Formula biz ban a boondoggle
Big loopholes in proposed law to limit chains
By Chris Busby
During the Nov. 8 meeting of the Portland City Council’s Community Development Committee, a steady parade of critics spoke out against the proposed city ordinance aimed at limiting so-called “formula” businesses in parts of the peninsula. Though a handful in attendance spoke in favor of the ordinance, most questioned its details, the speed with which it’s been drafted, its intent and its expected (and unforeseen) consequences.
Among the most critical were real estate brokers and property owners who lease commercial space in the Old Port and downtown, like Steve Baumann (C.B. Richard Ellis/The Boulos Co.), Alan Fishman and Tony Donovan (Fishman Realty Group), Eric Cianchette (ELC Inc.), and Drew Sigfridson (a MaineBiz columnist and broker with The Boulos Co.).
Others voiced support for the spirit of the law, but not its specifics, like Jan Beitzer, Executive Director of Portland’s Downtown District, whose board voted not to endorse the ordinance as drafted. Bayside Neighborhood Association Chairman Ron Spinella echoed that sentiment, and said the BNA had not yet taken a position on the proposal. Most of Bayside would be affected by the new law. He asked councilors to spend more time studying and discussing the ordinance, which is expected to be voted on at the full Council’s Nov. 20 meeting.
Portland real estate broker Joe Malone (of Malone Commercial Brokers) expressed concern about the law’s impact on the rapidly developing neighborhood. He said there’s been interest in locating a cinema and a hardware store in Bayside – two types of businesses he thought would be prohibited there should the ordinance pass.
After Malone’s comments, City Councilor Karen Geraghty, a lead proponent of the limits, spoke up in frustration. “It’s difficult to sit and listen to the amount of misinformation” expressed by the preceding speakers, she said. Geraghty singled out Chip Harris, President of the Portland Community Chamber, who, with Portland Regional Chamber CEO Godfrey Wood, had sent an e-mail to member business owners urging them to lobby against the proposal.
Geraghty said Harris had apparently attempted to educate business owners about the ordinance’s details, but told him, “you’ve done sort of an abysmal job.”
Harris, however, clearly wasn’t the only one confused by this complex proposal. “It’s not people’s fault for misunderstanding this,” Councilor Nick Mavodones said at the Nov. 8 meeting. “We need to get the details out.”
Among the details…
• The Formula Business Ordinance would create two new zoning districts: a Formula Business Overlay Zone and an expanded Pedestrian Activities District Overlay Zone, or PAD Zone. The PAD Zone falls within the boundaries of the Formula Business Overlay Zone, but has a distinct set of restrictions, including a different definition of what constitutes a “formula” business. [Click here for the latest map of these zones; image courtesy City of Portland].
• In the Formula Business Overlay Zone, a business is considered a formula business if it shares “identical features,” such as décor or menu items, with 30 or more businesses within the United States. In the PAD Zone, a formula business is one with features identical to 10 or more domestic businesses.
• There could be no more than 23 formula businesses in the PAD Zone at any one time (an informal count put the current number of businesses meeting the PAD definition of “formula” at 23). There would be no cap in areas outside the PAD Zone.
• Any new formula business must be located at least 400 feet from any other formula business (as measured along the sidewalk between the two businesses’ main entrances) in the Formula Business Overlay Zone. In the PAD Zone, that distance can be no closer than 200 feet – unless the formula business would need a liquor license. In that case, in either zone, the main entrance of that business must be at least 150 feet from the main entrance of any other business, formula or not, with a liquor license.
• Formula restaurants are limited to 3,000 square feet of service area (not counting kitchen and storage space) in the Formula Business Overlay Zone, and formula retail businesses are limited to 4,000 square feet of “selling area” in that zone. In the PAD Zone, formula restaurants could have no more than 2,000 square feet of service area, and formula retail businesses no more than 1,500 square feet of “selling area.” In addition, in the PAD Zone, formula retail businesses and restaurants can have no more than 50 feet of “street frontage,” a limit not applicable in the larger Formula Business Overlay Zone.
Then there are the exceptions to this ordinance, of which there are not a few.
The primary exception applies to businesses selling services, as opposed to products. Examples of service businesses mentioned in the ordinance include banks, movie theaters, and businesses offering mailing services, like Federal Express or United Parcel Service. Accounting and other financial-service franchises would also be exempt, as would car-repair chains, and franchise hotels and motels.
Businesses offering “entertainment or recreation service” are exempt. Examples of these businesses include “an indoor golf range or a venue for live concerts,” said Jim Adolf, the city attorney who drafted the ordinance’s legal language. This exemption may apply to chains like The House of Blues and Jimmy Buffett’s Margaritaville Café, formula businesses that serve food and host live music.
It’s unclear whether movie-rental chains like Blockbuster fit the definition of a formula retail business. That could depend on whether the business primarily rents or sells its products. “If it’s purely renting, I think you’d have a really good argument they’re a service business,” said Adolf. Businesses that rent vehicles and “equipment” are specifically exempt under the ordinance.
Cell phone stores could also fall into this gray area, since they offer both products (phones) and services (calling plans). Ditto hair-styling chains like Supercuts that sell services and hair-care products.
“To be honest, there are a few loose ends,” Adolf admitted.
Other types of businesses exempt from the law include grocery stores, drug stores and pharmacies, convenience stores, hardware stores, and gas stations. Chains that already have a big presence in Portland, like Cumberland Farms, 7-11, and CVS, would be free to multiply. All existing formula businesses would be “grandfathered,” and likewise unaffected.
These loopholes give even some supporters of limits pause. Kevin Donoghue, elected last week to represent District 1 on the Council (the District that contains most of the area in question), said he’s “sympathetic in concept” to limiting chains, but called the proposed ordinance “ineffective and illegible.”
“The exceptions are huge,” said Donoghue. If supporters of the limits are concerned about the economic impact of formula businesses in addition to chains’ aesthetic effects, “we should not be accepting gas stations and grocery stores,” he said. “That’s where the money falls out of the Portland economy.”
The zones’ boundaries have also raised eyebrows. They exclude the waterfront, as well as the Maine State Pier and adjacent land leading to the Ocean Gateway cruise ship facility – public property the city is currently offering for private development. Many major commercial corridors, like India and Washington streets, Forest Avenue and outer Congress Street, are likewise unaffected by this ordinance.
Neither Donoghue nor Dave Marshall, newly elected to represent District 2, will be voting at the Nov. 20 meeting, since neither will be officially sworn in until early next month. Current District 1 Councilor Will Gorham has expressed opposition to formula-business limits.
The group initially organized in secret by Geraghty (the outgoing District 2 Councilor) to promote formula-business limits has made itself more manifest in recent weeks. Calling themselves “Keep Portland Real,” the group now has a logo, an e-mail address, and a list of members that includes nearly 40 local business owners and over 25 consumers. Supporting businesses include Aurora Provisions, Material Objects, Pat’s Meat Market and The Café at Pat’s Meat Market, Standard Baking Company, and Pierre’s of Exchange Street.
Speakers at the Nov. 8 meeting were asked to limit their comments to suggested amendments to the ordinance, rather than remarks about the proposal itself, though few did so. Both supporters and critics are expected to be out in force for next Monday’s Council meeting.
