Inside Bellingham's big-box battle

   City Council moratorium on megastores provides time for planners, staff to research issue; but what answer is best for the community as a whole?

Holly Barbo, co-owner of Barbo Furniture downtown, said while she feels the negatives of big-box superstores outweigh the positives, she is also leery of the city’s prohibiting certain types of stores from operating.

Heidi Schiller
   The big-box store: a necessary and beneficial product of capitalism in its purest form, or an evil entity that sucks away business from local merchants and destroys living-wage jobs in a community?
   It is an issue many cities have grappled with, and now Bellingham gets to tackle it as well. Luckily, most business experts in Bellingham recognize the issue is much more complex than the above dichotomy.
   In September, the Bellingham City Council passed an ordinance placing a moratorium on any applications to build or expand retail stores larger than 100,000 square feet, establishments referred to by many as “big-box” stores.
   The moratorium lasts for six months; during this time the council has asked the planning department to examine what the options would be to alter development regulations for such retail stores.
   The ordinance was passed just in time to block Wal-Mart’s intended application to expand the company’s Meridian Street store — currently 151,000 square feet — by 40,000 square feet, although Wal-Mart was not specifically mentioned in the ordinance.
   Since then, Wal-Mart has released its option on the land it would have expanded on, and is actively looking at other sites in the county and surrounding cities, Wal-Mart spokesperson Jennifer Holder said.
   But the moratorium, and whatever decision regarding big-box stores the council makes at the end of the six-month period, affects not only Wal-Mart, but also any other retail entity wanting to build or expand to more than 100,000 square feet.
   Senior planner Marilyn Vogel said the planning department is looking at a variety of options to present to the planning commission, which will make a recommendation to the council before the six-month moratorium is up. The department is looking at various other cities’ attempts to deal with large retail-store restrictions as part of their analysis. Vogel said two of those options are likely to be the most focused on by council.
   The first of those two options would be to require a community economic impact analysis to be performed for big-box store applications, likely by an outside consultant, Vogel said. In this instance the applicant would likely reimburse the city for the analysis as part of the application process.
   The other would be to address any potential negative impacts of big-box stores — such as their large footprint and parking area, and incongruity with the comprehensive plan’s encouragement of pedestrian-friendly, mixed-use urban villages — by adding development criteria to the approval of a store’s application, she said.
   Other possibilities are to prohibit outright any construction of big-box stores either in certain areas of the city or after a cap has been reached; to limit the footprint for big box stores, forcing them to build higher; or not to do anything at all, she said.
   Members of the business community fall on all sides of the issue, but most agree that the outcome of the council’s decision either way will affect the local economy and community.

Effect on local businesses
   Chuck Robinson, co-owner of Village Books, spoke at a public hearing in favor of the moratorium. He said it is important for the council to gather as much information about all of the impacts big-box stores can have on a community, especially whether their extra tax revenue is worth the potential shift in business away from locally owned stores to big-box chain stores.
   “I’m not saying someone shouldn’t be able to compete, but I want us to look at the tradeoffs,” Robinson said.
   There is an economic concept called “churning” that describes the process of new ideas, or new supply chains, replacing old ones. In this process there are winners and losers.
   “Big-box stores exemplify churning,” said Hart Hodges, director of Western’s Center for Business and Economics Research. “There is a price to that churning. Somebody is getting displaced. Somebody is having to change their business.”
   For example, he said, when a store like Wal-Mart or Walgreens comes to town, local businesses like Fountain Drug and Hoagland Pharmacy are affected and must adjust to the new competition.
   “The fear is that they go out of business,” he said. “The hope — from my little pointy-hat academic chair — is that they don’t go out of business but that they refine or change their business.”
   In the pharmacies example, Hodges said he’s noticed the local businesses seem to be adapting and changing successfully to survive against their competition.
   Brown & Cole, which recently filed for bankruptcy protection, citing competition from Wal-Mart, — is an example of a business that possibly has been unable to adjust to new competition effectively, Hodges said, although he doubts Wal-Mart was the only competitor affectiong them.
   This churning is not always the case of big-box store versus small independent stores, he said. People tend to forget that locally owned independent stores sometimes displace other locally owned stores.
   “Big-box stores are the most visible version,” he said. “Cost Cutter is Wal-Mart to some businesses and Village Books is Barnes & Noble to some businesses.”
   Bellingham/Whatcom County Chamber of Commerce and Industry president Ken Oplinger echoed that sentiment, saying rather than being close-minded when dealing with big-box stores, it is important to take a cue from small businesses that have responded and adapted to large retailers entering the market.
   “In my experience, in places that large, more general merchandise retailers have come in or expanded, small businesses that are able to succeed are able to (adjust) their merchandise or services so they are not directly competing,” he said.
   Lehmann’s Maytag is a good example of a business that has done this, Oplinger said. The company has created relationships with big-box stores to service their on-site equipment, while still retaining a thriving retail component of the business because of the company’s level of service and quality.
   Holly Barbo, co-owner of Barbo Furniture, said that big-box stores hurt local businesses because many consumers tend to assume they are cheaper. Sometimes they are and sometimes they aren’t, she said. But most don’t offer the high quality and service that smaller stores usually do, she said.
   When consumers buy from big-box stores, they hurt local businesses and themselves by having to replace their purchases sooner than they would if they bought from a store that focused on quality, Barbo said.
   “If the bottom line is cost, and you don’t care how long you keep (the item), then I lose,” she said. “I’m not against outside businesses. What I’m against is the really big box stores that people assume are the end-all, be-all panacea, and they don’t do their research and they end up spending money on something that doesn’t work and that hurts local businesses.”
   Oplinger said that it’s important for the council to look at all of the positive as well as negative impacts of big-box stores on a community.

Effect on consumers
   The jury seems to still be out on whether or not big-box stores inherently offer lower prices than small, independent and locally owned businesses do.
   “Do they result in lower prices? I don’t want to say they inevitably do,” Hodges said. “But they sure can, in terms of supply-chain-management efficiencies and volume buying.”
   It appears that for some segments of the community — those with low incomes — these lower prices are invaluable.
   “Part of the reason it’s a contentious issue is that there are very vocal groups who know they’re going to get hurt (by big-box stores), and they often have political clout — some of the labor unions,” he said. But there are also groups that are important, like those on fixed incomes, that no one wants to admit they don’t care about, he said. “If we got rid of big boxes, there’s a whole set of our population who would be ecstatic, and there’s a group of us that probably wouldn’t notice, and there’s a group that would be hurt.”
   Barbo argues that big boxes don’t always have lower prices, but she ultimately believes that consumers need to be able to make informed decisions on where to shop.
   “I understand they have a market, but aren’t there businesses here that fulfill that market now?” she asked. “But on the other side of the coin, I don’t want to see a really good business having some kind of thing the city can bludgeon them with and say you can’t come here, because diversity and competition really does help us all.”

Effect on workers
   Michelle Long, director of Sustainable Connections, said one of her concerns about big-box stores is their effect on jobs. She said it’s important to consider how big boxes affect local workers.
   “It’s important to look at not just the jobs they bring in, but the net jobs (they result in),” she said. “Because of the ones we gain, some will be lost. And what kinds of jobs are we gaining and losing?”
   Hodges said that some big-box stores, like Wal-Mart superstores, tend to hurt unionized grocery workers, but also offer jobs for people who are looking for part-time work, like senior citizens and students. Some big boxes offer employment opportunities that are quite good in that they are career-track jobs, he said.
   “Store managers for big-box stores can do quite well and some provide benefits,” he said.
   Oplinger said it is important to remember that while big-box stores are often criticized for not providing enough benefits to their employees, many local independent retailers also do not offer benefits — so the council would be wise not to discriminate against larger retail outlets that have similar practices as smaller, locally owned ones do.
   “It’s important for the city and the county to see there is a role for all forms of retail to play. We can’t single out one entity or group of entities for scorn without bringing some of that attention on ourselves,” he said.
   If the area did not have big-box stores, there would be winners and losers regarding employment and wages, Hodges said.
   “There would be people that are able to stay in the industry and are going to be paid better at a small business, but there will be people that aren’t employed. It’s a trade- off,” he said. “It’s about making tough choices about whether the winners gain enough to offset what the losers lose.”

Effect on the community
   Then there are the other issues that swirl around big-box-store arguments, like their environmental impacts, social costs, and transportation issues, as well as the way a community looks and feels.
   While Long insists she is not an expert on big-box stores, she does have concerns about them from studies she’s seen on their impacts on communities.
   “This town has been clearly vocal in its desire to support walkable communities, locally grown food and preservation of farmland,” she said. “It seems we should be really thoughtful in how we move forward and develop.”
   She said some studies have shown that big-box stores can cost communities heavily for more services such as roads, sewer, police and fire departments, and it’s important for the council to weigh the potential revenue against those extra costs.
   Robinson also said he is concerned about other costs that come with big boxes that may not be as tangible as dollar values — things that are more emotional or aesthetic.
   Local businesses tend to support charitable organizations and nonprofits more than big boxes do, he said, and Bellingham could lose that support if local businesses are displaced.
   But Oplinger said that large retailers, because of their sheer size and resources, are often more charitable than small businesses, including sponsorship of sports teams and youth groups. Not to mention their direct dollars for city programs from tax revenue.
   “Clearly, in the environment we are in, cities have to be cognizant of all relevant resources, and sales tax is certainly one of those,” he said. “If big boxes were to move out in the county, for example, other jurisdictions would benefit from that.”
   Both Robinson and Long mentioned the parking and transportation issue, as well, saying that big-box stores tend to stray from the pedestrian-friendly, mixed-use, urban village concept the city’s comprehensive plan encourages.
   “Whether it’s national or local businesses, we can have smaller footprints,” Long said.

The future
   The planning department will present its findings to the planning commission on Dec. 14, Vogel said, and the planning commission will hold public hearings and deliberate over the issue before making its recommendation to the council before the moratorium date expires in March.
   Regarding that decision, Hodges said if the council decides to adopt plans to perform an economic analysis for big-box store applications — which he thinks is a valuable idea — the city needs to be sure they clearly define what methodology will be used to evaluate their impacts. There also needs to be a clear set of corresponding criteria used to mitigate whatever negative impacts the analysis might find.
   “They can be demanding hurdles, (such as) your building will be this ‘green.’ You won’t just not deteriorate part of the watershed, but you’ll improve it. Or, we’re worried about this churning and this displacement, you’ve got to help us fund social programs,” he said. “You’ve got to make these things clear.”
   While such criteria might scare some big-box stores away, Hodges said the council has the power to balance gaining the tax revenue from big boxes and holding them to the city’s quality-of-life standards.
   Long said she ultimately couldn’t say what, exactly, she thinks the council should do about big-box stores, but is grateful the city decided to pause and examine the issue.
   “I appreciate that the city is being thoughtful in their analysis,” she said.
   Oplinger agreed that it is a good idea for the council to get their questions answered about big-box stores and encouraged a well-rounded solution.
   “The review that needs to be done needs to be holistic,” he said. “It needs to look at all the positive and negative impacts.”



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