Proposed Fiscal and Community Impact Report for Petaluma

August 21, 2007

The Living Wage Coalition has joined with other labor, environmental, and community organizations to propose that the Petaluma City Council require a 'Fiscal and Community Impact Report' for new commercial development. Click here for the complete comments

Also, if you would like to download a model Fiscal and Community Impact Report by the Center on Policy Initiatives in San Diego for a proposed Wal-Mart please click here: SubsidizingWalMart.pdf 

See below a brief summary of what a fiscal and community impact report is and articles about a community impact report requirement passed by the Maine legislature and similar laws in other states.

What is a Community Impact Report?

When policy makers decide to invest public dollars in a development project, they usually do so in the belief that their investment will boost the local economy, enrich tax coffers and improve the local quality of life.

But these decisions sometimes backfire or have less than stellar results. A publicly-subsidized superstore, for example, may result in other stores being driven out of business, a glut of low-wage/low benefits jobs and-their counterparts-an increased demand for subsidized housing and welfare programs. Similarly, policy makers might decide to make a construction loan to developers of a sports stadium only to find, once the stadium is built, that ticket sales and sponsorships do not meet the level necessary to trigger repayment of the debt.

Several cities throughout California have begun to utilize Community Impact Reporting, a new development review tool designed to more systematically and accurately predict and measure the costs and benefits of proposed public/private partnerships and subsidies.

The need for a tool like this is particularly acute in California, where local jurisdictions are severely limited in the amount of money they can raise and must rely on sales tax dollars for most of their General Fund activities. Any project that holds the promise of generating significant sales tax dollars understandably holds a natural, and sometimes blinding, attraction for policy makers.

The Community Impact Report's organization and scope grow out of the local jurisdiction's police powers and the "right to know" precedents that began to be set in the 1980s as the public began to demand more accountability in the development process. Like an Environmental Impact Report, a CIR is an advisory document, designed to provide information but not to dictate to policy-makers. The CIR has benefits for both developers and interested community members-providing information and a forum to citizens and alerting developers to community concerns early on in the process.

The report studies numerous areas, all in an effort to make accurate predictions about a proposed project's costs and benefits to a community.

First, is the proposed project economically viable and will it be profitable to the local community? Will the business succeed and contribute to the tax base as hoped? Will that contribution be offset by losses elsewhere? Second, what kinds of jobs will the business create? Low wage jobs increase strain on workers and their families and, in turn, on schools and public services. When public dollars go toward subsidizing low-wage employment, it is important to measure the true costs and to note which community members and institutions will be paying those costs. Additionally, the reports asks if the project will contribute to the need for affordable housing, and at what income level the need will be most acute. This is a hugely important question in the North Bay, where exorbitant land costs contribute to the fact that most cities fail to meet even the affordable housing targets given to them by the State (targets which most experts agree are inadequate to meet housing needs). The report also looks at whether the project will create a need for additional community services and benefits-childcare, parks, road improvements-and the benefits the project will provide. CIRS also measure the Smart Growth attributes of a proposed project.

What triggers a CIR?

Different cities have different triggers. Some require a CIR for any project in a redevelopment agency; others base the requirement on project size, subsidy size or the nature and scale of the potential impacts on a community.

Who creates a CIR?

In California, there are many examples where cities have prepared analyses that make up parts of a CIR. For example, cities that have adopted per square foot development fees for affordable housing or childcare have first conducted "nexus" studies that look at the impact of types of commercial projects (retail, office, etc.) on the community. Also, some cities have studied the effects of big-box retail projects on local businesses and tax revenues. Usually a consultant chosen by a city council will prepare these studies, just as they do for Environmental Impact Reports (EIR). Typically the cost of these analyses is passed on to the developer. City staff will review the consultant's work and may note any area of disagreement or staff may add information as needed. In some cities, staff provides the pertinent analyses. A simple CIR can be relatively brief (50 pages) and take no more than three months to complete. However, for larger projects, a CIR that covers a wide range of impacts could take 6 months or more. The City of Los Angeles adopted a CIR policy for new large commercial and industrial projects in its redevelopment districts. The City of San Jose will soon adopt a comprehensive CIR policy.

How does a CIR differ from an EIR?

Environmental Impact Reports, mandated under the California Environmental Quality Act (CEQA), are concerned only with environmental impacts, not broader land use and community development policies. It does not examine the issues a CIR does-economic impacts, community services and amenities impacts, affordable housing needs, etc. The CIR functions as a companion to the EIR.

Who benefits by a CIR?

The CIR has benefits for both developers and interested community members-providing information and a forum to citizens and alerting developers to community concerns early on in the process. A CIR can also help build support for a project early in the planning process and avoid costly delays or litigation.

Excerpted from the report (pp 60-61): The 'Limits of Prosperity: Growth, Inequality, and Poverty in the North Bay' by New Economy, Working Solutions (NEWS) 2005. Available at http://neweconomynorthbay.org ________________________________________________________________________________ 6/21/07

Good Jobs First 1616 P Street NW | Suite 210 | Washington | DC | 20036 http://www.goodjobsfirst.org/

In a major grassroots victory after a hot debate, Maine yesterday became the first state in the nation to require that big-box retail projects undergo economic impact studies. The new law allows a municipality to grant a permit for a big-box project "only if it determines that there is likely to be no undue adverse impact."

Mandated measures include the impact on existing retail businesses, net job creation and loss, downtown vitality/vacancy rates, retail wages and benefits, local tax revenue and local municipal costs, economic development subsidies (including tax increment financing or TIF), water and sewer capacity, traffic congestion, and "sales revenue generated and reinvested" locally.

Gov. John Baldacci signed the Informed Growth Act, LD 1810, after the House passed it 82-49 two weeks ago and the Senate passed it 19-16 last week.

Key advocate, Portland resident, and Big-Box Swindle author Stacy Mitchell writes: "The campaign to enact the bill was led by the Maine Fair Trade Campaign, the Institute for Local Self-Reliance's New Rules Project [Mitchell is a senior researcher with the Project], the Maine chapter of the Sierra Club, and Our Town Damariscotta, a citizens group that stopped a Wal-Mart project last year."

More than 180 small business owners wrote or testified in favor of the proposal, effectively countering opposition by the Maine State Chamber and other big business-dominated groups, which tried to characterize the bill as "anti-business." One legislator argued implausibly that the law is a "slippery slope" that might later be applied to manufacturing facilities.

The law was introduced after several acrimonious "site fights" in recent years.

The law, an amendment to the state's land use statute, covers any proposed retail store of 75,000 square feet or more (including those that span multiple buildings or floors) and requires that developers deposit $40,000 for an impartial impact study commissioned by the local government. The study must cover the entire market area to be served by the project, even including neighboring communities.

The study's findings, with all other public comments, must then be heard at a public hearing, with notice given to all residents within 1,000 feet of the project site and officials of all neighboring communities.

The law resembles local ordinances that have been passed in numerous small localities and one very large city Los Angeles cataloged by the New Rules project at http://www.newrules.org/retail/impact.html

________________________________________________________________________________ June 18, 2007 Maine Passes Law Requiring Economic Impact Studies of Big-Box Projects

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. ________________________________________________________________________________ For more specifics on the Maine legislation and pending legislation in other states please see the "New Rules of the Game" http://www.newrules.org/retail/

Economic Impact Review

Maine has enacted and several other states are considering legislation that would require communities to assess the economic impacts of large retail stores and shopping center proposals. Only those developments that would not have a significant negative impact could be approved.

Although studies have found that the economic costs of large retail stores can outweigh the benefits, cities typically make decisions about whether to approve these projects without any objective information about the effects they are likely to have on other businesses, jobs, wages, and public services costs. Indeed, in most cases, the only information that local officials have are the rosy, and often misleading, job and tax revenue projections provided by the developer.

Maine's law remedies this by making an economic impact study a standard part of what a city must consider when reviewing a large retail development proposal. Under the law, cities that determine that a project would have an adverse impact have the authority to reject the development.

RULES:

* Maine

Enacted in 2007, this bill requires developers seeking to build retail stores larger than 75,000 square feet to pay for a comprehensive impact study, a public hearing and related municipal staff support in order to estimate the positive and negative economic effects of the store on the local area. Under the bill, towns may approve large retail stores only after reviewing the study and concluding that the store will not have an undue adverse impact on the local economy.

* California [proposed]

In August 2006, the California legislature passed legislation requiring cities to commission an economic impact study prior to approving any store larger than 100,000 square feet. The bill, however, was vetoed by Gov. Schwarzenegger. Had it been enacted, cities would have been required to assess the impact of a proposed big-box store on existing businesses, jobs, wages, retail vacancy rates, the cost of public services, and the number of vehicle miles consumers in the region travel for shopping.

* New Jersey [proposed] This bill would require cities to conduct a regional economic impact analysis before approving stores larger than 130,000 square feet that contain more than 25,000 stockkeeping units (i.e., items for sale) and derive more than 10 percent of their total sales from the sale of nontaxable merchandise (i.e., groceries). The analysis must weigh the impacts not only on the host municipality, but also on adjacent municipalities and the county. The bill also gives neighboring municipalities a voice in the process.

* Oregon [proposed]

This bill stipulates that cities and counties may not approve proposals for retail stores larger than 100,000 square feet until an economic impact study has been completed and a public hearing on the study's findings has been held.

* Vermont [proposed]

This bill was introduced in 2006 and passed the Senate, but not the House. It would have established a statewide store size cap of 50,000 square feet. Cities and towns would have been allowed to lower or raise the size limit within their jurisdictions provided that they adopt comprehensive plan provisions that address the impacts of big-box retail; limit big-box stores to designated areas; establish design standards; and require an economic impact review for projects over 30,000 square feet.

More:

* Informed Growth Act a needed tool for Maine communities - by Stacy Mitchell, published in the Maine Sunday Telegraph, May 20, 2007

* Also see our sections on Regional Impact Review and Community Impact Review

* Protecting Locally Owned Retail: Planning Tools for Curbing Chains and Nurturing Homegrown Businesses [PDF] by Stacy Mitchell, Main Street News, February 2004. (c)National Main Street Center, National Trust for Historic Preservation. All rights reserved.

Copyright - Institute for Local Self-Reliance

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Excerpted from the report the "Limits of Prosperity: Growth, Inequality, and Poverty in the North Bay" by Nari Rhee and Dan Acland and published by New Economy, Working Solutions (NEWS). For the full report go to: