Maine and South Carolina Try Different Tacks with Big-Box Stores

By: - August 11, 2007 12:00 am

Two states are taking vastly different approaches with “big box” retailers like Wal-Mart and Bass Pro Shops that want to expand within their borders. Maine: Make life tougher for them. South Carolina: Roll out the welcome mat.

Fearing that behemoth stores could destroy its small town charms, Maine became the first state to require that retailers who want to open a store larger than 75,000 square feet – approximately one-and-a-half football fields – first conduct a study estimating the store’s impact on the local community, environment and other businesses. If the proposed big-box store is found to have a harmful effect on the community, it can’t be built.

South Carolina lawmakers, however, see a big box not as a threat but a job creator that could draw in tourists. They passed a tax break that will give specific outdoor mega-stores aid worth half of the sales tax the stores generate. But if Gov. Mark Sanford (R), who says the breaks are unfair to small businesses, has his way, his state will yank the welcome mat next year by repealing the law.

The moves happen as communities everywhere debate the merits and disadvantages of having a big-box store. Big-box proponents say they bring in cheaper goods and jobs, but opponents say they kill small businesses and ruin a small town’s character.

Critics charge that some big-box retailers also fail to provide proper wages or health care for their workers. Last year Maryland tried to require companies that employ more than 10,000 residents to spend at least 8 percent of their payroll on health insurance – a move directed solely at Wal-Mart – but a federal judge struck down the measure, saying it ran afoul of federal employment law.

For years, local communities were the ones that passed legislation to either draw or limit big-box retailers, but recently states have made forays into this area. Maine’s law is the latest effort to slow big-box growth, with the Legislature following in the footsteps of several coastal towns that last year passed ordinances banning stores of more than 35,000 square feet. The town that led the rebellion, Damariscotta, began its effort when it learned Wal-Mart planned to open a Supercenter, which typically run 186,000 square feet, there.

Joe McConnon, an economics professor at the University of Maine, said supporters of the measure wanted to protect Maine’s local charm that draws millions of visitors to the state. “Tourism is a significant economic driver in Maine, and people come to the state in large part because of its natural beauty and natural resources,” he said. But opponents of the bill say Maine’s legislation doesn’t allow communities to decide for themselves what they want. “You’re really talking about limiting consumer choice here, and at the very least, you should offer municipalities a chance to opt out of legislation like that if they do want to attract stores to their localities,” said Joe Rinzel, a spokesman for the Retail Industry Leaders Association, the group that sued to overturn Maryland’s Wal-Mart health care law.

New Jersey has a bill similar to Maine’s law, while a Montana bill died this session and California Gov. Arnold Schwarzenegger vetoed a similar bill last year.

On the other end of the spectrum, South Carolina passed major incentives this year meant to draw a large-scale retailer to the state. However, the breaks aren’t allowed for just any big-box store. As in Maine, South Carolina’s lawmakers are also taking advantage of their state’s natural beauty – by tailoring the tax breaks toward large national outdoor gear stores that serve hunters, fishermen and campers.

South Carolina already allows incentives for manufacturers and research centers, but rarely retailers. That changed last year when the Legislature passed a tax break in an attempt to lure Cabela’s, an outdoor supply store, to North Charleston, and this year passed a similar bill to hook another outdoor gear retailer, Bass Pro Shops, to a site near Greer. Neither store has signed on to develop in their proposed sites yet.

Lawmakers’ justification for why these stores should get incentives that other stores can’t get: the mega-sporting stores are “extraordinary retail establishments,” tourist destinations in their own right. Some stores in both chains have waterfall or aquarium displays.

Supporters say a Bass Pro Shops would create about 2,000 jobs and could bring in as much as $400 million a year in sales taxes. Bass Pro Shops would have to invest $25 million, attract 2 million visitors a year and raise $2 million in sales taxes. But local governments would be allowed to put half of the sales tax into infrastructure for the store, including roads, buildings – even an aquarium.

The South Carolina situation, however, is far from settled. In an extraordinary move, Sanford took his opposition to the big-box law on a road show across the state last month, urging citizens to convince lawmakers to repeal the law next year. In his stump speeches, several in front of owners of mom-and-pop fishing shops, the governor has argued that the tax breaks are unfair and unnecessary, as retail follows the market and should not need incentives.

Sanford spokesman Joel Sawyer said the governor also opposes the law because it lacks a mechanism to take away incentives if Bass Pro Shops doesn’t fulfill its end of the bargain. “We think that’s a terrible model for economic development,” he said.

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