How suburbs deal with the loss of a major big box retailer

Big box stores can provide a lot of tax revenue so when a big box store leaves a suburban community, it can be a big blow:

The unexpected closure — it was announced in April and the store shuttered in May — forced village officials to approve a series of last-minute budget cuts totaling $216,000.The largest savings came by cutting hours for part-time firefighters, a move that limited response times out of one of the village’s two stations. West Dundee also moved its 54 employees to a cheaper health insurance carrier, reduced hours for part-time and seasonal employees, eliminated a community service position in the police department, canceled a National Night Out event and decided to hold fewer board meetings…

But Rolling Meadows officials found themselves scrambling in January 2010 when Sam’s Club abruptly closed after eight years in business, City Manager Barry Krumftok said.

The closure meant the loss of about $600,000 in various annual revenues from the retailer — nearly an 8 percent loss to the general fund…

The city responded by eliminating two part-time jobs and four full-time positions among the police department’s civilian staff, delaying the hire of a finance director, eliminating holiday decorations and glow necklaces for kids at the tree-lighting ceremony, ending a program reserved to commemorate employee and volunteer milestones, and holding off on painting its historical museum, digitizing city records and parkway tree replacement, removal and trimming.

In many cases, big-box stores leave one town to build a bigger, better store just out of the taxman’s reach.

To paraphrase a common saying, if you live by the big box store, you can also die by the big box store. I can see why communities would want big box stores since they generate tremendous tax revenues but at the same time, communities would prefer to have a diversified economy where a single employer or firm doesn’t control a sizable portion of the municipal budget. This hasn’t just happened to suburbs reliant on big box stores; it has happened to communities reliant on single factories or industrial firms that might be prosperous for years or even decades but when business dries up, the community doesn’t have much recourse. It doesn’t sound like the big box stores are as big of a loss as some factories to some towns but a 5-10% revenue loss can be huge, particularly in a down economy.

Once the initial budget adjustments are made, then the loss of the big box store becomes perhaps even more problematic for smaller communities: can they find someone else to lease or buy the property? Should the community continue to pursue big box retailers or does it pursue different directions? In an economy that in recent years has been built on a consumer economy, many suburbs will probably redouble efforts and continue to pursue more white-collar, high-tech jobs but there are not enough of these to go around at the moment.

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