 e-Mail this page to a Friend!
NOTE: As of August 2004, this e-Bulletin has a new format. Click Here and Visit the New Hometown Advantage Web Site
The Home Town Advantage Bulletin - October 2001
Reprint Policy and Guidelines
CONTENTS
- About this Bulletin
Correction
- LOCAL BATTLES
State of Maryland Intervenes in Local Big Box Fight
New Orleans Landmark Saved, But Wal-Mart Still Not Welcome
- NEW RULES
Coconino County, Arizona Caps Store Size
Agoura Hills Residents Push Big Box Referendum
Mamaroneck Zoning Law Survives Court Challenge
- NATIONAL NEWS
Protecting Historic Buildings from Chain Drugstores
Thousands Camp in Big Box Parking Lots
- E-COMMERCE
Sales Tax Fairness Update
- ANTITRUST
Wal-Mart Settles Predatory Pricing Charge
- RESOURCES
Forming an Independent Business Alliance
GAO Franchise Study
The Home Town Advantage Bulletin is a bimonthly electronic newsletter reporting on efforts nationwide to stop chain store proliferation and support locally owned, independent retail businesses. Learn about land use policies and other tools that can protect the character and vitality of your hometown. Find out how other communities are bucking the "big box" retail trend and encouraging small-scale, homegrown businesses - and why this approach is proving far more beneficial to the local economy. Plus, news on e-commerce, independent business alliances, development subsidies, franchisee legislation, and all the latest resources.
Subscribe by sending a blank e-mail to:
home_town_advantage-subscribe@topica.email-publisher.com
ABOUT THIS BULLETIN
In communities across the country--from Burlington, Vermont to Bozeman, Montana--citizens are taking action to defend and strengthen their local economies.
The Institute for Local Self-Reliance (ILSR) has been tracking these efforts and will use this bulletin to provide bimonthly updates on significant developments. We hope it will serve as a tool for making connections and sharing strategies within this growing movement. We encourage readers to share news and resources by sending email to smitchell@ilsr.org.
ILSR is a nonprofit research and education organization that promotes healthy and sustainable local economies. This bulletin is part of ILSR's New Rules Project, which publishes a quarterly journal, The New Rules; several electronic bulletins on specific issues; and books, including The Home Town Advantage: How to Defend Your Main Street Against Chain Stores and Why It Matters. We also maintain a web-based clearinghouse of model public policies at http://www.newrules.org
Another good source of news on local efforts to keep chain stores is the NewsFlash! section of the Sprawl-Busters web site (http://www.sprawl-busters.com). Additional links and organizations are listed at the end of each story.
CORRECTION
A story ("Hudson Valley Communities Fight CVS") in the last issue of this Bulletin mistakenly reported that the local government of Rhinebeck, New York is largely Republican. In fact, most City Council and Planning Board seats are held by Democrats. Also, Rhinebeck's village center is listed on the National Register for Historic Places.
I. LOCAL BATTLES
STATE OF MARYLAND INTERVENES IN LOCAL BIG BOX FIGHT
As part of Governor Parris Glendening's smart growth agenda, the Maryland Department of Planning has decided to assist Kent County in its nine year battle to block a Wal-Mart store.
Under a rarely employed 1974 law, the state has the authority to participate in local land use proceedings. Earlier this year, Gov. Glendening announced that his administration would revive the law to address development that has smart growth implications. The law allows the state to provide assistance to local governments and to file legal briefs that support, oppose, or recommend changes to particular projects. Final decision-making authority, however, remains in the hands of local officials and the courts.
In June, after more than fourteen hours of testimony and deliberations, the Kent County Planning Commission voted 5-1 to reject Wal-Mart's proposal to build a 108,000 square foot superstore on the outskirts of Chestertown, a lively, 300-year-old town of 4,000 people. Wal-Mart challenged the decision in court. The state planning department will provide legal assistance and has filed a friend-of-the-court brief on behalf of Kent County.
"It is so gratifying to know there is a partner there to back you up," said Chestertown Mayor Margo Bailey. "Having a big powerhouse like the state jump in gives us credibility."
The grassroots Coalition for the Preservation of Chestertown had hoped the Planning Commission's decision would end a fight that has waged for nine years and is thought to be the longest big box battle in the nation. Wal-Mart's plans to build in this rural county of 19,000 people on Maryland's Eastern Shore were first revealed in 1992. Three years later, the Planning Commission approved the project, but the citizens group appealed.
Finally, after years of litigation, Maryland's second highest court ordered the Planning Commission to reconsider the proposal and to pay particular attention to its impact on traffic and the local economy. This time the Commission voted against the project, concluding that, while Wal-Mart's traffic impacts could be mitigated, its economic impacts could not.
The superstore's estimated annual sales of $52 million would be equivalent to 40 percent of the county's total retail sales, or $5,000 per household. The Commission concluded that the county could not absorb that much new retail without destroying dozens of existing businesses and undermining downtown Chestertown.
The Wal-Mart case is one of three development projects in which the state has intervened. The state will also assist local officials and private developers in designing residential developments in Annapolis and Gaithersburg.
In all three of cases the state is supporting the position of the local government. When Gov. Glendening announced the new strategy in May, however, he noted that on some occasions the state might oppose local officials, and even take them to court, to block projects inconsistent with Maryland's smart growth policies.
NEW ORLEANS LANDMARK SAVED, BUT WAL-MART STILL NOT WELCOME
Fierce opposition from preservation and community groups has saved the last cotton press complex in the city of New Orleans from becoming a Wal-Mart parking lot. Now, building on this success, the groups hope to keep the proposed store out altogether.
In July, the ironically named Historic Restoration Inc. (HRI) revealed plans to redevelop a 65-acre site along Tchoupitoulas Street in the heart of New Orleans. The proposal includes 1100 units of housing and a 203,000 square foot Wal-Mart supercenter. To make room for the 900 parking spaces required by Wal-Mart, HRI sought to raze several buildings in the Amelia Cotton Press complex. Built in 1882 of red brick and cypress, the structures compose the last intact cotton press complex in New Orleans and represent an important part of the city's history.
In September, with opposition growing louder by the day, HRI announced that it would reduce the size of the parking lot by 75 spaces and thereby save the buildings.
"We're thrilled those buildings will be saved," said Patty Gay, executive director of the Preservation Resource Center (PRC). "But we're still concerned about the impact of a Wal-Mart supercenter on [existing] commercial areas."
PRC, the Urban Conservancy, and Protect NoLa are among the organizations that oppose the construction of a big box store on the site. They contend a multi-acre retail project that could draw as many as 10,000 car trips per day is incompatible with the small-scale, walkable character of the city's urban core.
According to PRC, the proposed Wal-Mart does not comply with New Orleans' big box ordinance, a set of design standards that apply to stores larger than 25,000 square feet, or the neighborhood's Strategic Renaissance Plan. Developed by residents in 1996, the Plan calls for small-scale, mixed use development.
Opponents also contend the supercenter will negatively impact locally owned businesses in several commercial corridors, including Magazine Street, which has undergone a rebirth in recent years with several restoration projects and new entrepreneurs.
"The current leadership of the city has embarked upon a constellation of projects designed to strengthen the local economy and provide entrepreneurial opportunities for our citizens, such as the city-wide Main Street program," notes Edward Melendez of the Urban Conservancy. The city would be squandering those investments by allowing a Wal-Mart store.
The redevelopment project must go through several layers of public review before proceeding. With the preservation issue resolved, the next major battle is likely to be over financing. In addition to more than $40 million in federal, state and city money earmarked for the housing component, HRI's plan hinges on tax increment financing (TIF) and Payment in Lieu of Taxes (PILOT). The TIF would divert sales tax generated by the Wal-Mart for up to 25 years to pay off development costs. PILOT would likewise divert property taxes for 20 to 25 years to further subsidize the store.
Opponents contend the subsidies are unfair to existing businesses. Estimates suggest that about 75 percent of Wal-Mart's revenue will come directly at the expense of nearby stores. The resulting declines in jobs and tax revenue at these stores, combined with the subsidies for Wal-Mart, could result in a substantial net loss for the city coffers.
Opponents also note that the state has already assisted Wal-Mart's expansion into southern Louisiana by providing an $8 million subsidy for the company's two new distribution centers.
II. NEW RULES
COCONINO COUNTY, ARIZONA CAPS STORE SIZE
In August 2001, the Coconino County Board of Supervisors unanimously passed an ordinance barring the construction of stores larger than 70,000 square feet and requiring those over 25,000 square feet to obtain a conditional use permit. The ordinance will apply to all land in the county that lies outside of municipal boundaries. Coconino County is located in northern Arizona and includes the city of Flagstaff.
Two grassroots organizations, Friends of Flagstaff's Future (F3) and the Flagstaff Activist Network (FAN), are largely responsible for initiating the public discussion that ultimately led to the ordinance. F3 and FAN launched a public education and organizing campaign last year after a developer announced plans to build a 200,000 square foot Wal-Mart store on the east side of town. Wal-Mart already has 100,000 square foot store on the west side of town.
The Wal-Mart supercenter, they argued, would harm local businesses and the economic vitality of downtown Flagstaff, which came back to life only recently as a result of a concerted public and private revitalization effort. A new supercenter, moreover, would almost certainly lead to the closure of the existing Wal-Mart.
Through a variety of outreach and educational efforts, including a public debate, F3 and FAN helped persuade local officials and the public that large chain stores may not be in the community's best interest. In August, the developer announced that Wal-Mart was no longer part of his redevelopment plan. Two weeks later, the County adopted the size cap.
F3 and FAN hope that the City will likewise move to limit big box proliferation. One of the City Council's major concerns has been the possibility that big box retailers, if barred from the city, would build just beyond Flagstaff's borders. The County's ordinance prevents that possibility.
F3 and FAN also hope to work with the Council and developer on drafting a redevelopment plan that would benefit the eastside without undermining other commercial centers.
AGOURA HILLS RESIDENTS PUSH BIG BOX REFERENDUM
Hoping to protect their community's semi-rural landscape and lifestyle, a group of residents and small business owners in Agoura Hills, California are pushing for a ballot initiative that would ban retail stores larger than 60,000 square feet. Agoura Hills is a town of 20,000 people located about 35 miles north of Los Angeles.
Citizens for Responsible Development (CRD) began organizing earlier this year after a developer proposed building a 255,000 square foot retail complex south of Highway 101. The complex would include a 139,000 square foot Home Depot store.
Several hundred residents have turned out for town meetings to voice opposition to the development. CRD is now gathering the 1,900 signatures it needs to place the size cap measure before the voters. If they succeed, the vote will be held in January. Meanwhile, the project and proposed size cap have become major issues in the November City Council race.
One of the primary concerns about the proposed retail complex is its impact on existing businesses. Home Depot would likely reduce sales and perhaps force the closure of six locally owned businesses, including a hardware store, lumber dealer, equipment renter, fence business, door supplier, and building materials company. Reductions in jobs and tax revenue at these stores would substantially offset the gains expected from the Home Depot.
Another significant concern is the project's impact on traffic and the environment. The complex would require the removal of more than 40 native oak trees and the widening of Agoura Road from two to four lanes. Estimates suggest the project will generate about 13,000 car trips daily, adding congestion and pollution to an interchange that currently handles 40,000 cars a day.
MAMARONECK ZONING LAW SURVIVES COURT CHALLENGE
A New York court has let stand a local law enacted by the town of Mamaroneck governing development outside its borders. Under the law, large-scale developments that abut, adjoin, or are adjacent to the Mamaroneck's borders must undergo a comprehensive review and obtain a permit from the Town Board.
The law covers residential projects of 250 or more homes, facilities of more than 100,000 square feet, and projects involving parking for more than 1,000 vehicles. In granting a permit, Mamaroneck will consider the impact on natural resources, noise, traffic, cultural or aesthetic resources, and community or neighborhood character.
The law was adopted last year in response to a 270,000 square foot Ikea furniture store proposed for a site adjacent to Mamaroneck's border, but entirely within the neighboring town of New Rochelle. The superstore was expected to generate thousands of car trips each day.
New Rochelle contends Mamaroneck has no right to regulate land outside it borders and challenged the law in court. When Ikea abandoned its planned superstore earlier this year, New Rochelle continued the court case, arguing that Mamaroneck's law is unconstitutional on its face, regardless of any specific impact. New Rochelle also claims that the law is hampering its efforts to attract developers to redevelop the proposed Ikea site.
In July, the Westchester County Supreme Court let Mamaroneck's law stand, noting that it has never been utilized and has not affected the use of any property, and cannot be found unconstitutional in the absence of a specific controversy. The Court found New Rochelle's claim that the law impeded its redevelop efforts to be insufficient evidence of harm.
Mamaroneck officials insist that the law is well within the authority of a local government to protect its citizens. That authority, they say, must on occasion extend beyond the town limits to address external problems with internal impacts.
III. NATIONAL NEWS
PROTECTING HISTORIC BUILDINGS FROM CHAIN DRUGSTORES
Several years ago the major drugstore chains---CVS, Walgreens, Rite Aid, and Eckerd---lost interest in strip malls and began to focus their expansion plans on prominent downtown intersections. As Walgreens CEO Daniel Jorndt told the New York Times, the chain's preferred location these days is "the corner of Main and Main."
Often, of course, these intersections are occupied by some of the community's oldest and most significant buildings. Rather than reuse these structures, chain drugstores have bulldozed numerous downtown blocks to make way for their cookie-cutter outlets:
- An ornate 1906 Beaux Arts style building in DeKalb, Illinois was demolished for a Walgreens.
- A 200-year-old inn in Whitpain, Pennsylvania, was razed for a CVS.
- The historic Depot in Tarboro, North Carolina, was torn down early one Sunday morning while citizens groups were in the middle of negotiations with Eckerd over the its fate.
- In Brownsburg, Indiana, CVS demolished an entire block of historic buildings on the corner of the town's busiest intersection. One year later, Walgreens leveled the opposite block.
"There's no way to know how many communities have been affected," says Cristina Prochilo of the National Trust for Historic Preservation. "But we've been flooded with phone calls from people asking for help."
In 1999, the National Trust for Historic Preservation, citing fears that downtowns would be converted to "cut-rate versions of suburban strip malls," placed the "Corner of Main and Main" on its annual list of America's 11 Most Endangered Historic Places. Soon after, the Trust reached agreements with the major pharmacy chains to spare buildings listed on the National Register of Historic Places.
Unfortunately, many important and eligible structures have not been submitted for inclusion in the Register and remain at risk. Nevertheless, the Trust's attention to the issue and the resulting publicity have strengthened local campaigns. In Oklahoma City, plans to replace a 1958 Buckminster Fuller-designed geodesic dome with a Walgreens were recently dropped. In Hamilton, Ohio, six historic buildings on Main Street were saved from CVS.
Although citizen protest can succeed, the only way to ensure protection of important structures is through local zoning ordinances that safeguard designated historic districts and establish design standards. Such ordinances are multiplying as communities realize the value of historic buildings.
Some communities are also focusing their economic development efforts on independent pharmacies and enacting ordinances that deter chains, such as formula business restrictions, impact reviews, and limits on the size of retail stores. A 4,000 square foot cap on the size of retail businesses in some San Francisco neighborhoods, for example, keeps out drugstore chains, which are reluctant to build outlets smaller than their standard 14,000 square foot format.
- The National Trust for Historic Preservation can provide model ordinances and guidance for communities seeking to protect historic structures. Call 202-588-6296 or visit http://www.nthp.org
- Examples of size caps, impact reviews, and formula business restrictions can be found on the New Rules Project's Retail sector
THOUSANDS CAMP IN BIG BOX PARKING LOTS
Wal-Mart has become one of the nation's largest campground operators. Every night thousands of recreational vehicles (RVs) set-up camp in Wal-Mart parking lots. The practice, which first began in the late 1980s, has grown rapidly in recent years. In places like Durango, Colorado and Anchorage, Alaska, Wal-Mart parking lots are jammed full of RVs night after night.
Parking overnight at Wal-Mart is free, so campers save the $20 to $35 fee charged by traditional campgrounds. Although the company says it does not promote the practice, all of its stores sell a modified Rand McNally road atlas that shows the location of the chain's 2,600 U.S. outlets. Store employees have been known to provide wake-up calls for RV'ers, directing them to the store's cafe for breakfast. Wal-Mart has also expanded its stock of camping products and featured RVs more prominently in its advertisements.
According to store managers, campers are an excellent source of revenue, often purchasing all of their supplies at Wal-Mart.
"Wal-Mart is acting like Wal-Mart acts when it goes into any small town," says David Gorin, president of the National Association of RV Parks and Campgrounds. "They just eat up the business, and they are doing it to us like they have done to other folks." He estimates that parking lots are siphoning off as much as 10 percent of the business.
Gorin and others in the industry believe that retail stores that allow overnight camping should be required to follow the same regulations governing traditional campgrounds. These rules include purchasing a state license to operate; complying with the state health code on such things as the number of restrooms and the drinking water supply; and undergoing regular inspections.
Traditional campgrounds also collect sales and lodging taxes, an important source of revenue in many communities. Park County, Wyoming, which encompasses the town of Cody and part of Yellowstone National Park, collects $1 million in lodging taxes annually, an amount officials fear will diminish with the growing popularity of the Cody Wal-Mart parking lot.
"We understand why it's appealing to RV'ers," says Gorin. It's one thing when people pull over late at night for a quick stay, he notes. But it's another issue when people are spending days at a time in a Wal-Mart parking lot or making all of their stops at the company's outlets, practices which industry publications suggest are increasingly prevalent.
Some states and communities have attempted to regulate or ban overnight camping in parking lots, only to encounter boycott threats from well-organized RV'ers. In 1999, the Illinois Department of Health informed Wal-Mart store managers that they would have to purchase campground licenses, but quickly dropped the policy after a barrage of complaints.
A few communities have stuck to their guns. Kissimmee, Florida adopted an ordinance last year banning all overnight camping at retail stores. An earlier ordinance had allowed up to nine RVs to stay no more than one night in the Wal-Mart lot, but the law was routinely violated. Officials often found twice as many RVs in the lot, with stays averaging three to six nights. Del Norte County, California and Flagstaff, Arizona also prohibit overnight camping in store lots.
IV. E-COMMERCE
SALES TAX FAIRNESS UPDATE
Efforts to apply sales taxes equally to both bricks-and-mortar and online retailers have made substantial progress since our last update (see January 2002 issue), yet it is likely to be several more years before a level playing field becomes a reality.
The Supreme Court has ruled that states cannot compel out-of-state companies, including internet and catalogue retailers, to collect state and local sales taxes. Requiring companies to comply with the varying rules and rates governing the nation's 7600 local and state tax jurisdictions, the Court concluded, would unduly burden interstate commerce.
The policy effectively gives distant companies, which contribute little to the communities where they do business, a five to eight percent price advantage over local stores. The issue is also of mounting concern to the states, which depend on sales tax for about one-third of their revenue. Growth in online shopping is expected to cost states an estimated $20 billion annually by 2003.
Efforts to address the problem are proceeding on two fronts. At the state level, 35 states have joined the Streamlined Sales Tax Project, an initiative organized by the National Governors Association (NGA). The Project seeks to eliminate the difficulties of complying with multiple taxing jurisdictions. Participating states agree to simplify their sales tax systems and to adopt uniform administrative rules and procedures. (Simplification involves such things as agreeing on whether orange juice is a beverage or a fruit for taxing purposes.)
Nineteen states have enacted the Project's model legislation on sales tax simplification. Meanwhile, four states---Kansas, Michigan, North Carolina, and Wisconsin---are developing and testing software that will enable online retailers to easily collect and remit taxes for multiple jurisdictions. (To find out where your state stands, see the NGA's map)
Although the states are solving the logistical difficulties that online and catalogue retailers would face in collecting sales taxes---largely removing the burden identified by the Supreme Court---they still cannot compel out-of-state companies to do so. That power rests with Congress.
Federal lawmakers have shown little interest in tax fairness until recently. The momentum created by bipartisan state action has begun to generate increased support in Congress, although many lawmakers, especially those from high tech states like California, Massachusetts, and Virginia, remain strongly opposed.
Among supporters of tax equity, two general camps have emerged. One, led by Senator Byron Dorgan and supported by state government associations, favors a bottom up approach that would allow states and localities to continue to decide whether to levy a sales tax at all, and if so, what to tax and at what rate. The other, led by Senator Ron Wyden and favored by most national retail chains, would impose a uniform rate of taxation on all states.
Supporters of sales tax fairness had hoped to push forward legislation this month by tying it to the renewal of the Internet Tax Freedom Act. The ITFA, which expires on October 21, bans certain internet taxes, such as access fees (but does not prohibit or affect internet sales taxes). In the wake of the September 11 tragedy, however, it now seems more likely that Congress will simply extend the ITFA for several more years and shelve the sales tax issue until a later date.
V. ANTI-TRUST
WAL-MART SETTLES PREDATORY PRICING CHARGE
Wal-Mart admits no wrongdoing and will not pay a fine in a settlement reached with the Wisconsin Department of Agriculture, Trade, and Consumer Protection over a predatory pricing complaint filed by the agency last year. The company will, however, face double or triple fines for any future violations, according to the terms of the agreement.
The complaint accused Wal-Mart of selling butter, milk, laundry detergent, and other staple goods below cost at stores in Beloit, Oshkosh, Racine, Tomah, and West Bend. A bottle of laundry detergent that cost Wal-Mart $6.51, for example, was sold for less than $5 at several stores. The company's intention, according to the complaint, was to force competitors out of business, gain a monopoly in local markets, and ultimately recoup its losses through higher prices. State officials filed the complaint after Wal-Mart failed to take corrective action following several warning letters sent as early as 1993.
Although most, if not all, states have received numerous complaints from small business owners about Wal-Mart's anti-competitive practices, Wisconsin is the first state to investigate predatory pricing at the company's outlets and file a formal complaint.
VI. RESOURCES
FORMING AN INDEPENDENT BUSINESS ALLIANCE
The Fall 2001 issue of Orion Afield includes an article, "Homegrown Economics: How Boulder Businesses Are Staying Ahead of the Chains," by ILSR researcher Stacy Mitchell, that discusses the formation and impact of the Boulder Independent Business Alliance and provides a useful resource for those seeking to form similar alliances in their own communities. See http://www.oriononline.org/pages/oa/index_oa.html.
GAO FRANCHISE STUDY
The US General Accounting Office (GAO) has released a long-awaited report on enforcement of the federal Franchise Rule and other problems facing small business franchises. The report confirms that the Federal Trade Commission lacks the resources necessary to investigate most of the complaints it receives from franchise owners. Moreover, the vast majority of these complaints involve problems that arise after the entrepreneur has purchased the franchise, while the FTC rules only cover pre-sale disclosure requirements. The report notes that the extent of post-sale problems is unknown due to a lack of data and recommends further study. Currently, 17 states have laws that offer franchise owners some degree of post-sale protection. There are no comparable federal laws.
|
