Dave Yost: Growth, taxes and big boxes
September 6, 2010
The heart of this whole Lowe’s matter is the issue of growth. Just as in the Front Range cities, the Glenwood Springs area or in the Edwards-Avon-Eagle corridor, a lot of people are deciding this is a very nice place to live. A quick check of the real estate market reveals properties are holding value here versus a complete meltdown in some other markets. That little fact, and the demographic data available to Lowe’s and other retailers, is telling these firms they should open a store here. When you couple that with a town whose income is based on sales taxes instead of property taxes, you get good odds of a successful venture.
Having read a number of the more recent articles about this Lowe’s venture, my first conclusion is I’m glad I’m not one of those who have to make this decision. I also like to dig into a story and see if the arguments for or against a particular issue are fair and honest. As an example, the recent column by John Karis caught my attention. He mentioned a number of studies of big boxes relating to jobs, taxes, costs, traffic, and other measures. However, there was a slant to his view in that some of the studies he quoted were specific to Walmart and not a general statement of big box stores as he claimed. One thing is obvious here” A Lowe’s is not a Walmart!
The general arguments against the new Lowe’s are that it will be a major negative relative to jobs, traffic, and the impact on local businesses. I find the jobs argument a bit strange since new positions are needed in a store that will pull in buyers from outside of town. This should offset the job loss from existing businesses. Traffic may be an issue, but it can be addressed and Lowe’s will do most of their business outside of the ski season. The local small business impact may very well be negative. Local businesses that sell the products Lowe’s carries will be taking a bit of a hit. Some may not make it but others, like the outdoor garden and nursery businesses in Silverthorne, will likely make it on the basis of their experience with plants grown and sold up here at 8,700 feet.
It is a tough choice indeed for a town leader to tell some existing businesses that they will vote to cut their business volume, perhaps to zero. On the other hand, a town leader has to sit back and say “what if I vote to deny this venture? What is the likely outcome of protecting the existing base?”
In my opinion, the outcome of denying the Lowe’s venture will be that Home Depot or Lowe’s will move forward somewhere else in the county. It would be insane for Home Depot to continue with their proposed store if a Lowe’s is approved. If the city were to approve a second big box with the same products, the town council should have their heads examined. There is no business model anywhere that can support two such stores in a market such as ours. Lowe’s is likely making their move now simply to get here first, and they may very well be making a sound business decision.
If both stores are denied entry to Silverthorne, do we think for a minute they will stay out of Summit County? While many are saying the county is near build-out, I simply cannot come to the same conclusion when I look at the open space still left along the Breckenridge-Frisco valley. Another growth section may be north of Silverthorne. If a similar big box opens anywhere in Summit County, the local Silverthorne businesses are going to take the exact same hit.
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Regarding traffic, even the 3,000 cars per day estimate made by a previous study is likely on the high side – unless a lot more people start remodeling kitchens and baths. The 3,000 cars number is equivalent to an average of about four cars a minute with higher flows in the afternoon. The new improvements can handle this.
Regarding the issue of existing stores losing customers due to the new competition, I suspect this will be true but it may not be as bad as some think. Some smaller appliance stores with good service departments and garden centers are doing quite well in the lakes area of southeast Wisconsin, where we live the other half of the year; even though a both a new Lowe’s and Home Depot opened recently. The older hardware stores and lumber yards did take a hit, but most of them are still open.
Lowe’s is looking to the future not the current business market. The town can do the same. What Silverthorne cannot do is return revenue to the town if Lowe’s goes to Frisco or Breck a few years down the pike or even somewhere else out of town if somebody sells them the land. We have to keep one caveat in mind: Development can be controlled but not stopped.