Big box out | Stakeholders weigh in on the Informed Growth Act's consequences, including some unintended ones
Illustration/Pat Corrigan
Photo/Amber Waterman
Jim Wellehan, president of Auburn-based Lamey Wellehan shoe stores, supports the Informed Growth Act and recently testified against its repeal in August
ff Interstate 95 in Lewiston, a 75-acre parcel at the terminus of Challenger Drive sits largely vacant. Zoned and prepped for development for more than two decades, much of the site’s specifications are mapped out in engineering and traffic studies, survey work and wetland plans. All told, a national retailer has invested hundreds of thousands of dollars in the parcel, but today there’s not a store or shopping cart in sight.
Back in 2005, Walmart announced plans to build store No. 4634 on this site off Exit 80. But three years later the plans collapsed, due in no small part, according to some, to a state law recently targeted for repeal: the Informed Growth Act. Passed in September 2007, the IGA requires developers of retail stores totaling 75,000 square feet or more to cough up $40,000 for an independent economic impact study, which municipalities then use to weigh whether the project will have an “adverse impact” on the area. “The Informed Growth Act really took the rug out from the local initiative to embrace this type of development,” says Lincoln Jeffers, who directs economic development for the city of Lewiston.
That sentiment has led to a push to make the law optional, allowing municipalities to trigger it or ignore it as they see fit. Supporters of the IGA say an opt-in provision would render the law meaningless, since big box stores could simply dodge towns that enact it and move to the next, more amenable town over. Opponents argue that it robs municipal planning boards of local control and discourages development. Still others insist that, in an ironic twist, retailers have appropriated the law for themselves, using it to keep competing stores out of prime market areas.
The IGA has been triggered only twice in Maine since it was enacted, in 2009 for an expansion of a store in Skowhegan that’s now under construction, and more recently for a proposed Walmart in Thomaston. A plan to expand the Falmouth Walmart is also expected to require the IGA’s required economic impact study. (Attempts to interview Walmart about its Lewiston plans were unsuccessful.)
The law’s passage in Maine coincided with the economic downturn, making it difficult to parse its impact from the effects of a national contraction in retail development. But Jeffers, who spent three years trying to attract the Arkansas retailer to Lewiston, has no doubt that the law’s cost and added uncertainty sent Walmart and its $36 million project packing. “They knew they were in the crosshairs,” he says, even though the company won state and local approvals in time to slide under the wire before the law took effect. “It’s widely recognized that [the IGA] is intended to stop just the kind of development they were proposing.”
But just across the river in Auburn, Jim Wellehan isn’t so sure the IGA scared Walmart away from Lewiston. “It would be amazing if it were for that reason,” says Wellehan, president of Lamey Wellehan, which operates six shoe stores in Maine from its headquarters in Auburn. Walmart recently reported its seventh consecutive quarterly drop in sales at U.S. stores open at least a year, and Wellehan believes the increasingly uncertain market the retailer faced in March 2008, when it abandoned the planned Lewiston store, drove its decision. (A veterans’ outpatient clinic is now being built on the site.)
Wellehan testified in February against LD 322, a bill to repeal the law, pointing out that the IGA’s mandated $40,000 economic impact study amounts to roughly a quarter of one percent of the total cost of building a big box store, hardly enough to sway a developer’s decision. “It does require the developer to consider the town and the project holistically, which brings better results for both the development and the town,” Wellehan told members of the Joint Standing Committee on State and Local Government.
Whether for reasons economic or legislative, large-scale retail development nosedived in Maine in 2009 as part of the national market’s worst contraction in 35 years. Vacancy rates bounced back last year, but new big box retail development remains scarce in Maine — now legislators are weighing if that’s good or bad.
IGA’s impact
Since the state made the Informed Growth Act law in 2007, only one Maine town has fully grappled with its implementation. Skowhegan approved a 30,000-square-foot expansion of its existing Walmart store in 2009 after reviewing an economic impact study on the proposal by Planning Decisions Inc. in South Portland, one of two Maine-based preparers. The approval was John Youney’s last undertaking after more than 18 years as chair of the town’s planning board. Of his decision to step down, he says, “Part of it was the ridiculousness of the Informed Growth Act.”
The report — which found that the expanded store would result in more in-town purchases by residents who were leaving Skowhegan to shop — didn’t include much practical information the town couldn’t already deduce through its existing development review process, Youney says. “For an ‘informed’ bill, it didn’t inform us particularly,” he says. Plus, the data, while credible, did nothing to change the opinions of those already dead set to speak for or against the newly opened Walmart expansion, Youney insists. At an additional public hearing required by the law, “it was the same dozen people talking,” he says.
“The Legislature created a process that, to me, was guaranteed to create divisive meetings,” Youney says. “I think that was part of the intent. If you make it difficult enough, [developers] won’t come.” As for unintended consequences, the IGA pushes smaller, local developers out of the market because their larger competitors know they can’t afford to comply with the law, he says. And in a strange twist of fate, existing big box retailers are using the law to prevent competitors from encroaching on their territory, Youney says.
“It’s just another tool for a company to block a big box from coming to a market,” says Charlie Craig, a retail development expert and partner at brokerage firm NAI The Dunham Group in Portland. He’s seen attendees show up at public hearings on behalf of retailers that aren’t subject to the law — those with stores under 75,000 square feet — to oppose big box development plans. Are they citizens “or is it a company who has straws working on their behalf to sort of fan the flames?” he says.
While big box development has slowed nationally after a 10-year boom that led to some overdevelopment, the IGA still can mark a tipping point in a developer’s or large retailer’s decision to locate in Maine, Craig says. “The economics of the situation are driving the lack of big box development now,” he says. “But there was a time when it would have happened here but the law slowed development down.”
Ben Devine, who develops large retail stores throughout the East Coast, says he worries the law has added to a perception that Maine is unfriendly to business. Devine owns the Skowhegan Walmart and has proposed a 17,000-square-foot expansion of the Walmart in Falmouth. “We’re proceeding as if the law is in place,” he says, in light of legislative debate about the IGA’s future. “We’ll see what happens there.”
A number of national retailers cite a similar law in Vermont, known as Act 250, as proof they’re not wanted there, Devine says. Act 250 gives nine commissions in Vermont the power to deny a permit for developments of at least 10 acres, or more than one acre in towns lacking zoning and subdivision bylaws, based on criteria covering the environment, community life and aesthetics. “It’s difficult enough to attract business [in Maine], and the idea that there’s an added hurdle, from a PR perspective, doesn’t help at all,” he says. Devine’s made a business decision to expand in Falmouth despite the law, but “it would be lovely if that $40,000 could be targeted somewhere else,” he says.
If the IGA’s intent was to protect small towns that lack sophisticated development review processes, it missed the mark, Devine says. To their credit, Maine municipalities don’t just let projects slide in without thorough review, he says, pointing to the state’s relatively lower rate of excess retail development. And large retailers tend to locate in towns that have had plenty of practice in reviewing development, he says. “The irony is retailers want to go where the people are, so they tend to go where there has been prior development.”
Making the law optional for municipalities would mark an improvement, but still wouldn’t address a fundamental timing issue the IGA presents, says Gary Vogel, an attorney at Drummond Woodsum in Portland who represents the Maine Real Estate and Development Association. Basic questions about whether a community wants a big box retailer, which the required economic impact study addresses, should be answered long before a project is proposed, he says. “All of those are important and good questions, but they’re best as part of the zoning [and comprehensive plan] process,” Vogel says.
To Jim Wellehan, the question of whether communities want the sprawl that large retail stores can engender is easy to answer. Imagine children playing with toys they’ve scattered all over the living room, he says. There’s nothing wrong with toys, but if retailers and developers are the kids, “It’s reasonable to ask them to pick them up.”
Jackie Farwell, Mainebiz senior writer, can be reached at jfarwell@mainebiz.biz.
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