An An Alternative to ‘The Gateway’
Originally published July 30, 2011 in The Shoreline News.
The Town of Conception Bay South is currently developing and marketing 100 acres of land to sell to ‘big-box’ retail establishments. The town has sold one lot to the owner of Kent Building Supplies, and expects to earn approximately $2 million in tax revenue once the development is complete. The Gateway promises short term economic gains for the Town of CBS, but it may not be the best move for the region, as there are alternatives that can garner higher revenues for the town while being long-term sustainable.
The Town plans to grow its retail sector with a new development titled, “The Gateway.” They hope to sell ten-acre lots to various big-box establishments, the first of which has already been sold to the New Brunswick company, J.D. Irving for just over $2 million. They will build a Kent store on the site this year, and the town hopes that it will act as an anchor tenant that will attract similar style retail companies.
There will be positive effects for CBS in developing its retail sector - there will be a significant tax revenue boost for the town assuming “The Gateway” succeeds in attracting new businesses. If all ten lots are sold the Town’s current property tax revenue could double.
Though it might initially seem otherwise, there will also be positive impacts on the local business sector. There are many ways in which the entrance of established chain retailers to the province can complement local businesses. First, competition increases standards for all parties involved. Second, shoppers from surrounding areas will likely frequent other CBS businesses while they in town. For example, people will look for distinct items that are not produced in quantities at the big box. Some research has indicated that up to 20 percent of big-box retail shoppers will seek out historic style downtown areas once they’ve finished shopping in a big box area. Establishments such as restaurants and fine gift retailers could therefore see improved business.
Other businesses will be and risk however, and must work hard to define a sustainable strategy.
Consideration of the Town’s plan from a strategic perspective however, could provide useful insights. One could view CBS as a business, competing against nearby towns for residential and corporate tax revenues. In this respect, a well cultivated business strategy should consider, among other things, the Town’s strengths, opportunities, threats, and rivals.
The current plan does not complement the Town’s existing strengths such as the large waterfront, and appealing view. Rather than focus on the Town’s strengths, The Gateway is a direct attack on the Town’s greatest threats, namely nearby towns well ahead in their big box infrastructure. Businesses that directly challenge larger rivals without product differentiation generally don’t survive. Likewise, the Town’s choice to challenge nearby Mt. Pearl and St. John’s with the same services could be an flawed strategy; though given the location factor here, ‘The Gateway’ could be successful if more big box stores sign up AND the Town’s assumptions regarding the number of visitors are both true.
The Plan does not take advantage of existing opportunities such as the lack of commercial office space nearby, and the premium for both condominium style developments and ocean-view property could command. One might expect a good strategy to include elements of these.
The Town of CBS should consider other options for growing its tax base. Mixed land use communities demonstrate the business case for a compact mix of retail, commercial offices, and residential living; such communities are attractive to both home buyers and retail shops, while being attractive from a municipal revenue perspective.
Examples of mixed land use include Kings Gate in St.John’s, and Santana Row in San Jose. This 42-acre area is not only a walk-able retail-shopping district, but also an innovative community complete with living spaces and offices. Along with stores, there are restaurants, cinemas, a hotel, rental apartments, condominiums, and offices. The district is thriving both in its retail sector and as a residential community. It has become a destination both for tourists and for shoppers from surrounding areas. The benefits to the community, in general, translate into financial benefits for the Town: the relatively high property valuations translate into higher property tax revenues while the higher density area translates in to lower costs for the city.
An analysis of mixed-land use alternatives demonstrates the potential financial benefits. With conservative assumptions, a similar development will provide CBS with more than three million in annual tax revenue compared with an estimated 1.8 million from the current plan.
If CBS does not modify its development plans, it could soon find itself dealing with the same difficult situation as other cities. The Globe and Mail recently published an article on how Winnipeg is currently fighting to reverse the trend of suburban sprawl that began in the 1970s. Winnipeg is just one of many cities around the world, including Toronto and Calgary, which have come to the understanding that sprawled development is unsustainable.