ELK GROVE (CBS13) – Plans for a $500 million casino in Elk Grove can move forward after the federal government gave its stamp of approval.

The casino and resort will be built by the Wilton Rancheria Tribe on 36 acres just off of Highway 99

Meanwhile, Elk Grove city leaders are trying to stop big money from leaving town as more of its residents are shopping outside city limits, causing a serious drain on the city’s largest revenue base: sales tax.

What’s being done to keep the cash from flowing to other cities?

“Some cities have too much retail, we don’t have enough,” said City of Elk Grove Economic Development Director Darrell Doan.

The city says it loses nearly $2 million each year from residents leaving the city to shop.

“They don’t generally care about city boundaries, so they’re going to go where it’s most convenient for them,” he said.

That so-called “retail leakage” is money that could be spent on additional police officers or improving other city services.

“This has a very negative impact on the city from a sales tax standpoint,” he said.

Of particular concern to city leaders is Delta Shores, a new mall being built just north of Elk Grove city limits. It’ll have more than 1 million square feet of planned shopping space.

Another concern is the lack of retail diversity in Elk Grove. The majority of the city’s sales tax comes from auto-related sales.

“As the automobile industry changes, we need to hedge against a slowdown in the industry or new technology that will erode auto sales,” he said.

What is Elk Grove doing to stop shoppers from leaving? They’re directly reaching out to recruit new retailers, self-developing retail property on city-owned land, and creating more upscale shopping experiences.

“A big part of our strategy to recapture that leakage is to facilitate development of better, higher-quality shopping centers,” said Doan.

They also want to improve conditions in existing malls.

“We have centers that can be refreshed and reinvested in and we’re working with those property owners to make sure that happens,” said Doan.

There is some progress — a new Costco is under construction, and the partially built mall near the casino site now has signs saying it’s opening this fall.

The overall goal is to make it more attractive for residents to shop locally.

“Everybody who’s in business would like to capture sales that are going elsewhere, and that’s the whole essence of what we’re trying to do,” said Doan.

Along with shopping centers, the city is working to attract more restaurants, health clubs and luxury movie theaters.

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