Meijer Poised to Potentially Reap Millions If HB 5232 Approved

Author’s note: On April 26, Local Government Committee Chair Lee Chatfield declared HB 5232 permanently removed from the agenda, killing it in committee. Many thanks to all who came forward to address this absurd bill. Till next time, N.K.

There is a lot of conjecture and suspicion surrounding the role of Meijer co-CEO Mark Murray in the hiring of a Lansing lobbyist, Jeff McAlvey, to write a legislative proposal, HB 5232. The bill, currently in committee, essentially guts Michigan Public Act 169 by, among other things, removing a community’s ability to delay and even, under certain conditions, prevent the demolition of historic properties by developers. Until now, the focus has been on a group of East Grand Rapids residents as the source of the proposal, including Mr. Murray and his personal dislike of historic districts. In a letter he wrote, co-signed by his wife in 2014, he stated the following:

“Freezing a community at one point in time is a positive harm.” He continued: “It will reduce long-term values of housing and burden existing homeowners…Part of our belief stems from growing up in East Lansing where seemingly sensible regulation has greatly harmed homeowner value in wide swaths of the city.”

It is alarming that the CEO of the 19th largest privately held company, according to Forbes, with annual revenue of over $15 billion would neglect to do his homework on some basic economic data, data that would squarely refute his claims. Historic Districts in fact do not ‘freeze a community in time’. They provide technical support and guidelines that directly benefit all property owners economically when one homeowner chooses to make alterations to any given property. Further, data reveals that the presence of historic districts creates a net increase in property values, therefore increasing tax revenues for the community, reflected in sales comparisons inside vs. outside of established districts. But these are relatively minor points in light of our current predicament.

Thus far, the drafting of HB 5232 has been attributed to a handful of disgruntled affluent property owners in East Grand Rapids, angry after battling a proposed historic district, (which they successfully defeated) and apparently determined to make sure nobody else would have the opportunity to defeat a proposed historic district in the future, anywhere in the state. Seems excessively vindictive to me, even for those accustomed to getting their way. Who would purposely enter into such a divisive public process for the sheer joy of doing so? Nobody in their right mind, that’s who.

Let’s stay in reality: the odds that a group of affluent property owners, or one CEO of a major Michigan corporation such as Mr. Murray, would bother to go to all the trouble of drafting and attempting to change a 46 year-old statewide Public Act simply because they find it annoying are rather slim. What would be the point? They already defeated a local effort to create a district in East Grand Rapids, the issue was resolved.

The point might just lie in what Mark Murray learned about PA 169 while undergoing that local fight to stop a historic district. Specifically, how Public Act 169 might block some of his future plans as CEO of Meijer. Do you smell a multi-million dollar motive? Before we look at Meijer and Mr. Murray, lets take a moment to understand the world of big box stores and their economic impact on communities.

Big Box stores are defined by the following characteristics:

Occupy more than 50,000 square feet of space (sometimes as much as 250,000).

Require large sales volumes, so they often use predatory marketing strategies to take sales away from existing retailers.

Rely on shoppers who arrive at the store by car, so they need large-capacity roads.

Include acres of parking and occupy a large footprint.

Create site development that neglects any community or pedestrian amenities.

Seek to dominate markets and provide no unique culture, products, or identity.

According to GoodJobsFirst.org, Big Box stores are responsible for the following harms to communities in which they are located:

Harm #1: Big-box stores undermine small businesses and entrepreneurialism The business models of big-box chains are to dominate market share. That is, they grow mostly at the expense of existing competitors, many of them locally owned independent businesses. In towns and cities across America, big-box retailers have been the death knell for local businesses. Harm #2: Big-box stores undermine retail wages Retailing is notorious for its low wages, part-time hours, and lack of health insurance and pension benefits. Harm #3: Loss of open spaces and natural resourcesWhen big-box retail stores locate in farmland, wetlands, or green space, they eliminate natural resources and open space. According to the American Farmland Trust, the United States loses 3,000 acres of productive farmland to sprawl every day. This is the equivalent of all the acreage of Delaware every year. Harm #4: Loss of uniqueness of place As big-box retailers spread across the country and wipe out local businesses in their wake, America becomes more homogeneous and the unique character of individual communities is lost. In 2004, the National Trust for Historic Preservation named the entire state of Vermont as one of eleven Most Endangered Historic Places because Wal-Mart had announced plans to open seven new 150,000+ square foot stores there, threatening the state’s revered architecture and small-town culture, as well as its entrepreneurial health and environmental standards. Harm #5: Losses caused by main street and mall abandonment Dead malls (a.k.a. “greyfields”) and abandoned big-box stores (or “ghostboxes”) litter America’s landscape. Our nation is awash in excess retail space. The National Trust for Historic Preservation estimates that we have 38 square feet of store space for every man, woman and child, many times the rates of other industrialized nations. Harm #6: Hidden costs in the form of public assistance to low-wage workers When Wal-Mart and other poverty-wage retailers fail to provide their workers with a decent wage and full-time hours, many employees and their families qualify for safety-net help such as Medicaid, State Children’s Health Insurance Program, Earned Income Tax Credits, Section 8 housing assistance, low income energy assistance, and free or discounted school lunches. These programs cost taxpayers money. Harm #7: Popular confusion about prosperity The opening of new retail space creates the false illusion that a regional economy is prosperous, never mind the dead malls, ghostboxes and boarded-up Main Street not far away. Harm #8: Bricks and mortar economic development subsidies Finally, despite the fact that big-box stores pay poorly, fail to provide most employees with full-time hours, and often cannibalize existing retail employers, they attract massive subsidies in the name of “economic development.” Good Jobs First’s 2004 report Shopping for Subsidies: How Wal-Mart Uses Taxpayer Money to Finance Its Never-Ending Growth found that Wal-Mart has received more than $1 billion in subsidies from local and state governments. That research, since updated at WalMartSubsidyWatch.org, now finds subsidies totaling more than $1.2 billion. In essence, taxpayers across the country are paying Wal-Mart to build new stores. – courtesy Good Jobs First The big box retail concept dates all the way back to 1962 with the arrival of the first Wallmart in Rogers, Arkansas. Since that time, big box retail stores have forever changed the American landscape. Staying with Wallmart as our example (whose objectives in providing everything a consumer could wish for under one roof are mimicked by Meijer) research shows an alarming effect on local communities with the opening of a new Wallmart:

According to 2014 research in Social Science Quarterly, On average, within 15 months of a new Wal-Mart store’s opening, as many as 14 existing retail establishments close. Other research has found that the arrival of Wal-Mart stores was associated with increased obesity of area residents, higher crime rates relative to communities that were not by stores, lower overall employment at the county level, and lower per-acre tax revenues than mixed-use development. “

In summation, big box stores such as Meijer, destroy local, owner operated businesses, the backbone of virtually every small (historic) town in Michigan. The devastation of this phenomena on the historic infrastructure of towns throughout Michigan is astounding. Empty storefronts, derelict main street commercial strips and declining housing stock can be measured wherever you find a big box store such as Meijer. In the name of convenience, entire communities are forever altered, their beautiful historic architecture left to crumble. Every small business to close it’s doors in our small and medium sized towns sends a customer to mega-retailers such as Meijer. Learn about how Meijer dodges paying it’s fair share of taxes via the ‘dark store’ scam HERE.

For reference, let’s note the following: The footprint for a Meijer store is approximately 200,000 square feet under roof; a recent land acquisition for a new Meijer totaled 41 contiguous acres; Ideally, prospective sites will be in close proximity to adequate service roads and freeways. Meijer spends approximately $20 million dollars to build each new store, a significant investment. Based on my own research, a population minimum of 50,000 to 60,000 residents, in part seems to qualify a community for consideration as a store location. Given the notoriously slender profit margins, being able to build to such an enormous scale, providing extensive inventory across several product groups thus capturing as many consumer dollars as possible is critical to a successful formula. Scaling down in anyway to accommodate a new location is virtually impossible.

Now let us return to HB 5232 and Mr. Murray. In an interview conducted in 2013 by WXYZ on Mackinaw, Mr. Murray went into some detail on his future plans for Meijer in the city of Detroit: “I’m very excited about Detroit….Detroit has 700,000 residents.”

Murray went on to discuss the two stores already open in Detroit, one on Eight Mile and the other located on the site of the historic old Redford High School, which Meijer bought and demolished in order to build it’s second Detroit location. Given Detroit’s current population of 700,000 residents and likely growth in the future, Meijer could potentially be looking to build several additional locations within the city limits. But where?

While outlying areas of Detroit are not experiencing an economic boom of any kind and remain stagnant, certain portions of the city center are making headlines as growth and speculation rise. Areas such as the Woodward corridor, New Center, East Jefferson and Gratiot Avenue near Historic Eastern Market are seeing significant increases in residential units as well as emerging small, owner operated retail, one supporting the other. Food retailers serving these areas remain limited. Whole Foods with it’s high price points serves a certain market layer in New Center; Eastern Market draws from as far as the northern suburbs for it’s one-of-a-kind open air market though it is not available 24/7.

In order to tap this under-served food market, Meijer must locate a store as close to the city center as possible, the closer, the better. In the WXYZ interview, Murray makes a point of saying that one of the challenges in siting a new store, with regards to Detroit, is the ability to assemble enough parcels to meet the size requirements for both the footprint under roof and the required parking.

Now we get to the core of it: It is inevitable that any such location considered by Meijer, given their need for such large parcels, will contain existing structures that might very well be historically significant. The current legislation that is in place, Public Act 169, presents a potentially VERY expensive obstacle to a corporation such as Meijer: the city of Detroit, under the authority of it’s historic district ordinance as allowed by PA 169, could call an immediate halt to any planned demolition Meijer deems necessary in order to prepare a site for new construction, such as the one carried out by Meijer of the old Redford High School, for a period of up to 6 months while it determines the significance of any structure located within the planned site. It could inevitably deny a demolition, in turn adding significant costs to the project for Meijer or threatening it’s viability all together.

HB 5232, as written, removes this power from the City of Detroit, allowing unobstructed demolitions as needed by any potential developer in the city. Thus, in certain scenarios, a corporation such as Meijer stands to make millions, literally, should HB 5232 be voted into law by the Republican-led Michigan Legislature.

While it is palatable to attribute the proposed changes to Michigan’s long standing and successful Public Act 169 to some well-heeled residents of East Grand Rapids, it is much more likely that the millions at stake for Meijer, under the direction of it’s current co-CEO and documented opponent to preservation, Mark Murray, is indeed the catalyst. Personal desire pales as a motive when millions of dollars are at stake.

Note: I have detailed the economic effect of the presence of big box stores previously in this post. It simply cannot be understated how magnified such devastation would be in a city like Detroit at this most precarious moment in it’s renewed growth. Being able to retain revenue and investment locally is CRITICAL to building a strong and sustainable economic base for Detroit. Owner-operated small and diverse businesses and the unique character they bring to the city scape are the very key to Detroit’s ability to attract and retain new residents. It is widely agreed that those choosing to relocate to Detroit are attracted to it’s world class architecture, raw industrial building stock and unique, no-two-alike, spaces available for lease or purchase. The big box model utilized by mega retailers such as Meijer are the very antithesis of this reality and desire and would only serve to dilute the power of Detroit to attract creative entrepreneurs willing to invest and build their future in the city. ANY threat to the ability of these seedling small businesses, such as a revenue-sucking big box store, to establish a foothold economically in the city will be devastating and terminal. It would serve Detroit well to consider placing a square footage limit on retailers, say 20,000 sq feet, that would effectively render it un-viable for a mega retailer such as Meijer to locate any more stores within the city limit.

Nothing short of a statewide boycott of Meijer is in order if indeed the scenario I put forth here has a grain of truth. We simply cannot afford to have our very essence as a state corrupted by the greed for profit. The hijacking of the democratic process by corporate entities is simply immoral and must not be tolerated, no matter how one feels about HB 5232.

In order to kill HB 5232 in committee, which is still possible as of this writing, we must maintain massive public pressure on both the legislature and the Governors office.

Call the Local Government committee chair Lee Chatfield and demand he remove HB 5232 from the agenda permanently, effectively letting it ‘die in committee’. His office can be reached at 517-373-2629.

You can send your comments to Governor Snyder here: http://www.michigan.gov/snyder/0,4668,7-277-57827-267869–,00.html

Authors footnote: The irony of Meijer sponsoring a signature event of the Michigan Historical Society in light of what is contemplated in this essay would more than likely leave Hendrik Meijer rolling in his grave.

© 2016 Nancy Kotting All Rights Reserved Reproduction by Permission Only