling the plug on the 58,000 square foot Scotts Valley storefront at 270 Mount Hermon Road, which he says was neglected for years. When they shut the doors a few months later, it was the opening salvo in a painful barrage better known as the year 2020. After all, the department store was in the top 10 of all city sales tax remitters. Scotts Valley was relying on this, since it doesn’t bring in as much in property tax as other communities.
In short order, Timm was appointed to head the search for a new anchor tenant to the strip mall shopping complex.
“We were in the midst of the pandemic,” Timm said. “The one large retailer that was still expanding in the U.S. was Target.”
They knew the Minneapolis-based company would have to navigate a complex series of ownership, lease and sublease contracts for the space, but they had the enthusiastic support of owner Kevin Pratt, with Scotts Valley Phase II, LP, to make sure everything went smoothly, he said.
The community’s roller coaster ride of courting Target is a tale of two economic downturns. Target had hoped to build a 143,000-square-foot store on La Madrona Drive but pulled out in 2009, citing the subprime mortgage crisis.
Fast-forward to America’s next financial crash, and Target is in the complete opposite position. After getting to stay open while many other businesses were forced to close for much of the pandemic, Target now has $4 billion on hand to put into growth over the next few years.
“2020 was a record-breaking year thanks to the work of our team and their commitment to serving our guests amidst unprecedented demand,” Target CFO Michael Fiddelke said in a March news release. “The bold investments planned for the next few years will scale key capabilities across stores, fulfillment, and supply chain to drive deeper engagement with new and loyal guests, continued market share gains, and long-term, profitable growth.”
A report completed when Target was considering the vacant La Madrona parcel hints at the windfall the community could see from the new deal, since it estimated sales tax revenue of nearly half a million dollars a year.
A spokesperson for Target said they couldn’t be happier about their new digs.
“We’re excited to bring an easy, safe and convenient shopping experience to new guests in the community with this new Target store,” she said, adding population density and site accessibility were two factors that made the location so attractive. “We work closely with local leaders to identify locations where we can best serve a neighborhood.”
Timm says while he knew Target reps flew in over the summer to scope out the Kmart husk, he didn’t know if Scotts Valley would be selected for the multi-store purchase from Transformco Properties, the parent of Kmart and Sears.
“As a city we were not sure—until they actually closed—if the transaction was going to come together,” he said. “To land this at that moment was really uplifting for the city and the community.”
While 90% of the refurbishing cash is expected to go to interior design, Target is planning to put some money into renovating the commercial plaza, Timm said.
“This center is pretty tired from a look-and-feel perspective,” he said. “It’s going to re-energize some of the empty window fronts.”
The city has been getting advice from retail expert Bob Gibbs, who once estimated Santa Cruz was missing out on 85% of potential retail dollars.
Gibbs has been preaching the belief that Target will drive customers to Scotts Valley’s mom and pop shops, but some aren’t so sure.
Tyler Best, 41, who owns Cali Style, located in the next shopping plaza over, says the Target deal is a popular topic of conversation around the skate and apparel shop.
He’s apprehensive, to say the least, and yet he remains hopeful Gibbs’ theory will prove to be on the money.
Best and his 19-year-old employee, Wyatt Brown, agree on one thing.
“I’d rather see a Trader Joe’s,” Brown said. “At least it’s not Walmart.”
Brown concedes he’ll probably end up shopping at the Target, but wonders if the reno will mean more traffic jams.
When asked about traffic concerns Timm said he expects the Target will restore lost traffic and could even reduce Highway 1 congestion—since Scotts Valley and San Lorenzo Valley residents won’t have to commute to Capitola or Watsonville shop at the store.
“It was one of the busiest Kmarts in the country from a sales volume perspective,” he said. “This really does serve this north end of the county.”
For the last year-and-a-half, Jonny Diepersloot, 20, has been working on-and-off at the Togo’s Sandwiches location from which the sun-faded red of the Kmart sign is clearly visible.
As the son of the owner, he’s been aware of the ups-and-downs of business life in this corner of the community. And during the pandemic it got pretty dismal.
“I’m excited,” he said. “Hopefully it will bring more business into this whole area.”
He’ll probably hit the toy aisles to seek out the Lego brick sets he collects out of a sense of nostalgia for the days when his mom and dad would accidentally step on loose pieces on the floor, he says.
Over at the Capitola Target, Ben Walker, a 42-year-old teacher from Santa Cruz, says a Scotts Valley location would be nice. He imagines stopping off on his way to, or from, work in Santa Clara.
“Honestly, I don’t really love this Target,” he said, referencing what he considers to be the wonky layout of the Capitola Mall store. “I actually prefer the Watsonville Target.”
While he isn’t particularly thrilled that it’s a “big box” store making inroads in the wake of the coronavirus onset, he can definitely see why.
“There’s a part of me that’s like, ‘Do we really need three Targets in this area?’” he said. “If we keep shopping at them, they’re gonna keep coming …. My money is the one that does the talking.”
Walker also isn’t confident the local infrastructure will be able to handle all the increased action in Scotts Valley, since the community is growing.
“The thing that concerns me is, I don’t think they have a plan for all the traffic it will attract,” he said. “At some point it’s gonna be crazy.”
And while Timm pointed to the city’s recently-adopted traffic plan, the pedestrian and vehicle flow could be an important topic at the upcoming public hearing.
The meeting will be available on Zoom, via the Planning Commission Agenda at the city of Scotts Valley On-Line Agenda Center: scottsvalley.org/AgendaCenter