The Way I See It!

Is a 100,000 sq ft or larger zoning ordinance coming to Cudahy? Part 1

Posted by Randy Hollenbeck on July 2, 2009

Cudahy, Leadership, Development, Wal-Mart

I have not been told that such an ordinance is currently in the minds of the city officials of Cudahy or on any agendas, but have heard whispers of one being considered.  This is a surefire way to keep Wal-Mart out.

Before we really get rolling, let’s get on the same page of definitions.

Department Stores - variety store, notions store, five-and-ten, five-and-dime, general store, chain store, dry-goods store, ready-to-wear, discount store, outlet store, mail-order house, warehouse, emporium, bazaar, exchange, bargain store, hypermarket, shopping center, mall; see also market

Discount Stores - A store that sells merchandise, especially consumer goods, at a discount from the manufacturer's suggested retail price.  Also called discounter, discount house.

The large-scale retail model depends on high-volume sales with tight profit margins (such as Wal-Mart or Target), rather than price markups at high-end retailers (such as Nordstrom or Neiman Marcus).  To generate high-volume sales, the large-scale retailer must occupy a large space and offer enough parking to accommodate many shoppers.  To minimize construction costs, big-box stores typically use standardized layout.

Big-Box store  - A large retail store whose physical layout resembles a large square or box when seen from above.  A big-box store is characterized by a large amount of floor space (generally more than 50,000 square feet), a wide array of items available for sale, and its location in suburban areas.  Big-box stores often can offer lower prices because they buy products in high volume.  Also called supercenter, superstore, megacenter.  Supercenters, combine large grocery sections with general merchandise.

A big-box retail store can be a freestanding operation or part of a conglomeration of several big-box retail stores in a power center or value mall.

There are at least three categories of big-box retailers.  The first category includes discount department stores such as Wal-Mart or Target and outlet stores that sell department store merchandise and other products at low prices.

The second category includes the "category killers" like Home Depot, Toys ‘R Us and Circuit City, which buy and sell specialty or niche items in large volumes at low prices, and often tend to eliminate local competition in a product line. 

The third category includes warehouse clubs such as Costco, or Sam's Club, which are limited to members and sell a wide variety of items, including clothing, electronics, books and groceries at wholesale prices.

Hypermarkets - Vast self-service warehouse-cum-retail outlet that combines the features of a supermarket, department store, discount store, and specialty store in one location.  Also called hypermart.

Let us theorize for a little bit.  A few things just to presume.

Let’s suppose you want a concerted effort to block Wal-Mart from coming in.  This is the single most successful BUSINESS ever but some Cudahy officials’ wants to block them from getting in out of hatred for Wal-Mart for various reasons.

Let’s say Shopko is looking at both parcels in Cudahy (Iceport/Meyer property and Pennsylvania/Layton) but won't go if Wal-Mart gets in.  (How will that look if big box Shopko ends up on the Iceport?  Would a lawsuit be far behind if Shopko does?)

Let’s say someone is posturing to support a “Big Box” store of less than 100,000 square feet.  This size fits Shopko but precludes Wal-Mart.

Let’s say that Wal-Mart is still interested in Cudahy, but the SuperCenter store is still 138,000.  This size is the size of the future.  Remember that exceeds the artificial limit of 100,000 sf .  The idea that Wal-Mart would leave a 138,000 sf store is laughable.  Also, remember that in the business conditions you can place clauses in that would make Wal-Mart pay to take the building down or find a new tenant for the building. 

Now you can go about creating an actual 100,000 sq ft or larger zoning ordinance called a “Big Box” ordinance directly or indirectly applied.

Let’s look at the direct approach first.

“Big Box” Zoning Ordinance Passes (Remember this is a what if)

Some people that want to block Wal-Mart to pressure people to pass the to “Big Box” Zoning Ordinance state it is because they want to ensure that superstores will not induce urban blight in the city by running other retailers out-of-business.

They contented (claim) that Supercenters are dangerous for a city’s fiscal planning and represent bad land-use for four primary reasons:

1-     They cannibalize existing stores and create urban blight

2-     Most grocery items are non-taxable and in the bad economy, cities want the most taxable revenue.

3-     Wal-Mart doesn’t adhere to the core of Cudahy and the city needs to protect the economic vitality of downtown

4-     For being such an obstruction to pedestrian, cycling, and transit modes of travel

Now because of the bad economy, you slip in a provision to the “Big Box” Zoning Ordinance that says, “Stores cannot dedicate more than five percent of the total gross floor area for non-taxable merchandise for stores exceeding 100,000 square feet of total gross floor area”.  See typically Wal-Mart Supercenters have over 10% of their square feet dedicated to groceries.

To try and make things seem fair the city puts in a provision that if anyone ever builds a 100,000-square-foot grocery store; no more than 10 percent of its floor space can be used for non-groceries.  All this is for is lawsuit protection.

Now mind you that, Wal-Mart could propose a store of 98,000 square foot and this would all be moot, but for this mind exercise, it doesn’t.  See the city would fire back and amend the provision for restriction on non-taxable merchandise begins with stores larger than 90,000 square feet or they could just set a "big-box" ordinance that would require all new big-box retail stores over 50,000 sq. ft. to get a conditional use permit.  The permit application will require an "economic impact" statement and notification of surrounding neighbors.  In other words, it's a ban.  So again, we will not go there.  Just know those games could be played.

The new ordinance makes stores of 100,000 square feet or more a conditional use.  This means that any proposal for a store of that size must undergo a public hearing and be approved by the Planning Commission, CDA, City Council and finally the Mayor.  Does that sound familiar to anyone?

One more item added to the multi-step “Big Box” ordinance is that it would require developers to notify neighborhood organizations within one mile of the proposed site and to post a sign on the property stating that a permit application for retail development has been filed with the city.

“Permit application" means they can say no.  In addition to all the other places where they can already say no, but only for certain well-established reasons (which must be strong enough to forestall lawsuit).  This basically turns big boxes into a "permitted" use, i.e. conditional; so effectively rather than having to defend why they said "NO", they're allowed to just say "NO".  "Notification of surrounding neighbors means the City Council will be told to say "NO" by those pushing so hard to keep Wal-Mart out.

After all of that, it comes down to, “Well the Wal-Mart just was not in the right location anyways!  There are appropriate and inappropriate locations for these types of stores and this location is just not one of them!”

If the "right" location is really the issue, then why not create a new zoning category?

Okay that was a lot of information, so I will stop there and have more later. 

Indirect 100,000 sq ft next.

Jay Weber talking about Wal-Mart including Cudahy and Mayor McCue.

July 1: Many in Chicago want to take another look at Walmart due to the recession, but unions and Democrats still say no

Jay Weber’s Podcast Click Here

Charlie Sykes talking about a Chicago Wal-Mart being blocked from being built.  Talks about Mayor McCue’s “brilliance” in not allowing Wal-Mart in Cudahy.

Podcast here