Home » Open Letter to Mayor Johnson and City Council – Do Not Repeal the Superstore Ordinance
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Open Letter to Mayor Johnson and City Council – Do Not Repeal the Superstore Ordinance

I have lived in Central City for over 25 years. I have had the pleasure of watching my neighborhood grow organically throughout the years. Small businesses have blossomed. We calmed the traffic. We created Second Saturday, which promotes local artists and artisans, and made many other positive changes during those years. Midtown was not the celebrated neighborhood that it is today.

This ordinance was a reaction to an ill-conceived plan by Westfield Mall to bring a Wal-Mart at the Downtown Plaza. Westfield’s Roseville Galleria gets Tiffany’s and Downtown Sacramento gets Wal-Mart. Residents reacted and the City Council listened and enacted the big box ordinance.

I believe that an Economic Impact Analysis (EIA) with a wage benefit analysis component is critical for a community. It protects our local business community. It allows small businesses the opportunity to weigh in and allows the community a chance to make sure a big box store compliment our community. It also studies a host of other issues such as wage and benefit analysis, environmental issues, traffic, an exit strategy, and a host of other issues.

The wage and benefit analysis is a true indicator as to whether a big box store will truly benefit the community. An EIA compares how many jobs a big box store will create vs. how many a big box store will destroy, it gauges whether there will be a net benefit for the community. The wage and benefit analysis takes the EIA a step further by comparing a net gain for the city as to revenue generated vs. revenue lost.

While there are hundreds of studies that show how big box stores negatively impact small businesses. Here are a few studies that will hopefully convince you not to repeal the ordinance.

Mom-and-Pop Meet Big-Box: Complements or Substitutes? By John C. Haltiwanger, Ron S. Jarmin, C. J. Krizan

“Big-Box retail format along these lines is that it displaces smaller, often family owned (a.k.a. Mom-and-Pop) retail establishments and contributes to the decline of traditional retail districts such as the main streets of small towns and the downtown shopping districts of large cities.”

Thinking Outside the Box: A Report on Independent Merchants and the Local Economy -by Civic Economics, September 2009

“Analyzing data collected from 28 locally owned retail businesses in Portland, Maine, along with corporate filings for a representative national chain, the researchers found that every $100 spent at locally owned businesses contributes an additional $58 to the local economy. By comparison, $100 spent at a chain store in Portland yields just $33 in local economic impact. The study concludes that, if residents of the region were to shift 10 percent of their spending from chains to locally owned businesses, it would generate $127 million in additional local economic activity and 874 new jobs.”

Does Local Firm Ownership Matter? — by Stephan Goetz and David Fleming, Economic Development Quarterly, April 2011.

“Goetz and Fleming analyze 2,953 counties, including both rural and urban places, and find that, after controlling for other factors that influence growth, those with a larger density of small, locally owned businesses experienced greater per capital income growth between 2000 and 2007. The presence of large, non-local businesses, meanwhile, had a negative effect on incomes.”

The Impact of an Urban Wal-Mart Store on Area Businesses – by Julie Davis, David Merriman, Lucia Samayoa, Brian Flanagan, Ron Baiman, and Joe Persky, Economic Development Quarterly, October 2012.

“The opening of a Wal-Mart on the West Side of Chicago in 2006 led to the closure of about one-quarter of the businesses within a four-mile radius, according to this study by researchers at Loyola University. They tracked 306 businesses, checking their status before Wal-Mart opened and one and two years after it opened. More than half were also surveyed by phone about employees, work hours, and wages. By the second year, 82 of the businesses had closed. Businesses within close proximity of Wal-Mart had a 40 percent chance of closing. The probability of going out of business fell 6 percent with each mile away from Wal-Mart. These closures eliminated the equivalent of 300 full-time jobs, about as many Wal-Mart added to the area.”

The big box business model has a devastating impact on small businesses. The goal of this repeal is to generate tax revenue for Sacramento. The above studies show, time after time again, the harm this business model has on the local business community. The Economic Development Element of the General Plan states that “The City shall provide incentives to existing small and startup businesses . . . to facilitate their expansion and job creation. (ED 1.1.5).” The Economic Impact Analysis (w/wage & benefit analysis) will provide the City and the community the opportunity to evaluate the impacts of a big box store. The City must not sacrifice its small business community to allow big box stores to come into Sacramento without a complete picture of the benefits and impacts to our community. Is the city so starved for tax revenue that you will sacrifice the middle class for a short term gain?

About the author

Michael Murphy


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