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Big Boxes and Local Business

Mayor Daley’s veto of the big-box living wage ordinance in part reflects development policies skewed toward national chains, and local business advocates are arguing that Chicago needs to do more for locally-owned small business.

Economic development resources in Chicago have largely gone to big chain retailers and neglected locally-owned small businesses, argue Ellen Shepard of the Andersonville Chamber of Commerce and author Michael Shuman in a recent paper. Local businesses produce significantly more local jobs, purchase more local goods and services, and contribute more to local economies, they say. They also generate more tax revenue per square foot. City resources should be focused on promoting local business, Shepard and Shuman write.

Tax Increment Financing, the city’s largest development program, heavily favors national chains over local businesses. Last year only 9 of the city’s 130 Tax Increment Finance zones included Small Business Investment Funds, according to Jackie Leavy of the Neighborhood Capital Budget Group. SBIFs were created in 2000 in response to public demand that some TIF funds benefit existing community stakeholders.

A three-year-old NCBG study showed that less than 1 percent of $237 million in TIF funding for commercial projects outside the central loop benefited local small businesses. Neighborhood business groups have helped win increases since then, but it’s still “really token,” Leavy said.

Big box developments – often requiring assembling large land parcels and improving infrastructure – are frequent recipients of public largesse. Target Corp. has received nearly $10 million in direct subsidies from Chicago taxpayers, according to the Grassroots Collaborative. The developer building the new West Side Wal-Mart is also receiving significant subsidies, Leavy said.

“The city would be perfectly justified in requiring decent wage and benefits standards” from businesses receiving public subsidies, said Jeff McCourt of Good Jobs First Illinois, which promotes accountability in economic development policies.

Many TIF projects promise a certain number of jobs created, but there is little follow-up, advocates say.

Dan Swinney of the Center for Labor and Community Research points to successful labor-community ventures in Canada and Europe to argue that large-scale, locally-owned, high-wage retail development is a viable alternative that has been neglected here.

On the South Side, small business groups in seven communities are joining to conduct strategic economic development planning. “We’re focusing on what small business can do for itself,” with ideas like joint purchasing and marketing efforts, said Alicia Spears of the Business and Economic Revitalization Association of Grand Crossing. They’re working with Chicago State University’s Small Business Development Center and University of Illinois’s extension office.

“The Target in Chatham is the highest-grossing Target in the nation,” said Rhonda Harvey, community and economic development educator at UI Extension’s Cook County unit. “That’s increased [Target’s] income, but has it increased the per capita income in Chatham? Probably not.”

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Category: development, retail, TIF

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