Massive retail expansion could harm Maine’s economy

Massive retail expansion could harm Maine’s economy

by Stacy Mitchell

Originally published in the Maine Sunday Telegram, January 11, 2004

Developers have announced plans to construct well over 2 million square feet of large retail stores in Maine over the coming months.

Wal-Mart is planning a supercenter in Westbrook and perhaps another in Topsham. Lowe’s building supply is aiming at Brunswick. A 460,000-square-foot project, including Lowe’s and Target, is slated for Biddeford.

Home Depot has a site in Topsham. More than 900,000 square feet of retail is planned for Augusta, including a Lowe’s superstore and an expansion of The Marketplace that will house Best Buy, Kohl’s and others. And with the defeat of two zoning ordinance amendments in Kennebunk, that town may soon have a Stop & Shop supermarket.

All of this growth will leave Maine more like the rest of the country: overrun by the same sprawling box stores and a growing traffic problem. We’ll lose more open space and our downtowns and homegrown businesses will suffer.

It’s commonly assumed that these downsides will be more than made up for by significant economic gains, particularly new jobs and tax revenue. But many studies indicate that large-scale retail projects may in fact do more economic harm than good.

The 2 million square feet of development currently in the pipeline will expand the state’s retail capacity by more than 5 percent. This is on top of extensive retail construction in the late 1990s.

With population and incomes growing much more slowly, however, it’s unlikely that Maine can absorb all of this new retail without existing businesses losing sales. As these businesses downsize or close, jobs will be lost. Numerous studies have concluded that when superstores open, communities typically lose as many jobs as they gain.

The tax benefits can prove to be a mirage as well once cities factor in the considerable road maintenance and public safety costs these big stores entail.

A recent study in 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 100,000-square-foot superstore costs the city $47,000 more each year than it contributes, according to the study.

As national chains displace sales at locally owned businesses, other parts of the state’s economy will suffer. Last year, the Institute for Local Self-Reliance conducted a study that found that more than half of the revenue taken in by locally owned stores in Maine is re-spent with other businesses in the state.

Local merchants bank with local banks, advertise on local media, purchase supplies from local firms, and hire local accountants, printers, Web designers and so on.

National chains have little need for these local services. Only 14 percent of the dollars spent at a chain store stay within the Maine economy, the study estimated.

Perhaps most significant of all, more large-scale retail development could impair the state’s ability to attract new investment and high-quality jobs.

Maine has few economic advantages. It’s not a cheap place to do business; nor is it a major market. Our biggest asset is our quality of life. Compared to other regions, we have healthier downtowns, more local character, more open space and less traffic.

These qualities, more than anything else, draw entrepreneurs and investment to Maine. But these assets are steadily being depleted with every new sprawling megastore.

Some believe consumers alone should decide whether big chains prosper and grow. But none of these costs ever show up on price tags at Lowe’s or Wal-Mart.

They are instead paid in fewer job opportunities, higher tax burdens and a diminished quality of life.

That’s why many communities are now adopting laws that require an economic impact analysis before large retail projects are approved.

These reviews, typically conducted by independent consultants chosen by the city and paid for by the developer, examine the full range of economic impacts. Only those projects that will generate more benefits than costs are allowed to proceed.

In some areas, including Vermont and parts of Massachusetts, very large projects also go before regional boards that consider the implications for the entire region.

In Maine, this kind of comprehensive analysis is lacking both locally and regionally, leaving citizens and elected officials blind to the potential economic and tax implications of their decisions. We need to rectify this before approving any more large-scale retail development.