Frustrated by a lack of success in bringing much new commercial life to its largest shopping center, the City of Lacey is beginning to talk about working to “create a new town center” elsewhere, specifically at Hawks Prairie.

If businesses shy away from Sleater-Kinney Road, the historic heart of Lacey’s commercial district, “we still have to move forward,” said City Manager Greg Cuoio at a recent public forum sponsored by the chamber of commerce. “If we can’t turn it around, we have to focus on Hawks Prairie.”

The city’s own outside experts warn this would be a risky approach to revitalization of the city, however. They suggest putting Hawks Prairie development on hold until problems are fixed within the existing central business district, including the “old-looking and uninviting” South Sound Center.

A marketing study, conducted for the city by Mundie & Associates of San Francisco, found per capita retail spending in Lacey, adjusted for inflation, fell by nearly 15 percent between 1980 and 1995 and that’s causing municipal government to lose out on sales-tax revenues. For comparison, 1995 retail sales in Olympia were nearly $13,000 per resident; in Lacey they were less than $4,000.

“At the bottom line,” the study concluded, “residents (of Lacey) are spending ever-decreasing percentages of their retail dollars in Lacey and ever-increasing percentages elsewhere.

“If this continues,” the survey says, “it will mean trouble not only for the economic health of Lacey’s retailers but also for the fiscal health of the city and (its) ability to provide public services.”

Cuoio estimated that recapturing the retail “leakage” from Lacey to Olympia would mean an additional $4 million a year in sales-tax revenues for the city.

“We’re underachieving in this community,” Cuoio said. “We can’t thrive as a bedroom community. So far, we’ve been able to pull rabbits out of hats, but we’re about out of rabbits.”

According to the study, Lacey could support more retail establishments of almost every kind except fast-food restaurants. The city manager said there is an immediate need for another 200,000 to 300,000 square feet of retail space – about the same square footage as at South Sound Center.

Although the study concludes that the 30-year-old mall, owned by Capital Development Corp., is badly in need of renovations, easy access to the interstate continues to make it a desirable location. Among the study’s recommendations are a food court, multi-screen cinema and more development on the property.

The city’s role in this dream would be to improve traffic flow in the area. Among other changes, the study recommends realigning the dogleg in Sixth Avenue to create an easier, more visible entrance to the mall. This would require relocating a Seafirst Bank branch office.

But, the study cautioned, “successful revitalization of the (central business district) will require that Lacey direct all appropriate types of new retail and office development to that area until available sites are absorbed.

“Attempting to direct some new uses to the (central business district) and some to (Hawks Prairie) will weaken the probability of success for CBD revitalization.”

In other words, successful retail development in Lacey is an either/or situation between Hawks Prairie and the existing business core.

The study suggests the Hawks Prairie area should be held in reserve until the CBD is healthy, or a major “footloose” employer who would benefit from good interstate access and visibility can be found for the east side.

By Dean Boyer, Business Examiner contributing writer