Good for the economy/Bad for the economy

By Scott Finlayson
Guest Columnist

Bridgton is coming under siege from all quarters and therefore it is vitally important to understand that not all development is economically healthy. Since McDonald’s has made overtures to come to town others have started looking seriously at Bridgton. Because we have no ordinances on the books to regulate this type of formula-based national chains, Bridgton is defenseless against this plague.

Last week, the Associated Press broke the story that Walmart is changing their business model and will be opening smaller stores in smaller communities and urban neighborhoods. This does not bode well for Bridgton. We are the type of community that they will target when they start building out the 1,700-plus new stores they have planned.

The big question is, what is the effect that a multi-national corporation has on a small town economy?  Many people believe that we should welcome this kind of development with open arms and that all development is good development if it promises jobs. Many towns have aggressively courted these corporations with tax breaks and incentives. For many of these towns it has been a disaster.

There are an incredible number of studies and reports that have been written addressing just this situation that is facing Bridgton. Many towns require that an economic assessment report be prepared as a part of their documentation for the building permits. As a result this data is available for review. Many universities and colleges have used this as case studies and there is a considerable volume of information available. Over the past decade, hundreds of communities across the country have faced this issue and have succeeded against these mega corporations. Here in Maine, Belfast, Ogunquit, York, Damariscotta, and Nobleboro have all reviewed the economic impacts and found it unsustainable and a negative drain. Here are some examples:

St. Albans, Vermont State Environmental Board Act 250 Decision, 1994.

A cost/benefit analysis of a proposed Walmart store in St. Albans, Vt., found that the store would cause dozens of existing businesses to close, leading to a net loss of 110,000 square feet of retail space. The 214 jobs created by the new superstore would be offset by the loss of 381 jobs at other businesses. The analysis also found that the overall tax losses expected from the small business failures would be greater than the tax revenue generated by the new Walmart. Moreover, the city would incur a variety of new costs to provide roads, sewers, police, and fire protection to service the sprawling new development. The analysis concluded that for every dollar in tax benefit created by the superstore, there would be 2.5 dollars in tax losses and public costs.

And this close to home:

The Economic Impact of Locally Owned Businesses vs. Chains: A Case Study in Midcoast Maine.

( by the Institute for Local Self-Reliance and Friends of Midcoast Maine, September 2003.

Three times as much money stays in the local economy when you buy goods and services from locally owned businesses instead of large chain stores, according to this analysis, which tracked the revenue and expenditures of eight locally owned businesses in Midcoast Maine. The survey found that the businesses, which had combined sales of $5.7 million in 2002, spent 44.6 percent of their revenue within the surrounding two counties. Another 8.7 percent was spent elsewhere in the State of Maine. The four largest components of this local spending were: wages and benefits paid to local employees; goods and services purchased from other local businesses; profits that accrued to local owners; and taxes paid to local and state government.

Using a variety of sources, the analysis estimates that a national big box retailer operating in Midcoast Maine returns just 14.1 percent of its revenue to the local economy, mostly in the form of payroll. The rest leaves the state, flowing to out-of-state suppliers or back to corporate headquarters. The survey also found that the local businesses contributed more to charity than national chains.

And finally this pertaining to formula restaurants:

The Andersonville Study of Retail Economics

( by Civic Economics, October 2004.

This compelling study, commissioned by the Andersonville Development Corporation, finds that locally owned businesses generate 70 percent more local economic impact per square foot than chain stores. The study’s authors, Dan Houston and Matt Cunningham of Civic Economics, analyzed 10 locally owned restaurants, retail stores, and service providers in the Andersonville neighborhood on Chicago’s north side and compared them with 10 national chains competing in the same categories. They found that spending $100 at one of the neighborhood’s independent businesses creates $68 in additional local economic activity, while spending $100 at a chain produces only $43 worth of local impact. They also found that the local businesses generated slightly more sales per square foot compared to the chains ($263 versus $243). Because chains funnel more of this revenue out of the local economy, the study concluded that, for every square foot of space occupied by a chain, the local economic impact is $105, compared to $179 for every square foot occupied by an independent business.

There are dozens and dozens of similar reports and studies from all over the country, from Maine to California and Texas to Montana, all finding the same results.

Bridgton has very little time to save itself from this kind of negative economic impact. It is folly to think that it will be any different in Bridgton. We need to support our local businesses and create an environment that is supportive of new local business and say no to the multinationals. We hear time and time again how people who live here and visit Bridgton love it because we don’t have all the blight that affects other communities. By prohibiting the influx of big box and formula fast food we will set the stage for a healthier more balanced and diversified economy. This is a case where prohibiting certain types of development will yield bigger dividends and create a more sustainable economy.

The time is now to adopt simple new amendments to the Site Review Ordinance that will give us the ability to make these choices. There is no need to reinvent the wheel. The groundwork has already been done by other communities and their ordinances have held up. Our current comprehensive plan clearly states that Bridgton must “not become North Windham.”

Scott Finlayson is a resident of Bridgton.

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