Los Gatos Weekly-Times

News

Town is in 'good shape'financially, but cautious

By Judy Peterson

Despite the threat of what Los Gatos finance director Steve Conway called a "recession cloud," he and the town's economic vitality manager say the town is in good shape heading into the last half of the fiscal year.

"We do anticipate a moderate amount of operating surplus when we finish the fiscal year," Conway said at last week's town council meeting. He is projecting a $1.3 million surplus in revenues when the fiscal year ends June 30.

He said half of the surplus would be put into the general fund to pay for projects such as street repairs, while the other half would go into the town's reserve fund.

However, Conway warned that Los Gatos faces potential deficits in three years. He said the town's various departments have contingency plans in place. On the surface, Conway said a deficit could mean an across-the-board 5 percent cut in services. "We hope we don't have to use that silver bullet," he said.

On a positive note, Conway said the town's "rainy day" reserve account has more than $4 million in it.

Conway also said he is encouraged by the growth of Akeena Solar, which is headquartered in the old Swanson Ford building at 16005 Los Gatos Blvd. In a Feb. 19 news release, Akeena said it expects to report record 2007 revenues totaling $32.2 million. That is a 141 percent increase over 2006 revenues.

Although Conway continues to worry about the town's dependence on sales tax revenues from DVD rental giant Netflix, he said, "We know their business plan looks solid. We may have 10 more years of high cotton." Netflix contributes about $1.8 million annually to the town's bottom line.

Economic vitality manager Danielle Surdin offered a snapshot of the town's retail, commercial and office vacancy rates. "The state of the national economy is presenting some challenging outlooks for the mortgage and real estate industry," she said. "Los Gatos commercial districts have experienced some small, but noticeable, vacancy increases in our office uses."

Throughout town, there are an estimated 35 vacant offices and commercial storefronts.

Surdin painted a positive picture of the town's retail business, saying, "We have maintained relatively low vacancy rates in retail."

Surdin said the area that includes N. Santa Cruz Avenue, Winchester Boulevard and University Avenue shows 12 retail vacancies. But there is uncertainty about the Sharper Image, one of downtown's specialty retail stores. On Feb. 20, Sharper Image filed for Chapter 11 bankruptcy protection, but said it will be conducting business as usual.

However, a company spokesman, Tersh Barber, acknowledged some stores will be closing. Barber could not say if the Los Gatos store, at 105 N. Santa Cruz Ave., is on the chopping block. "We have not made any decisions about which stores will be closing," he said. "We'll know more in a few weeks."