Special to Union Square Main Streets by Emily Tulman
With the expansion of the MBTA’s Green Line into Union Square we can expect increased pedestrian activity and new development in the neighborhood.
These changes offer opportunities and challenges for locally-0wned retailers. New developments tend to attract corporate-owned or chain businesses because new construction properties generally command higher rents and because corporate-owned developers typically prefer businesses that are well-established and, therefore, a safer bet. Throughout the square, even among existing retail spaces, rents are expected to increase with both the increased foot traffic and neighborhood improvements. High occupancy costs and the willingness to engage with less well-capitalized business owners are significant barriers for local entrepreneurs.
When locally owned businesses thrive, the benefits extend far beyond that individual business owner. On average, more than half of every one hundred dollars spent in a locally owned establishment is reinvested in the local economy — in local business services, supplies, taxes, wages, and community involvement. A national or non-local business generally outsources more businesses services and supplies, resulting in only a quarter to a third of those same 100 dollars reinvested locally. There are other benefits; studies have shown that small stores and restaurants have a better rate of employee retention and promote greater income growth across the community than formula businesses, which often have a net negative impact on average income and employment. A local store or small business is more likely to sponsor local events and be connected with the needs of the community.
With such significant community benefits, how can we bolster locally owned, independent businesses in Union Square, both those currently in the neighborhood and for future generations?
While it’s been determined that laws outwardly favoring local businesses over national or out-of-state ones are not allowed, it is still possible to enact policies that give local and independent entrepreneurs a fair chance to succeed alongside their larger, non-local competitors. One policy that other communities have successfully employed is a formula business ordinance, a legal measure that controls if, how, and how many formula stores or restaurants can open in a certain area.
A formula business or restaurant is defined as either part of a large chain, offering the same merchandise or menu, or by standardized services, methods, décor, and other identical features. A formula business ordinance is a policy, usually a local zoning policy, that controls if, how, and how many formula stores or restaurants can open in a certain area. They can be completely banned, limited in number, or submitted for approval on a case-by-case basis. The law can also apply only to a specific area rather than an entire district, or distinguish between retail and restaurant, and have different rules for each.
Five towns in Massachusetts already have this type of bylaw in place, either completely banning or restricting formula businesses: Provincetown, Chatham, Nantucket, Dennis, and Barnstable. Formula businesses are completely banned in Nantucket, while Dennis and Barnstable banned them only in certain locations, and Provincetown requires each one to apply for a special permit, to be given on a case by case basis. In other parts of the country, some cities have banned only formula retail, or fast food restaurants, or limited formula businesses to a percentage of total businesses, or to a certain total number.
This type of ordinance does not technically distinguish between local and non-local, but rather between independent business owners and larger companies. The result is that local businesses are still able to open and thrive alongside new developments, including some number of formula businesses. Therefore, it serves a legally sound public purpose: to protect Union Square’s unique character, to promote economic vitality by creating good opportunities for independent entrepreneurs and keeping the businesses community diverse, and to make sure that the commercial district continues to serve the basic needs of the surrounding neighborhood, not only the new non-local foot traffic.
In Somerville, a proposed zoning ordinance would go through the Planning Board, part of the Planning and Zoning division of the OSPCD (Office of Strategic Planning and Community Development). The Planning Board holds public hearings and makes recommendations to the Board of Aldermen, who are elected by the community every two years (odd-numbered years) to represent specific wards or Somerville at-large. The Board of Aldermen would ultimately vote to pass or fail the measure.
Interested in learning more? The Institute for Local Self Reliance has some great resources.