Chicago Measure would let Neighborhoods Ban Formula Businesses

Date: 11 Oct 2006 | posted in: Retail | 0 Facebooktwitterredditmail

Some neighborhood business districts in Chicago would be allowed to ban formula businesses under an ordinance drafted by city officials.

The measure would establish a process by which residents could apply to have all formula businesses prohibited in their neighborhoods. Only neighborhoods that are pedestrian-oriented, that have a distinctive or historic character, and that have a diverse retail base with few or no formula businesses already may apply for the formula-free zoning designation. The City Council’s Committee on Zoning would decide whether to approve the designation after holding a hearing in the neighborhood.

Formula businesses are defined in the ordinance as retail stores or restaurants that share similar merchandise, decor, signage, and a trademark with five or more other establishments.

The initial inspiration for the proposal came from the Andersonville neighborhood on the north side of Chicago. Once rundown and filled with vacancies, Andersonville’s main business corridor has undergone a revival over the last decade thanks largely to investment by independent merchants. Recently, however, chains, including Starbucks and Einstein Bros. Bagels, have moved in. Many residents fear these initial arrivals may herald a much bigger influx of corporate retailers and chain restaurants.

“One Einstein Bros. Bagels isn’t going to harm the neighborhood, but if we started getting a density of them, then our whole character changes,” said Ellen Shepard, executive director of the Andersonville Chamber of Commerce.

A study commissioned by the Chamber two years ago found that every $100 spent at a locally owned business in Andersonville generates $68 worth of local economic activity, compared to only $43 for $100 spent at a chain.

City officials patterned the proposal after a similar ordinance adopted in San Francisco. One difference between the two is that the San Francisco law gives neighborhoods more flexibility. They may ban formula businesses completely or make them a conditional use, meaning that they must apply for a special permit to open and are reviewed on a case-by-case basis. Supporters of the Chicago proposal, which only allows for a ban, hope that a revised version of the ordinance will include the conditional use option.

Since the passage of the San Francisco law, several neighborhoods have banned formula businesses and others have opted to subject them to the added scrutiny of the conditional use approval process. If endorsed by voters, an initiative on the November ballot would make formula businesses a conditional use in all of the city’s neighborhood business districts that have not yet adopted either approach.

In Chicago, it will likely be several months before the formula business ordinance is introduced in the City Council.


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Stacy Mitchell

Stacy Mitchell is co-director of the Institute for Local Self-Reliance and directs its Independent Business Initiative, which produces research and designs policy to counter concentrated corporate power and strengthen local economies.