Dependence on sales tax and grasping for good economic news has somehow distorted reality for many communities. Do big box and chain stores with their national marketing campaigns, sometimes lower prices and predictable brands add real economic value to communities? Does expansion to your neighborhood deserve public subsidy? Many political leaders fall in to a trap of becoming advocates to recruit big box clusters to their communities by offering subsidies such as tax breaks, tax increment financing (TIF) that can reduce construction cost substantially, extending roads and many other unjustified assistance.

During a public meeting concerning a Kings Highway Corridor Plan in Shreveport, where approximately 90% of the businesses were unique local operations, one business owner expressed an understanding that he was actually subsidizing his demise. He understood that his tax dollars were being used to support growth of big box sprawl that threatened his existence. You may think that is the cost of progress. Maybe you should think again. The cost of such growth is not sustainable. If you are witnessing big box and chain store growth and your population is not substantially increasing you may see the negative results more quickly. What are these results? To name a few: loss of tax base as small businesses close, less retail revenue per square foot of retail, fewer jobs per square foot of retail, reduced residential property values in the area of this type of retail growth, higher poverty rates than communities without such development, increased police services, traffic congestion, negative impacts on surrounding small communities… Enough? There is more.

In evaluating this type of growth consider zero sum game theory. There is only so much retail expenditure per population. If you are not growing population then the new businesses will be shifting dollars from existing businesses. What are the impacts on the region when these shifts occur? Is it part of a well-conceived plan or just leap frog fill-in-the-gaps low-density haphazard growth.

Managing this type of growth is one of the keys to becoming a more competitive community. If your not convinced look at the studies from across the country compiled by New Rules that quantify cost to cities, costs to states, economic impact of local businesses vs. chains, existing businesses & jobs, wages & benefits, poverty rates and subsidies.