July 11, 2005
One more big-box battle | Will Augusta be overrun by retail, as some residents fear, or will city officials achieve their goal of balanced development?
By Douglas Rooks
Big-box retailing survived one of its stiffest challenges yet in Maine when Augusta voters on June 14 turned down two separate citizen referendums challenging major new retail developments in the capital.
While concerned neighbors had no trouble gathering enough signatures to get the questions on the ballot, the verdict at the polls was fairly decisive. Some 69% of voters opposed Question 1, which would have overturned a rezoning necessary to facilitate construction of Newton, Mass.-based Packard Development's planned Augusta Crossing, a 550,000-square-foot retail complex adjacent to the Maine Turnpike, just off Exit 109.
The tally on Question 2 was closer. That question would have cancelled the city's purchase and sale agreement with CB Richard Ellis/The Boulos Co. of Portland to redevelop the Cony High School property at the east end of Memorial Bridge. The site is earmarked for a Hannaford supermarket after the high school moves to a new location next year. Question 2 was rejected by 55% of voters. Turnout was heavy for a municipal election, with nearly 5,550 votes, about 40% of registered voters.
Bill Johnson, spokesman for the East Side Neighborhood Network, a group that organized to oppose the Cony plan, said he sensed the tide was against Question 1, but he expected Question 2 to pass. "On election night, I said I was surprised by the result," he said. "Actually, I was stunned. We had a great reaction to our campaign. People seemed to understand what the problem was."
The problem, in the view of neighborhood organizers like Johnson and Virginia Goodlett of GoodGrowth Augusta, a group formed to counter the Packard plan, is that large-scale commercial development is threatening the state capital. They believe these two proposals will overwhelm existing neighborhoods and make Augusta a less attractive place to live. City officials predictably disagree, saying the projects will supplement Augusta's tax base.
Behind the debate over these two projects, though, is a larger question about what Augusta will be like in 10 or 20 years: Will it still have a historic downtown and attractive in-town neighborhoods, or will the 1960s conversion of Western Avenue from an elm-lined street of stately homes to strip malls and fast-food restaurants be dwarfed by what is to come?
Critics say that Augusta has lost most of its manufacturing base, notably with the closing in 2002 of the former Digital computer chip plant, and is now increasingly dependent on the kind of low-wage, few-benefit service jobs that they think the Packard and Hannaford projects represent.
"We need to be more selective," said Johnson. "We're not against growth, but it seems that the city council and planning board accept just about anything that comes down the pike. Rezoning to commercial is way too easy in Augusta."
Goodlett said, "Hallowell and Gardiner have done what's needed to preserve attractive, viable downtowns and emphasize their historic residential neighborhoods. For whatever reason, Augusta's chosen not to do that."
Bill Bridgeo, Augusta's city manager, doesn't disagree with all the points made by the big-box critics, but he disputes the implication that the city is a passive recipient of any kind of development. "We've gone after every good opportunity that would have brought jobs here," he said, mentioning the T-Mobile call center that went to Oakland's FirstPark and another being built by L.L. Bean in Bangor. "The fact that we didn't get them doesn't mean we weren't trying." Bridgeo called the city's economic development director, Mike Duguay, "one of the best in the state," and said that, just as the referendum supporters urge, the city is seeking balanced office, commercial and residential growth.
Busy streets, empty buildings
"Ever since the 2000 census results came out" ˆ showing that Augusta had lost 3,000 residents, or 13% of its 1990 population ˆ "we've been emphasizing the need for new housing," Bridgeo said. That effort is now beginning to succeed, he said, with plans for subsidized housing units downtown, townhouse apartments and duplexes on the west side, and single family homes on the newly accessible east side, thanks to the just-opened "third bridge" over the Kennebec River, which has yet to be named.
The bridge project reveals some of the ironies involved in current development battles in what continues to feel like a small town despite Augusta's status as Maine's capital city.
John Melrose was transportation commissioner under Gov. Angus King, and set the parameters for the third bridge project, an extension of Route 3 from I-95 heading east to Belfast. It was designed to have limited access, with no commercial development, and to remove through traffic from Western Avenue and Augusta's notorious rotaries. Melrose is also an advocate of smart growth ˆ the idea that cities and village centers should enhance their core areas rather than permit low-density, traffic-dependent development to siphon vitality from downtowns.
Now, Melrose, a Winthrop resident, is the local agent for Packard Development and its proposal to build near Western Avenue. In his public statements, he points out that the new shopping center, billed to feature a Target department store and Lowe's home improvement center, is accessible to existing utilities and lies within an existing growth area.
Packard critics are not impressed. "The third bridge took a lot of the traffic off Western Avenue to free things up," said Bill Johnson. "The Packard plan puts it all back on." As the project is now configured, most traffic would enter the mall from Storey Street, between the Kennebec Journal plant and the Senator Inn. Existing homes on the street would be torn down and the street made one-way, with traffic exiting through a loop around the newspaper plant and back onto Western Avenue. (The development's site plan still needs to be approved by state and local authorities.)
The fate of downtown and the Western Avenue shopping district that developed in the 1960s and 70s is another concern for residents. Downtown still has many vacant storefronts despite years of redevelopment efforts and a just-completed parking garage, though several multi-story buildings are being renovated by Richard McGoldrick of Portland and Kevin Mattson of Harper's Development, a local firm. Around the time the third bridge opened last November, a half-dozen convenience stores along Western Avenue shut down ˆ and still remain idle. Of greater concern, perhaps, are long-term vacancies in existing shopping centers, where defunct Ames and Service Merchandise stores remain empty.
Retail explosion
Opinion is divided on whether the new projects will help or hurt existing retailers. What isn't in dispute is the dramatic expansion of commercial space in Augusta. The Marketplace at Augusta, off Exit 113 opposite the Augusta Civic Center, was planned as an enclosed mall in the early 1990s but instead developed around a Wal-Mart. With a planned expansion of the Marketplace, its stores will enclose nearly 1.4 million sq. ft., with a Barnes & Noble, Staples, Home Depot and a 10-screen cinema among the major tenants. A Kohl's department store is planned for the next phase. Combined with the Packard project, the Marketplace expansion means that Augusta will have nearly 2 million sq. ft. of interstate-accessible shopping.
On the supermarket front, both Shaw's and Hannaford bulked up to deal with the Wal-Mart competition, and both have 50,000-square-foot stores along the west side of Western Avenue. The Cony site would feature a similar Hannaford store, replacing an existing 20,000-square-foot store just down the hill. Massachusetts-based Stop & Shop has also indicated an interest in the old Kirschner meat packing plant site on Riverside Drive, near the new bridge.
To many long-time Augusta residents ˆ and not just referendum organizers ˆ the scale of this retail development has become overwhelming. But according to national retail researchers, it really isn't that unusual.
"National retailers look for a nexus to locate in. If one of them wants to be there, they all do," said Blount Hunter, whose retail and real estate research firm is based in Norfolk, Va. "They don't want to spread out in a given area for fear of splitting the market."
Two million square feet of new retail space may seem like a lot for a city of 18,000 people, but it's the regional market these retailers are tapping, customers within a 20-40 minute drive. In Augusta, that radius reaches toward the coast and inland as far as Farmington.
Hunter hasn't researched Augusta's market, but he said the notion that national chains locate stores in any convenient development is fanciful. "If a developer comes to a national chain, the first answer is usually 'no,' and then 'tell me why I should,' " he said. "This is a scientific, predictable process. It's not based on guesswork."
Hunter did say that one change since the days when Sears and K-Mart were dominant retailers, and Wal-Mart was just getting started, is that in most retail categories there used to be at least three or four chains vying for dominance. "Now there are often just two fighting it out," he said. Bigness, by itself, doesn't always work, though, as the failure of the pharmacy superstore shows, he said. "It turns out that people want a pharmacy within five or 10 minutes of home. They're not willing to drive miles to fill a prescription."
Offering a different perspective on the big-box boom is Stan Eichelbaum, principal of Marketing Developments in Cincinnati, Ohio. "When we did a national survey four years ago, we found that the United States had enough retail capacity for a population of 800 million people, and we have only 290 million," he said. Since then, "the boom has continued. There hasn't been one year where capacity grew less than demand."
When big gets bigger
What this apparent over-capacity means is not that big retailers are about to fail ˆ although some may ˆ but that the nature of the business has changed dramatically, Eichelbaum said. Even department stores, once highly profitable, run on slim margins more like those of supermarkets. "Everything has been commodified," he said. And to compete in this kind of market, stores need to be very big and move a lot of merchandise.
Old-line discount stores that failed in Maine, among them Ames, Bradlees and Rich's, just couldn't keep up with Wal-Mart. The giant chain's more successful competitors, such as Kohl's and Target go head-to-head on most items but also provide cachet through selected brand names ˆ "some of them, like [golf outfitter] MacGregor, that were practically defunct anyway," Eichelbaum said.
None of this is likely to settle the debate that continues in Augusta. The Packard and Hannaford plans roused opposition almost as soon as they were publicly disclosed. The Storey Street rezoning that benefited the Packard plan was approved only 5-3 by the city council. And the council was criticized for its haste when it accepted the Boulos offer more than two years before the scheduled high school closure. Abandoned schools elsewhere in the city were idle for several years before they were redeveloped, giving neighbors a chance to propose alternatives.
"But those sites didn't have a live, valid commercial offer," said Bill Bridgeo. He points out that not only will Boulos pay $1.5 million for the eight-acre site, which does not include the historic Flatiron Building on the rotary, but it will also spare the city the estimated $1 million cost of demolishing the 1970s high school wing, a 200,000-square-foot building.
Does Bridgeo now wish he'd spent more time talking to the neighbors? "Yes, I do," he said. "But I have no regrets about the project. When people see the final plan, I think they'll be pleased."
Both developments were promoted with hefty campaign contributions. Packard spent a reported $50,000 to counter the referendum drive, while Hannaford spent $200,000 ˆ almost 100 times the $2,000 or so raised by the East Side group. "If we'd known they were going to do that, we'd have worked a lot harder to raise money rather than just go door-to-door," Johnson said. The group also has filed a lawsuit against the Cony transfer, claiming the city failed to follow proper procedures, with a preliminary hearing scheduled for early this month.
Referendum backers objected to the main thrust of the "vote no" campaigns, which was that property taxes would rise if the developments didn't go ahead. Virginia Goodlett said that independent studies of big-box development, including one done for Biddeford, show that most of the reputed gains in property tax revenue are wiped out by the increased cost of services such developments require. She also said the city used the prospect of a citywide revaluation to push residents fearful of higher tax bills into voting for the projects.
On the question of Augusta's future, city officials and their critics may be able to come together. Bridgeo acknowledges that the city's comprehensive plan, written in 1987 and slightly updated in 1995, is due for a thorough overhaul, and the council has budgeted $50,000 for a new one. Despite assertions to the contrary, he said, "I do believe we can have balanced growth in the capital. There may be differences on opinion on specific projects. I didn't think we should say no to Packard or Hannaford, while others did."
Still, Goodlett isn't convinced Augusta continues to have the opportunity to grow wisely. "For 10 years, I've tried to answer the people who say this isn't a good place to live, that it's time to move," she says. "But now I'm not so sure myself."
While concerned neighbors had no trouble gathering enough signatures to get the questions on the ballot, the verdict at the polls was fairly decisive. Some 69% of voters opposed Question 1, which would have overturned a rezoning necessary to facilitate construction of Newton, Mass.-based Packard Development's planned Augusta Crossing, a 550,000-square-foot retail complex adjacent to the Maine Turnpike, just off Exit 109.
The tally on Question 2 was closer. That question would have cancelled the city's purchase and sale agreement with CB Richard Ellis/The Boulos Co. of Portland to redevelop the Cony High School property at the east end of Memorial Bridge. The site is earmarked for a Hannaford supermarket after the high school moves to a new location next year. Question 2 was rejected by 55% of voters. Turnout was heavy for a municipal election, with nearly 5,550 votes, about 40% of registered voters.
Bill Johnson, spokesman for the East Side Neighborhood Network, a group that organized to oppose the Cony plan, said he sensed the tide was against Question 1, but he expected Question 2 to pass. "On election night, I said I was surprised by the result," he said. "Actually, I was stunned. We had a great reaction to our campaign. People seemed to understand what the problem was."
The problem, in the view of neighborhood organizers like Johnson and Virginia Goodlett of GoodGrowth Augusta, a group formed to counter the Packard plan, is that large-scale commercial development is threatening the state capital. They believe these two proposals will overwhelm existing neighborhoods and make Augusta a less attractive place to live. City officials predictably disagree, saying the projects will supplement Augusta's tax base.
Behind the debate over these two projects, though, is a larger question about what Augusta will be like in 10 or 20 years: Will it still have a historic downtown and attractive in-town neighborhoods, or will the 1960s conversion of Western Avenue from an elm-lined street of stately homes to strip malls and fast-food restaurants be dwarfed by what is to come?
Critics say that Augusta has lost most of its manufacturing base, notably with the closing in 2002 of the former Digital computer chip plant, and is now increasingly dependent on the kind of low-wage, few-benefit service jobs that they think the Packard and Hannaford projects represent.
"We need to be more selective," said Johnson. "We're not against growth, but it seems that the city council and planning board accept just about anything that comes down the pike. Rezoning to commercial is way too easy in Augusta."
Goodlett said, "Hallowell and Gardiner have done what's needed to preserve attractive, viable downtowns and emphasize their historic residential neighborhoods. For whatever reason, Augusta's chosen not to do that."
Bill Bridgeo, Augusta's city manager, doesn't disagree with all the points made by the big-box critics, but he disputes the implication that the city is a passive recipient of any kind of development. "We've gone after every good opportunity that would have brought jobs here," he said, mentioning the T-Mobile call center that went to Oakland's FirstPark and another being built by L.L. Bean in Bangor. "The fact that we didn't get them doesn't mean we weren't trying." Bridgeo called the city's economic development director, Mike Duguay, "one of the best in the state," and said that, just as the referendum supporters urge, the city is seeking balanced office, commercial and residential growth.
Busy streets, empty buildings
"Ever since the 2000 census results came out" ˆ showing that Augusta had lost 3,000 residents, or 13% of its 1990 population ˆ "we've been emphasizing the need for new housing," Bridgeo said. That effort is now beginning to succeed, he said, with plans for subsidized housing units downtown, townhouse apartments and duplexes on the west side, and single family homes on the newly accessible east side, thanks to the just-opened "third bridge" over the Kennebec River, which has yet to be named.
The bridge project reveals some of the ironies involved in current development battles in what continues to feel like a small town despite Augusta's status as Maine's capital city.
John Melrose was transportation commissioner under Gov. Angus King, and set the parameters for the third bridge project, an extension of Route 3 from I-95 heading east to Belfast. It was designed to have limited access, with no commercial development, and to remove through traffic from Western Avenue and Augusta's notorious rotaries. Melrose is also an advocate of smart growth ˆ the idea that cities and village centers should enhance their core areas rather than permit low-density, traffic-dependent development to siphon vitality from downtowns.
Now, Melrose, a Winthrop resident, is the local agent for Packard Development and its proposal to build near Western Avenue. In his public statements, he points out that the new shopping center, billed to feature a Target department store and Lowe's home improvement center, is accessible to existing utilities and lies within an existing growth area.
Packard critics are not impressed. "The third bridge took a lot of the traffic off Western Avenue to free things up," said Bill Johnson. "The Packard plan puts it all back on." As the project is now configured, most traffic would enter the mall from Storey Street, between the Kennebec Journal plant and the Senator Inn. Existing homes on the street would be torn down and the street made one-way, with traffic exiting through a loop around the newspaper plant and back onto Western Avenue. (The development's site plan still needs to be approved by state and local authorities.)
The fate of downtown and the Western Avenue shopping district that developed in the 1960s and 70s is another concern for residents. Downtown still has many vacant storefronts despite years of redevelopment efforts and a just-completed parking garage, though several multi-story buildings are being renovated by Richard McGoldrick of Portland and Kevin Mattson of Harper's Development, a local firm. Around the time the third bridge opened last November, a half-dozen convenience stores along Western Avenue shut down ˆ and still remain idle. Of greater concern, perhaps, are long-term vacancies in existing shopping centers, where defunct Ames and Service Merchandise stores remain empty.
Retail explosion
Opinion is divided on whether the new projects will help or hurt existing retailers. What isn't in dispute is the dramatic expansion of commercial space in Augusta. The Marketplace at Augusta, off Exit 113 opposite the Augusta Civic Center, was planned as an enclosed mall in the early 1990s but instead developed around a Wal-Mart. With a planned expansion of the Marketplace, its stores will enclose nearly 1.4 million sq. ft., with a Barnes & Noble, Staples, Home Depot and a 10-screen cinema among the major tenants. A Kohl's department store is planned for the next phase. Combined with the Packard project, the Marketplace expansion means that Augusta will have nearly 2 million sq. ft. of interstate-accessible shopping.
On the supermarket front, both Shaw's and Hannaford bulked up to deal with the Wal-Mart competition, and both have 50,000-square-foot stores along the west side of Western Avenue. The Cony site would feature a similar Hannaford store, replacing an existing 20,000-square-foot store just down the hill. Massachusetts-based Stop & Shop has also indicated an interest in the old Kirschner meat packing plant site on Riverside Drive, near the new bridge.
To many long-time Augusta residents ˆ and not just referendum organizers ˆ the scale of this retail development has become overwhelming. But according to national retail researchers, it really isn't that unusual.
"National retailers look for a nexus to locate in. If one of them wants to be there, they all do," said Blount Hunter, whose retail and real estate research firm is based in Norfolk, Va. "They don't want to spread out in a given area for fear of splitting the market."
Two million square feet of new retail space may seem like a lot for a city of 18,000 people, but it's the regional market these retailers are tapping, customers within a 20-40 minute drive. In Augusta, that radius reaches toward the coast and inland as far as Farmington.
Hunter hasn't researched Augusta's market, but he said the notion that national chains locate stores in any convenient development is fanciful. "If a developer comes to a national chain, the first answer is usually 'no,' and then 'tell me why I should,' " he said. "This is a scientific, predictable process. It's not based on guesswork."
Hunter did say that one change since the days when Sears and K-Mart were dominant retailers, and Wal-Mart was just getting started, is that in most retail categories there used to be at least three or four chains vying for dominance. "Now there are often just two fighting it out," he said. Bigness, by itself, doesn't always work, though, as the failure of the pharmacy superstore shows, he said. "It turns out that people want a pharmacy within five or 10 minutes of home. They're not willing to drive miles to fill a prescription."
Offering a different perspective on the big-box boom is Stan Eichelbaum, principal of Marketing Developments in Cincinnati, Ohio. "When we did a national survey four years ago, we found that the United States had enough retail capacity for a population of 800 million people, and we have only 290 million," he said. Since then, "the boom has continued. There hasn't been one year where capacity grew less than demand."
When big gets bigger
What this apparent over-capacity means is not that big retailers are about to fail ˆ although some may ˆ but that the nature of the business has changed dramatically, Eichelbaum said. Even department stores, once highly profitable, run on slim margins more like those of supermarkets. "Everything has been commodified," he said. And to compete in this kind of market, stores need to be very big and move a lot of merchandise.
Old-line discount stores that failed in Maine, among them Ames, Bradlees and Rich's, just couldn't keep up with Wal-Mart. The giant chain's more successful competitors, such as Kohl's and Target go head-to-head on most items but also provide cachet through selected brand names ˆ "some of them, like [golf outfitter] MacGregor, that were practically defunct anyway," Eichelbaum said.
None of this is likely to settle the debate that continues in Augusta. The Packard and Hannaford plans roused opposition almost as soon as they were publicly disclosed. The Storey Street rezoning that benefited the Packard plan was approved only 5-3 by the city council. And the council was criticized for its haste when it accepted the Boulos offer more than two years before the scheduled high school closure. Abandoned schools elsewhere in the city were idle for several years before they were redeveloped, giving neighbors a chance to propose alternatives.
"But those sites didn't have a live, valid commercial offer," said Bill Bridgeo. He points out that not only will Boulos pay $1.5 million for the eight-acre site, which does not include the historic Flatiron Building on the rotary, but it will also spare the city the estimated $1 million cost of demolishing the 1970s high school wing, a 200,000-square-foot building.
Does Bridgeo now wish he'd spent more time talking to the neighbors? "Yes, I do," he said. "But I have no regrets about the project. When people see the final plan, I think they'll be pleased."
Both developments were promoted with hefty campaign contributions. Packard spent a reported $50,000 to counter the referendum drive, while Hannaford spent $200,000 ˆ almost 100 times the $2,000 or so raised by the East Side group. "If we'd known they were going to do that, we'd have worked a lot harder to raise money rather than just go door-to-door," Johnson said. The group also has filed a lawsuit against the Cony transfer, claiming the city failed to follow proper procedures, with a preliminary hearing scheduled for early this month.
Referendum backers objected to the main thrust of the "vote no" campaigns, which was that property taxes would rise if the developments didn't go ahead. Virginia Goodlett said that independent studies of big-box development, including one done for Biddeford, show that most of the reputed gains in property tax revenue are wiped out by the increased cost of services such developments require. She also said the city used the prospect of a citywide revaluation to push residents fearful of higher tax bills into voting for the projects.
On the question of Augusta's future, city officials and their critics may be able to come together. Bridgeo acknowledges that the city's comprehensive plan, written in 1987 and slightly updated in 1995, is due for a thorough overhaul, and the council has budgeted $50,000 for a new one. Despite assertions to the contrary, he said, "I do believe we can have balanced growth in the capital. There may be differences on opinion on specific projects. I didn't think we should say no to Packard or Hannaford, while others did."
Still, Goodlett isn't convinced Augusta continues to have the opportunity to grow wisely. "For 10 years, I've tried to answer the people who say this isn't a good place to live, that it's time to move," she says. "But now I'm not so sure myself."
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