Even as developers prepare to break ground on five downtown developments this spring, city officials and the business community are contemplating an ordinance allowing the City Council to manage the kinds of "formula businesses" that could move into the buildings.
City Councilwoman Karen Post said a formula business ordinance is about much more than simply protecting the appearance of Steamboat Springs' historic downtown. The discussion will include complex social issues, she said. They include the need to balance affordability for low-income families with the need to protect the upper end of Steamboat's working class.
"This is a bigger issue than, 'Do we want a Gap on Main Street?'" Post said. "These are issues that are important to the economic stability of the community. This is part of (achieving) sustainable growth."
Post said formula stores tend to transfer a bigger portion of their revenues outside the community, do not typically support professionals such as accountants and attorneys, and erode the resident class of business owners. At the same time, they tend to sell merchandise at lower prices than independent retailers, a factor that helps keep the cost of living in check.
Post was instrumental in tasking city planning staff with developing a draft formula business ordinance. The economic restructuring committee of Main Street Steamboat has been paying close attention to the process and has consulted with senior city planner Jonathan Spence as he works on the draft ordinance. Main Street's board will ultimately issue a position statement on the ordinance.
Post and her colleagues on the City Council are expected to conduct a work session later this month to discuss the draft ordinance. No vote would be taken at that time.
Spence said a key question for City Council to address will be whether the ordinance would be imposed citywide or solely in downtown. The council also must decide whether the timing is right for an ordinance, he said.
Post said the impetus for drafting a formula ordinance is all of the new projects poised to begin in the downtown.
She wants to put guidelines in place so the council has a tool to manage the trend.
"I just want to start this process so we don't get too far behind this train," she said. She added that if circumstances change in the future, city government could always go back and "tweak" the ordinance to suit prevailing trends.
Commercial real estate specialist Hal Unruh of Prudential Steamboat Realty said chain retailers place great importance on their ability to develop stores that reflect their brand.
"The more you inhibit developers, the more they get turned off to attempting the process," Unruh said. "You can require them to modify their brand recognition to the extent they'll say, 'I don't know if I want to be there.'"
Over the long haul, Unruh anticipates that the arrival of Intrawest as the owner of the ski area will broaden Steamboat's attractiveness to chain retail companies.
"As time goes on, undoubtedly it will create more interest on the part of players in the retail industry," he said.
Spence said the conditions of the draft ordinance do not specifically bar formula stores from entering the market. Rather, they set up criteria that require the businesses to meet local design standards, for example.
"You can't keep them out if they are willing to adapt their business models," Spence said.
Steve Hitchcock, chairman of Main Street's Economic Restructuring Committee, said his group is focused on formula stores in Old Town, but it is not interested in keeping all formula stores out of the downtown commercial district.
"We want there to be an appropriate balance among all types of retail and keep formula stores diffused throughout the district," he said.
Hitchcock is the owner of two pizza restaurants outside the downtown core, Soda Creek Pizza Co. and Gnarly Charlie's. He said the committee's motivation in working on the formula ordinance is to keep Steamboat's historic shopping district distinctly different from that of other towns.
"We want to avoid sameness," he said. "If a visitor finds essentially the same assortment of retail they have at home, it's no longer a compelling reason to visit."
The draft ordinance written by Spence seeks to establish a definition of formula businesses. He studied similar ordinances from all over the country.
The tentative definition would include a store or restaurant among a group of 10 or more, that contains these features: a standardized array of merchandise, a standardized faÃ§ade, standard decor and color scheme, uniforms for employees, and standard signage along with a trademark.
The ordinance goes into much more detail about all of those qualities.
Spence took a look at existing formula businesses and concluded they are relatively few.
"Overall we have very few formula restaurants (nine of 77) and, with the exception of Pizza Hut and Village Inn, no full-service, sit-down, formula restaurants."
Outside the category of grocery, auto parts, hardware and discount retailers, there is a limited number of formula retail stores in Steamboat, Spence said. They include Staples, Christy Sports, Overland, Images of Nature, Fuzziwigs, Great Outdoor Clothing and Rocky Mountain Chocolate Factory.
Post said she is concerned that the significant number of new commercial spaces coming to downtown Steamboat could create an oversupply that would cause landlords to look to formula stores and restaurants to fill their storefronts.
"I'm concerned the construction going on downtown could create a potential glut," she said. "There might be a pull on the part of developers to fill vacant spots with formula stores."
The regulatory mechanism contained in the draft ordinance would make formula stores and restaurants a "conditional use" under the city code. The ordinance would go on to describe criteria planning commissioners and council members could use in deciding whether to grant a conditional use.
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