M E M O R A N D U M 05-03

TO: MAYOR HORNADAY AND HOMER CITY COUNCIL

FROM: COUNCILMEMBERS McLAY AND WYTHE

DATE: JANUARY 3, 2005

SUBJECT: INCREASING LARGE STORE CAP IN CBD, GCI and GC2

Accompanying Ordinance 05-02 proposes an increase in the size cap for wholesale/retail in the CBD from 45,000 to 66,000 square feet, in the Ocean Drive GC1from 35,000 to 66,000 square feet, in the East End Road GC1 from 55,000 to 66,000 square feet, in the Scenic Gateway GC1 from 25,000 to 66,000 square feet and in GC2 from 45,000 to 66,000 square feet.. This matches the voters' intent expressed on 15 June, 2004. This change will also carry out the results of the Citizen Survey of November 2002.

The intention of the public was voiced again at the public meetings Fred Meyer's hosted regarding their construction proposal last fall where an overwhelming number of comments were directed to wanting general merchandise in addition to food.

Comments were made earlier this year that it was important to have major stores in the CBD rather than in outlying areas such as east of the airport or in the 'golden triangle' because shoppers would be more likely to patronize nearby small stores. An argument that some local merchants have made is that large stores will cause small stores to close. Most small stores in Homer address specialty needs that would not be replaced by a larger retail provider. In other areas which host larger stores, there are still an abundance of small retailers whose offerings are complemented by the offerings of the larger stores.

It has long been argued that a large store in our community will attract shoppers in a 30-mile radius north, south, and east that now bypass Homer to shop up the road. Safeway is interested in building a large store to remain competitive and provide needed competition that will help keep prices lower and bring more shoppers to the area, many of whom will presumably shop at the other local stores also.

Owners of small stores in Whitehorse were up in arms a few years ago when Wal-Mart came in. The result has been that all prospered because the pie got bigger rather than the slices getting smaller. As far as whether the area can sustain a 66,000 sf store, developers should be allowed to determine this for themselves. Few investors are interested in speculative and costly construction which their planning and development professionals do not feel will be profitable.

The expansion of existing merchants and the addition of others will bring much needed additional revenues to the City through sales and property taxes, and the addition of shoppers should also benefit current merchants.

RECOMMENDATIONS:

Set the Ordinance for hearing on January 24, 2005and refer it to the Advisory Planning Commission for response prior to January 24, 2005.

Fiscal Note: NA