Town lacking ‘big box’ stores

Martha Wewer loads her purchases into her car at SuperTarget in Durham on Monday afternoon. DTH/Lauren Vied

Residents and students in Chapel Hill have a lot of options when it comes to shopping.

Unfortunately for the town, the most appealing of those are outside of Orange County.

The town’s reputation for being against “big box” stores like Target and Wal-Mart in Chapel Hill has led those corporations to build retail outlets outside of Orange County — enticing shoppers and sapping the town’s sales tax revenue.

In the past year, Orange County has had to drastically cut services, and Chapel Hill has maintained high property tax rates and a hiring freeze.

Both could have potentially been offset by having a Target or Wal-Mart in Chapel Hill, town and county officials said.

During the past three years, Chapel Hill collected roughly $42.80 per resident in sales tax each month — about 30 percent lower than the average of other towns and cities of similar size in the state — according to the N.C. Department of Revenue.

In that same period, Chapel Hill funded about 20 percent of its operating budget with sales tax revenue. Only 17 percent of the $50 million operating fund will be paid for by sales tax revenue in the most recent budget.

Most towns and cities in North Carolina fund anywhere from 25 to 40 percent of their operating budgets with sales tax revenue, said Adam Klein, vice president of the Chapel Hill-Carrboro Chamber of Commerce.

“At this point, Durham, Chatham and Alamance Counties are growing at our expense,” Klein said.

The town historically has been against bringing in large corporations, but with recent budget crises, that lack of revenue has become more obvious.

“There’s this antipathy to big box stores, and it’s mostly historical,” said Sen. Ellie Kinnaird, D-Orange. “But it’s still continuing in a lot of ways.”

Shopping on the edge

Orange County receives funding from the state proportional to the amount of sales tax it generated, whether it was in Carrboro, Hillsborough or anywhere else within the county. That funding is then divvied up between towns based on population.

But the two closest, largest shopping centers in the Chapel Hill area are just outside the county lines, drawing shoppers and sales tax away from the county.

Streets at Southpoint is just over the border in Durham County, as is New Hope Commons.

Continuing the trend of placing large retail outlets on Orange County’s boundaries is Tanger Outlets, which plans to open up an 80-store retail outlet right across county lines in Alamance County.

To keep shoppers in the county, Hillsborough town commissioners approved a Wal-Mart in 2005 and Orange County Commissioners approved the Buckhorn Village retail development in 2008, said Aaron Nelson, president of the Chapel Hill-Carrboro Chamber of Commerce.

But even after the construction of a Wal-Mart, the county continued to hemorrhage sales tax revenue.

The situation won’t improve until Chapel Hill brings in a large-scale retail outlet, Nelson said. Hillsborough’s population just can’t provide the desired tax revenue.

“It’s too easy to drive over to New Hope Commons or Southpoint and not even know about the store in Hillsborough,” Nelson said.

An ‘anti-business’ image

The lack of answers to the town’s sales tax revenue issue stems from the town’s anti-business image, Nelson said. But he said the image isn’t much of a reality.

A retail development that includes a Lowe’s Home Improvement and a Borders store went through the Chapel Hill Town Council without much opposition in the 1990s.

“Sometimes our opposition is more mist than reality,” Nelson said. “Everyone thinks we don’t allow drive-throughs, but we do, and everyone thinks you can’t build a big box here, but you can,” he said.

The actual barrier to bringing in a big box normally lies with finding the appropriate space — with enough room for adequate parking and retail space ­— said Emil Malizia, chair of the UNC department of city and regional planning.

“The influence the town can give is much more limited on the positive side because there are a lot of other things that have to fall into place,” Malizia said.

While the Town Council can outright reject a proposal to bring in a big box, there simply haven’t been many such situations, Klein said.

Developers still have to show some flexibility — including being willing to redevelop an existing commercial space and follow the town’s strict zoning and environmental policies.

“We do have spaces in Chapel Hill and Carrboro where a large retailer could be a part of a redevelopment, like Ram’s Plaza,” Klein said.

But the truth is that not all big boxes are created equal, and the Town Council has traditionally tried to maintain the town’s quality of life at the expense of bringing in certain types of big box stores, said Ken Pennoyer, Chapel Hill business management director.

“If they brought in a Wal-Mart, that would probably make this town look a lot different than what it looks like right now — that’s a primary consideration,” he said.

A move against that image

While town residents have traditionally faced off against businesses like Wal-Mart and Target, that stance might be changing — both in the town’s current behavior and with today’s election.

Some candidates in the mayoral and Town Council races are running heavily on a platform of business development.

Current Town Council members have become more open to the idea as the stores improve their images as well, Nelson said.

“As the behavior of some of the big box stores — Costco, Wal-Mart — improves, we’re hearing here at the chamber more and more interest about the positive impacts of bringing them in,” he said.

The town has also taken steps to project a more business-friendly atmosphere, starting with the hiring of an economic development officer, Klein said.

“It shows intentionality by the town to be proactive, and I do think the economic development officer can play a key role along with us,” Klein said. “There’s increasing openness on the part of elected officials and leaders in Chapel Hill about the benefits of large retailers as well.”

Contact the City Editor at citydesk@unc.edu.