Maine Passes Law Requiring Economic Impact Studies of Big-Box Projects

Date: 18 Jun 2007 | posted in: Retail | 0 Facebooktwitterredditmail

The Maine legislature has given its approval to a bill that requires cities and towns to evaluate the economic effects of large-scale retail development and to approve only those projects that will not have an adverse impact on jobs, local businesses, and municipal finances. The legislation is the first of its kind in the nation.

The Senate passed the bill, the Informed Growth Act, on a 19-16 vote Friday. The House had endorsed it two weeks earlier by a margin of 82-49. The governor has expressed his support for the measure and is expected to sign it.

In the debate leading up to the vote, Senator John Nutting (D-Androscoggin County) argued that towns needed to more closely examine the effects of large stores on the economy. Referencing research in Maine and other states, Nutting noted that locally owned businesses generate a bigger “economic multiplier” by keeping a much larger share of their revenue in the state’s economy. Large retailers, on the other hand, have a “from away, go away” model. “The products are from away and the profits go away,” he explained.

Senator Dana Dow (R-Lincoln County), one of three Republican Senators who voted in favor of the bill, asked “Do we want to change every rural corner into a shopping area?” He argued that the bill would give communities a tool to protect “the Maine way of life.” He noted that big-box stores add little to the state’s economy and instead displace existing businesses and jobs. “I don’t think it’s good economics,” he said.

Senator Peter Mills (R-Somerset County) said the Informed Growth Act would give towns a sophisticated planning tool. He pointed to the negative effects big-box stores have had in Waterville and Skowhegan and argued that the ” helter-skelter irrational paving of our towns” threatens to destroy the very qualities that draw people and investment to Maine.

Opponents argued that the measure would impede economic growth. Senator Lynn Bromley (D-Cumberland County), whose district includes the Maine Mall and dozens of big-box outlets, said that the Informed Growth Act would impose another hurdle for businesses trying to locate in Maine. Although the bill affects only retail development, she said it would create a “slippery slope” and might soon be applied to manufacturing and other sectors.

Attempts to characterize the bill as “anti-business” largely failed, however, because more than 180 small business owners from across the state strongly endorsed the measure in letters to lawmakers. Their support was referenced several times during the legislative debate. Supporters contended that the Informed Growth Act would encourage small businesses to invest and develop in Maine.

The campaign to enact the bill was led by the Maine Fair Trade Campaign, the Institute for Local Self-Reliance’s New Rules Project , the Maine chapter of the Sierra Club, and Our Town Damariscotta, a citizens group that stopped a Wal-Mart project last year.

Numerous other small business, labor, environmental, and community groups provided crucial support and engaged the help of their members. Thousands of people contacted their representatives. Supportive editorials and op-eds appeared in newspapers around the state.

Opposition to the bill was led by the Maine Real Estate and Development Association, the Maine State Chamber of Commerce, and the Maine Merchants Association. The Maine Municipal Association unsuccessfully tried to amend the bill to make it optional for towns.

The Informed Growth Act stipulates that cities conduct an economic impact analysis for proposed stores larger than 75,000 square feet (roughly half the size of a typical Target or Home Depot). The analysis is performed by an independent consultant chosen by the town, but paid for by a fee charged to the developer. It evaluates the effects of the proposed store on existing businesses, jobs, wages, vacancy rates, the cost of municipal services, and the volume of “sales revenue retained and reinvested” in the community.

After the analysis is complete, the town must hold a public hearing. Residents within a certain radius of the proposed store and officials of adjacent municipalities must be given special notice of the hearing. After considering the study’s findings and public testimony, the town may approve the store only if it concludes that it would not have an undue adverse impact on the community and local economy.

The Informed Growth Act adds an economic impact standard to Maine’s land use statute (which already has standards for traffic, water quality, and other impacts) and thereby gives cities explicit authority to reject retail projects on the basis of economic effects.

The act ensures that, even in areas zoned for commercial development, citizens and local officials will always have an opportunity to evaluate big-box development and make informed decisions about whether to approve or reject such projects.

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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.