Cedar Rapids Gazette (Newspaper) - April 24, 1974, Cedar Rapids, Iowa
Southwest rezoning resisted
The Cedar Rapids Gazette: Wed., Apr. 24, 1974 7ARetail overbuild could hurt c.R. Summer Sales from Penneys
(Dr. Chapman is an associate professor of economics — now on sabbatical from Coe college — and has been working with the groups opposing a regional shopping center in southwest Cedar Rapids.)
By John H. Chapman, jr., Ph.D.
A FEW WEEKS ago the city planning commission acted affirmatively on a proposal to rezone 21 acres of land for shopping center use. It adjoins some 66 acres on the west side of Cedar Rapids already zoned for a shopping center, near the intersection of Williams Boulevard and Edgewood road SW. The new total of 87 acres would allow the construction of a l l million-square-foot enclosed mall-type facility containing four department stores, a bank, two auto-type stores and dozens of specialty-type shops. It would be named Westgate Mall.
At the time the planning commission considered the matter, Mr. Gerald Ovel, chairman, and a few other members voiced concern about the present need for a facility this large and its economic effects on Cedar Rapids — the downtown, particularly. Unfortunately, no economic analysis is legally required for commission members to consider in helping them render a judgment.
This lack of information on many proposed rezoning questions — but particularly those with overriding economic and social implications — is a defect in our present process, in my opinion, and needs to be remedied at the earliest possible date. The expense of these analyses should be borne by the rezoning petitioner, and the work done by qualified experts agreed to by all parties.
Reasonable people differ on whether it is in the province of public bodies to render judgments on issues that traditionally fall into the area of “private enterprise.” As an economist, I would argue that the very act of zoning is, in itself, a constraint on private enterprise; one to be exercised in the public good for the general welfare of all citizens. Most of the current literature written by responsible planners and other urban authorities supports this view.
Further, this is customarily interpreted to mean that when a major rezoning is under consideration, one such as the Westgate Mall proposal for example, every effort must be made to thoroughly evaluate the probable economic and social effects it would create. Finally, if it can be shown that major or irreparable economic, social or esthetic damage would result from the proposed rezoning, it should be denied at the lowest possible decision-making level so as not to burden council with the problem.
Since our present planning process does not require these considerations to be evaluated, or even acted upon in the view of some commission members, the policy issue of what is in the public good to promote the general welfare presently falls on the shoulders of our city council.
It must look at larger questions than the “highest and best use” of the land. And on May 8 the council will hear arguments on these issues regarding the proposed Westgate Mall, at 9 a rn. Anyone who has an opinion on this proposal should be there in person to express it.
In order to help the council arrive at a decision on this matter, I have prepared an economic analysis of this entire proposal. My report is lengthy and looks at many issues. The first part of it will soon b<* available in the public library for pub lie inspection, but it seemed appropriate to summarize its main findings at this time.
Two years ago I was quoted extensively on my views about the original (88-acre) rezoning. I stated then it was very doubtful whether a market need existed for the then-proposed 58(l,(MH)-square-foot facility. I had just recently completed an extensive population growth study of I.inn county which showed that our 198(1 population projection estimates done in 1987 were excessive, and I felt any Westside shopping center was premature in 1972. This was an analytical conclusion, not a personal preference, and my view remains unchanged in 1974.
To appreciate how large 1.1 million square feet really is, one needs only to consider that in all the main downtown area — the river to Sixth street SE, and from A avenue NE to Fifth avenue SE, a 25-square-block area — there presently are about 1.2 million square feet of retail space. Considering present vacancies, all of our downtown retail merchants could be comfortably housed in Westgate Mall.
The effect of this proposed center would be to create two downtown Cedar Rapids’. For comparison, Crossroads in Waterloo is 40 percent smaller, and it and College Square (Cedar Falls) combined would be only slightly larger than Westgate.
For any shopping center to be a financial success and an asset to its community, there must exist a sufficient market for its tenant stores. The first prerequisite is for sufficient population, and the second is for that population to have sufficient buying power to support the merchants.
Looking at population, I have analytically concluded it to have remained essentially stable in Linn county since the
rn $&&&&:' >v:.: sc ,v < *
Opinion page 2
This article presents one point of view on an important public issue, lf qualified spokesmen for the opposing view desire comparable space for comment, they may have it. —Editor
1970 census. Planning department projections show it should now be about 170,000, some 7,000 over 1970. I was a member of the committee of experts that finalized these projections last year, but I believe them to be in error at this point in time.
Linn county may well reach the 1995 targets, but growth has not yet started, in my judgment, for the following reasons:
Post office rates have gone up 33 percent (first class, the biggest revenue earner) since 1970 but total receipts are up only 16 percent. Bank clearings are up only 2.7 percent over the three-year period while prices have risen over 14 I>ercent. Newspaper circulation is down fractionally. Utilities data are never very useful for these sorts of analyses, but natural gas consumption is down from about 21 million cubic feet to less than 16.5 million, and water consumption is up not quite 3 percent at a time when water is being increasingly used as an industry anti-pollution dispersant. Inbound freight car loadings are down 6 percent (outbound loadings are not relevant for this kind of analysis). Inbound air freight loadings are down almost 8 percent.
Reasonably reliable data from the 1973 Sales Management magazine survey of consumer buying power for 1972 incomes also show an increase in net cash income of only 5 percent over the same period consumer prices rose 7 percent. Sales Management magazine supplies yearly population estimates which showed a
f I Chapman, jr.
1972 year-end figure of 163,700 persons, only a few hundred more than the 1970
One reverse reading Is provided by Linn county employment data. They show a rise from 73,000 in 1970 to 79,100 in 1973. There are probably two reasons for this, neither of which would have any local population effect. The “baby-boom” of the 1950s has caused a large increase in resident young persons now joining the labor force, abd increasing numbers of persons residing outside Linn county are now employed here.
My analytical conclusion is that population has remained flat (no growth) since 19711, or has declined a few hundred persons.
Another major factor to check is retail sales growth. In 1960, Cedar Rapids merchants sold about $195 million of goods, according to Iowa state tax commission reports. By 1973, sales had grown to more than $397 million, a healthy 13-year increase of 104 percent.
But economists are concerned with both physical quantities of goods, and their prices as well. We need to adjust these sales for inflation to get “real” growth. Using the United States department of labor price index data, sales in constant dollars (1967 prices) grew only 36 percent over the same period — two-thirds of reported current dollar sales growth was simply price increase. With population up only about 19 percent, less than 18 percent of the “real’’ sales increase was due to the same people annually buying more goods over the 13-year period.
Even more important, constant dollar sales reached their peak of $3(13 million in 1969 and 197(1, declined over 3 percent in 1971, and at the end of 1973 were still less than $299 million. This fact gives further support to the conclusion of no population growth for the last three years.
Another measurement of potential market is consumer buying power. Sales Management magazine makes annual estimates of consumer buying power for Cedar Rapids and Linn county. In constant 1967 dollars, that buying power has declined since 1969 at an even faster rate than constant dollar retail sales. Sales have held up relatively better probably bocuus with inflation, i>eople have been spending more and saving less of their incomes to maintain their standards of living.
The conclusions so far are that population is stable, sales are down in constant dollars, and incomes down even more — hardly an auspicious time for constructing major new retail facilities.
Experts agree that shopping centers must locate in rapidly growing areas that offer prospects for increasing markets — either rapid population increases or significant IHT capita income gains, or both — and they should not be designed to replace presently healthy retail facilities. Further, a marketing consultant hired two years ago by the city planning commission, Mr. John Cummings from Minneapolis, recommended that Cedar Rapids could expect to ultimately sup
port at least one (and possibly two) more “regional” shopping centers, of from 3(1(1,(HIO to 500,000 square feet each.
Regional centers require a healthy outlying trade arca with people willing to buy goods at that center. How large Is the Cedar Rapids trade area?
Time and distance determine this. Shoppers will usually go to those facilities located closest to them in terms of driv ing time. For surrounding locations, distance (in driving time) between two major centers with relatively equal main stores determines the trade area boundaries of each center, as a general rule. Using this principle, the Cedar Rapids trade area would include all or most of the following counties: Linn, Iowa, Benton, Cedar, Johnson, Jones and Tama. It would also include parts of Buchanan, Delaware, Keokuk, Muscatine, Poweshiek and Washington counties.
Effective buying power for all residents of this area carne to $1,223 billion in 1972. Relying on the analysis in my report, Linn county merchants already “capture” a minumum of 31 percent of total retail purchases by trade area residents outside Linn county. The actual figure probably approaches 40 percent (this is a complex calculation, but reasonably reliable).
My conclusion from this is that any new retail facilities could not easily increase trade arca sales “capture”; rather, new facility sales would have to come, primarily, from almost equal sales reductions of present Linn county merchants.
The final question to answer is how much in gross sales would a shopping center the size of Westgate have to generate to earn a profit for its developers and lessees?
There are no clear answers, and my analysis generates four different values using different techniques, ranging from a low of $103 million to a high of $126 million. The estimating techniques are torturous and difficult and, perhaps, not too reliable. But the results are probably “representative” and would not be too
far in error with an estimate of $105 million, of which about $55 million would be department store sales.
Realizing that Linn county department stores sold about $80 million in 1973, the addition of Westgate Mall would provide ruinous competition for sales that are not likely to increase in the aggregate over the next few years. Present specialty and other shops would experience the same difficulties.
Other major economic issues would include the tremendous costs of providing orderly traffic movement: widening, surfacing, signalization, rerouting and enforcement. Most of these fall on the general property taxpayer. In addition, storm water run-off could require an extensive reworking of public facilities to handle the load, again at general taxpayer expense.
My analytical conclusions are, I believe, compelling. Population growth has temporarily stopped and both constant dollar retail sales and consumer buyer power are below 1969 levels. The trade area cannot really grow much and non-Linn county residents already buy over one-third of their total retail purchases in Linn county.
The “necessary” sales requirement for Westgate is large enough to create retailing chaos and more than possibly ruin downtown Cedar Rapids, Lindale Plaza and Town & Country centers, plus others (and the taxpayer cost of that is staggering).
It follows, therefore, that we cannot allow the additional 21-acre plot to be rezoned to accommodate Westgate. Iii fact, a Westgatc-sized facility should never Im* built in Cedar Rapids — it is just too large for this area. And at the moment, the presently zoned 66 acres should be allowed by the developer to lie fallow since there is Insufficient market demand for any new retail facilities.
Perhaps by 1977 or so, regional growth again w ill occur and create the need for a 300,000- to 500,000-square-foot regional shopping center recommended by our marketing consultant, Mr. Cummings, for this same site.
I believe now is the time for citizens and the council to forcefully reaffirm the principle that we wish to maintain and further develop a strong downtown. A civic center located there would require it. The new building investments of IE Tower, the DEB apartment-shops complex, the Brenton bank construction, the KERG construction, and our parking ramp revenue bond repayment obligations, require it.
Besides, it is est helically pleasing to be in, and to possess, the only healthy major downtown in Iowa (and probably several other surrounding states as well). This is a matter of hard-earned local pride and a showcase for other communities.
I am confident city council members value these assets as much as all of us, and will vote to promote the general welfare of Cedar Rapids.
Save $18 to $25 on grills and movers
We know what you're looking for.
Charge it at JCPenney, 109 Second St. S.E. Cedar Rapids. Open 5 Nights A Week, Monday thru Friday 9:30-9, Saturday 9-5, Sunday 12-5
Save 20% on Men’s Knit sport shirts
2” to 7"
Reg. 2.98 to 9.98 Save on our knit short sleeve sportshirts. Golf shirts, football jerseys, placket fronts and more. In polyester/cottons and Ban-Lon' nylons to name a few. Sizes S, M, L, XL.
20% off girls’ short sets.
Reg. 2.99 Girls short set of easy care nylon doubie-knit. In stripes or jacquard patterns. Lots of colors to choose from in sizes 7 to 14.
Sizes 4 to 6X,
Reg. 1.99. Sale 1.60
20% off all women’s short sets.
Reg. $6 to $18 Just about every
look you love and every one at big 20% savings Choose from tank tops, halter looks, turtlenecks and so many more. And short-shorts to Bermudas in stripes, solids, checks and florals. And our easy care fabrics make these styles as much fun as they look.
Save 20% on boys’ knit shirts.
Reg. 2 for $3 to 4.98.
Boys' short sleeve sport
shirts in all the most wanted styles. Tank tops, crewnecks, turtlenecks and more. In easy-care fabrics like polyester/cotton. Assorted solids and patterns.
REG. NOW SAVE
2 for $3
2 for 2.40
3 for $5
3 tor $4
Grills and Mowers are at
JCPenney Patio Shop
Corner 2nd Ave. & 5th St. S.E.
Reg. 119.99 Sale 99.99 JCPenney 3'/2 HP cast aluminum , mower with 22” deck. Adjustable height of cut. Controls on handle.
Reg. 110.20 ‘ Party Host” gas grill features two stainless steel cooking grids.
Gas grill on pedestal base, Reg. 136.90 Sale 109.50 Gas grill on pedestal base, Reg. 183.50 Sale 146.80