Study: Towns often don't cash in on retail cha-ching(Emphasis added.)
With interest growing in Steelyard Commons, a sprawling shopping center planned for the former site of a steel mill in the Flats, it's worth listening to a voice that questions the financial soundness of retail development.
The Mid-Ohio Regional Planning Commission -the central Ohio equivalent of the Northeast Ohio Areawide Coordinating Agency - is circulating a new report it commissioned titled, "Understanding the Fiscal Impacts of Land Use in Ohio." The report analyzes the local financial implications of economic development based on a survey of outcomes around central Ohio.
The study. prepared by Randall Gross Development Economics, a Washington, D.C., consultant, finds office buildings and industrial parks, filled with well-paid workers who pay local income taxes, are a net benefit to cities. Not surprisingly, residential development, which creates a need for more schools, generally has a negative impact.
However, retail development, despite its singing cash registers, is, at best, a wash but usually a slight drain on city coffers, the study contends.
When all the costs and benefits are tallied, the study found office development provides a net positive fiscal benefit to the community of $1.34 per square foot of space, and new industry adds 62 cents a square foot.
Shopping centers and other retail development, however, generate a net loss of 44 cents per square foot of new development, largely because of added costs related to the traffic they generate.
Only when retailing is part of a mixed-use development and public transit can mitigate the crush of cars does it become financially positive, the report said.
The Steelyard Commons site, of course, is far from any residential development, far from existing transit lines, and hemmed in by industrial and highway uses with no place to grow or diversify. Its locational "virtue" is being next to the Jennings Freeway and close to I-71.
Here's MORPC's page linking to the full RGDE study.
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