Potentially confirming what could be the worst kept secret in Archuleta County — the courting by local officials of a big box retailer for the purpose of locating a store in town — Pagosa Springs Town Manager David Mitchem told Pagosa Springs Town Council members that a timely decision regarding the reauthorization of a 50-percent abatement of fees for new development was desired due to discussions with potential developers.
Following a decision by council to defer a decision on the matter (after trustee Shari Pierce asked for time to review research accumulated by local businessman Morgan Murri), Mitchem said, “I would advise council to do that in a timely fashion because we have parties in discussion regarding future development and they are looking at that abatement as an assistance.”
Mitchem made that statement following a lengthy discussion regarding whether or not to extend fee abatements to proposed structures exceeding 25,000 square feet.
Although Mitchem told SUN staff on Tuesday, “My comments last Thursday were general to several developments that are pending and not specific to a large-format (big box) retailer,” SUN staff pointed out to Mitchem that council had proven over the last two years that it has been all-too willing to pass, and extend, fee abatements for development (every time with a unanimous vote) and, furthermore, that no development in town had stalled due to concerns over the expiration of those abatements.
In fact, following the initial passage of those abatements in 2009, council made fee waivers retroactive from the time they were passed to the time the abatements were first proposed.
SUN staff also pointed out that, despite Mitchem’s assertion that his comments were “not specific to a large-format retailer,” the bulk of Thursday’s discussion was focused on big box development.
Thursday’s discussion began with the presentation of a resolution to extend fee abatements — but with a difference in the language from resolutions presented in previous years. The addition to Thursday’s resolution read, “Unless approved by Town Council, the abatement of fees shall only be available for facilities of less than 25,000 square feet,” a condition added following a suggestion by Murri made during the Dec. 3 council meeting (when the resolution was first presented to council).
At last Thursday’s meeting, trustee Stan Holt took exception to the new language, saying, “That should be struck, it (the fee abatement) should apply to any new business.”
Initially, the three other council members agreed with Holt (trustees Bob Hart and Darrell Cotton were absent from the meeting). Trustee Don Volger said, “We should extend that abatement to any new business, no matter what the size,” with trustee Kathie Lattin saying, “I think that any new development that would come into the community would be good.”
Pierce also stated that she agreed with Holt.
It was at that point that Mitchem asked if council would hear out Murri as to why he’d suggested restrictive language to the measure.
“I think that it’s important for you, as a council, to encourage economic development whenever you can,” Murri said. “But I think that, as a local business owner, incentives for a big corporation is a concern for me.
“If Wal-Mart comes here, Alco closes. If Alco closes, my center fails.”
During a meeting of the Pagosa Springs Community Development Corporation meeting earlier this year, Murri stated concerns over rumors that Wal-Mart was being pursued by the town to set up shop. During that presentation, Murri said that it was Alco corporate policy to close stores in an area where a Wal-Mart opens.
The rumors Murri referred to were not unfounded. AvJet General Manager Chris Harker confirmed that a Wal-Mart corporate jet landed at Stevens Field last summer with several Wal-Mart corporate representatives here to visit Pagosa Springs. Airport Manager Bill McKown stated that those representatives were only in Pagosa Springs for part of the day.
Yesterday, Mitchem confirmed that Wal-Mart representatives had indeed visited Pagosa Springs but added they had not met with town staff. Mitchem said that the representatives were in town to view potential properties for a store location as well as making a general survey of the area.
Continuing to address council, Murri stated that numerous studies documented the negative effects of large-format retailers on small, rural communities. Although Murri did not provide council with specific data, a body of research exists that indicates mass closures of small businesses in areas (both urban and rural) where Wal-Mart stores open.
Among other things, the closures of those businesses leads to (as research suggests) the loss of “social capital” — the influence of those business owners on the community. Whereas those business owners tend to participate in local government, charities and other community activities, corporate owners of big box retailers, located in distant cities, do not directly serve the communities where their stores are located.
The closures of small businesses also means the loss of 1.4 jobs for every job created by Wal-Mart. Furthermore, since Wal-Mart traditionally provides low wage jobs that lack benefits, a number of researchers say that each Wal-Mart job puts an additional $2,100 burden on local social services for each employee.
Murri continued speaking to council regarding why he felt the proposed abatements should not be extended to large corporations (and facilities over 25,000 square feet).
“For you to incentivize them (big box companies) is not providing a level playing field for your small business owners in town,” Murri said. “If someone comes here and sets up a business and other businesses fail as a result, well, that’s their business. But for you to incentivize that doesn’t send a great message to the business owners you already have here.”
However, Holt was apparently not convinced by Murri’s appeal, saying, “I just want to reiterate that I don’t think we should restrict who gets incentives. I just want to see growth in the community. You see businesses boarded up all over the place,” he said, referring to current (but not future) vacant commercial spaces.
“I just want to support development at any cost,” Holt continued, not stating what those costs might be.
Volger appeared more aware of that potential cost when he said, “Look, we know that if a big box comes in it will have an impact to the community. I think competition is healthy. If a big box comes in, it will force existing businesses to change how they do business.”
It was at that point that Pierce asked to table the resolution until council members had a chance to review the research Murri had mentioned. Lattin also said that she felt the issue required further review.
Holt did not agree with giving council more time, stating that the Wal-Mart in Durango did not have the negative effect that opponents claimed it would have. “Ninety-eight percent of the worry never happened,” Holt said. “I think to make that statement, well, it’s easier said than proven.”
Nevertheless, council voted 3-1 to accept Pierce’s suggestion.
Last year, town voters approved supporting council in scrapping Land Use and Development Codes that placed additional requirements on proposed developments exceeding 40,000 square feet — including economic impact studies. When council voted to nullify those requirements, it was done at the suggestion of Mitchem, who said those regulations were hindering the possibility of large-format retailers moving to town.
At that time, Mitchem referred to a 2005 Economic Planning Systems (EPS) study commissioned by the town and Archuleta County. In that study, it was claimed that total retail leakage (sales conducted out of county) for the area was 47-percent or $2,940,491 in potential sales tax revenues (sales tax revenues for the county in 2008 amounted to $3,315,873). Assuming that a large-format retailer would capture 75-percent of that leakage, sales tax revenues in 2008 could have been boosted by an additional $2,205,368.
“These are not my numbers,” Mitchem said then. “They come from the economic development consultant you hired in 2002.”
A closer look at the study cited by Mitchem could lead to a completely different conclusion, however. Presenting to council in May, 2005, EPS representatives Dan Guimond and Andy Knudtsen said that, while a big box retailer would capture the greatest tax revenue and would help curb leakage, it would come at too high a price. In fact, in the same study, EPS said a big box retailer would severely damage the local retail environment and would negatively alter the socioeconomic fabric of the community.
That 2005 study ultimately led to the codes that council scrapped in 2009, with voters deciding in 2010 to support that decision.
Voters did not decide if scrapping the code also included providing cash incentives to big box developers, however.
In fact, while states (including Colorado) commonly use cash and tax incentives to attract businesses and development, a recent trend has been to attach provisions to those incentives, asking for assurances that jobs will provide sustainable wages, guarantees of longevity (i.e. the company won’t pull up stakes for a specified period) and that, if low-wage jobs place a burden on social safety nets, that those companies provide subsidies to offset those costs.
Furthermore, some states have required that, when small businesses are put at risk by big-box retailers, that those companies participate in (and fund) low-interest loan programs to help those small businesses capitalize changes needed to make them more competitive.
In the past three years, with banks having greatly restricted loan availability and placing restrictions on lending that many small business owners cannot meet, the last provision has become especially popular.
When asked on Tuesday if the town had considered those kinds of requirements, Mitchem replied, “We haven’t had any discussions about that.
“I’m sensitive to Morgan’s concerns and the concerns of small businesses, the concerns of employment,” Mitchem said, pointing out that he was the one who put the size restriction in the abatement resolution.
“I was brought on board to expand the economy,” Mitchem continued, “and so I’m doing my best to facilitate those expansions.”
Council will meet on Tuesday, Jan. 3 at 5 p.m. in Town Hall to revisit how it will apply fee abatements to potential businesses and developments in town. Whether or not they will also express a sensitivity similar to Mitchem’s will be a matter of record at that meeting.