Dollar Store Restrictions

Date: 2 Oct 2018 | posted in: Retail | 0 Facebooktwitterredditmail

Chain dollar stores are multiplying rapidly. Since 2011, the two dominant chains — Dollar General and Dollar Tree, which owns Family Dollar — have grown from about 20,000 locations to nearly 30,000 total. Both plan to expand even further. In 2018, the two chains indicated they have identified locations for a combined total of 20,000 additional outlets.

Most dollar stores stock only a limited selection of processed foods and offer no fresh vegetables, fruits, or meats. Yet, in urban neighborhoods and small towns alike, the dollar chains are opening stores at such a density that they’re crowding out full-service grocery stores and making it nearly impossible for new businesses to start and grow. This has exacerbated the problem of food deserts and further eroded the economic prospects of vulnerable communities.

As we noted in our 2018 report: “Although dollar stores sometimes fill a need in places that lack basic retail services, there’s growing evidence that these stores are not merely a byproduct of economic distress. They’re a cause of it.”

A growing number of cities are now responding to the influx of these stores by enacting policies that limit new dollar store development. Two approaches in particular are being used across the country — formula business restrictions, which place limits on chain stores generally, and ordinances that specifically target dollar stores.

Formula Business Restrictions

Formula business restrictions are one common approach to restricting the development of chain stores — including dollar stores — while fostering a balanced mix of businesses. These policies limit formula or chain retailers that have standardized services, methods of operation, and other features. Find examples and learn more about formula business policies here.

Dollar Store Ordinances

In other cases, cities are developing dollar store-specific policies. One approach, known as a “dispersal restriction,” sets limits on how close new dollar stores can be to existing ones. Such policies account for the existing concentration of dollar stores within a neighborhood or city and help ensure that these chains cannot amass at such a density that they impede opportunities for grocery stores and other businesses to take root and grow.

In 2018, for example, the city of Tulsa, Okla., drawing on ILSR’s Policy Tools, passed  amending its zoning code to restrict new dollar store development in north Tulsa, a predominantly area on the city’s north side. North Tulsa is home to many dollar stores, some just blocks apart. “That proliferation makes it more difficult for the full-service, healthy stores to set up shop, and operate successfully,” notes Tulsa City Councilor Vanessa Hall-Harper, who led the effort to pass the ordinance.  Similar policies have been adopted in Kansas City, Kan., and Mesquite, Texas, and several other cities are studying the issue.

In addition, at least one city, Mesquite, Texas, has made dollar stores a “conditional use,” which means they must undergo a review and receive a special permit to open. This requirement is in addition to a dispersal rule.

Considerations in Drafting a Dollar Store Ordinance

Articulate a Clear Purpose

Cities enacting dollar store policies should articulate a clear purpose and tie the policy to a broader public goal. For example, the Tulsa City Council outlines its desire for “greater diversity in retail options and convenient access to fresh meats, fruits and vegetables.” Kansas City says the purpose of its ordinance is to “better regulate the total number and proximity of small box retail stores to assure the best possible opportunity to provide fresh fruits and vegetables to the community.” Mesquite’s measure seeks to address the fact that “residents typically have more access to convenience stores and fast food than to nutritious food.”

Define “Dollar Store”

Cities need to define which stores are subject to the policy. Tulsa’s ordinance defines “dollar stores” as those with “retail sales uses with floor area less than 12,000 square feet that offer for sale a combination and variety of convenience shopping goods and consumer shopping goods; and continuously offer a majority of the items in their inventory for sale at a price less than $10.00 per item.”

Kansas City adopted a more generalized definition of a “small box variety store,” which is a store of “15,000 square feet or less which sells at retail an assortment of physical goods, products, or merchandise directly to the consumer.”

Limits on Dollar Store Density

Most dollar store ordinances regulate these developments by limiting their density, setting distance limits between existing and new dollar stores. The Tulsa ordinance creates a “dispersal standard” requiring a new store to be a minimum of 5,280 feet (one-mile) from an existing dollar store. In Mesquite, Texas, locations must be at least 5,000 feet from an existing store. In Kansas City, Kan., the ordinance included both a separation requirement of 10,000 feet from an existing store and 200 feet from residentially zoned property.

Some ordinances define an overlay district or area where the density limits go into effect, while others apply citywide.

Supporting Alternatives to Dollar Stores

In addition to the dollar store density requirements, these policies can also include incentives to foster better alternatives. To encourage the development of stores that sell fresh meat and produce, Tulsa’s policy reduces parking requirements for grocery stores by 50 percent in the overlay district covered by the ordinance. Kansas City’s policy exempts stores that dedicate at least 15 percent of shelf space to fresh and frozen food or those that contain a prescription pharmacy from the required special use permit process.

Public Participation

As dollar store policies are crafted, cities can gather community input through hearings and public comment periods. These are important ways to develop policies that respond to local needs and goals. For example, Tulsa’s ordinance grew out of a community-driven effort to stop new dollar stores from opening in the neighborhood. This led the city to adopt a temporary moratorium on dollar stores, during which the city council held hearings to better understand the issue and develop its policy.


Examples


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Rules

Dollar Store Restriction — Mesquite, Texas

Passing a city-wide ordinance in July 2018, the City of Mesquite, Texas, has made dollar stores a “conditional use,” which means they must undergo a review and receive a special permit to open. This requirement is in addition to a dispersal rule. … Read More

Dollar Store Restriction — Kansas City, Kan.

The Unified Government of Wyandotte County, Kansas City’s regional planning commission, passed an original dollar store dispersal policy prompted by community concerns about the growth of chain discount stores and lack of access to healthy food in 2016, and subsequently passed an updated ordinance in February 2019.… Read More

Dollar Store Restriction — Tulsa, Okla.

In April 2018, the City of Tulsa, Okla., passed an ordinance that limits new dollar stores and encourages full-service grocery stores in area of the city known as north Tulsa. Since its passage, the Tulsa policy has become a national example and motivated other communities to consider and pass similar policies.… Read More
Marie Donahue
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Marie Donahue

Marie Donahue works with the Institute for Local Self-Reliance’s Energy Democracy and Community-Scaled Economy Initiatives. She analyzes and writes about the implications of corporate concentration and monopoly in these sectors.