Steve Lewis: Bringing in chains takes money out of the valley
March 13, 2004
Competition makes you better. Thus, recent articles conclude Gart Sports will be good for Steamboat Springs. Sure, the national chain store will bring lower prices, spur local merchants to provide better service, and plug some of our leakage of sales to other communities. But look a little deeper, and you may become a skeptic.
Dropping prices are good for the consumer, but dropping prices and sales volume will hurt local retailers. OK, retail can be a tough business. But while consumers enjoy the chain-store-induced low prices, employees hear, “What raise? Living Wage? Sorry about those health benefits. But let’s give the best service.”
How much leakage are we talking? Scott Ford of the Economic Development Council estimates Gart Sports will recapture leaking sales taxes of $33,000 and that two jobs will be created for those captured sales. Is that worth jeopardizing even our smallest sports store? Is that tax revenue even true? Barnstable, Mass., found that, while small Main Street retailers generate a net surplus for the public coffers, big-box stores require more in public services than they pay in taxes.
A study by the San Diego County Taxpayers Association also found that big-box stores would create costs greater than any revenues created from sales and property taxes.
National chain stores derive as much as 75 percent of their sales from local businesses, and this amounts to further community loss when they don’t need local financing, insurance or accounting. Add the profits not spent in Steamboat and you get what they found in mid-coast Maine: $100 spent at a big-box retailer generates $14 in local spending by the retailer. That same $100 spent at a locally owned business generates $45 in local spending. Three times as much.
Developing strategies to strengthen and expand locally owned retail, rather than supporting additional chain-store growth is beginning to sound like a sensible plan, isn’t it?
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Many towns have turned to “Community Impact Statements” to better align development with community goals. Carbondale requires developers to submit information and meet criteria in five areas: environment, traffic, community, utility and fiscal impact. A consultant selected by the city performs the analysis. Developers pay a $4,500 fee to cover costs.
The ordinance applies to any retail developments exceeding a given size limit. Under the standards, retail developments may not place more demand on public services than they generate in tax revenue, negatively impact water quality, create excessive traffic congestion, or over-burden utilities and infrastructure. The assessment also considers how the project would affect the availability of affordable housing and its effect on town character.
I know I lost some of you back at “dropping prices.” I realize that finding clothes for the kids or basics such as school supplies in Steamboat at a reasonable price was next to impossible before Wal-Mart. But bringing in chain stores to sell what we already have only takes money out of the valley. If we follow Carbondale’s example, an impact report could expose such losses, reduce duplication and highlight true needs.
The Update of our area plan is nearing completion. Now is the time to speak to your city and county representatives. This summer, we will develop two-thirds of the remaining commercial space allowed in our Mountain sub-area. Shouldn’t we finish out what’s left with our best effort at building community, character and economy?
Steve Lewis is a member of the Community Alliance and the Peace and Justice Center.