Three formula shops close downtown

A sign of things to come? The window of Quiznos' Monument Square sub shop. (photo/Chris Busby)

Three formula shops close downtown
City grappling with law’s implementation

By Chris Busby

The announcement that Cadillac Mountain Sports is closing its three shops on Congress Street – partly due to the new city law limiting franchise, or “formula” businesses – has city officials and property owners wondering how that law will now be applied.

For example, the closure of Cadillac’s two stores that sell merchandise made by The North Face and Patagonia opens up two opportunities for other formula businesses to operate downtown. And the recent closure of the Quiznos sub shop in Monument Square creates a third opportunity for a chain retailer or restaurant to move in. That’s because the law limits the total number of certain types of formula businesses downtown and in parts of the Old Port to 23.

(A sign on Quiznos’ window claims the business is “temporarily closed.” Calls to the shop and its landlord were not returned today.)

As City Councilor Ed Suslovic asked during a Community Development Committee (CDC) meeting earlier this week, how will people be informed of these opportunities? Will there be “a waiting list” of potential formula retailers and restaurateurs, he asked? 

Furthermore, what happens when franchise businesses that don’t currently meet the city’s definitions of a “formula” business – because they do not have either 9 or 29 other locations, depending where their Portland location is – grow to meet or exceed that threshold, thus becoming formula businesses under the law? Suslovic mentioned two franchise restaurants, Flatbread Pizza and O’Naturals, that could soon grow to fit the city’s definition. This could cause the 23-business cap to be exceeded. 

And who will be charged with monitoring all the existing retail businesses and restaurants in the affected areas to keep track of any additional locations they open in Portland and beyond? Likewise, the closure of other locations may make a business previously affected by the law exempt from it, and that will also need to be monitored by city staff on an ongoing basis. 

These and other questions remain unanswered, though city attorney Jim Adolph said the city’s zoning administrator will handle some of these issues as they arise. 

That administrator, Marge Schmuckal, may soon be walking the sidewalks of Congress Street with a measuring wheel. At issue will be whether a formula business can occupy space vacated by one of Cadillac Mountain Sports’ stores. 

Two of those retail spaces are clearly off-limits to formula businesses, due to their proximity to a Mr. Bagel location. Formula businesses must be at least 200 feet from one another in this area of town. 

The third, most westerly space appears to be at least 200 feet from the bagel shop. However, that space is within 200 feet of L.L. Bean’s Congress Street store and the Olympia Sports store next door to L.L. Bean. 

But those shops are across the street, and the 200-foot rule is applied based on the length of sidewalks between businesses. Adolph said the formula ordinance assumes people are “obeying all the traffic laws,” and not jaywalking across Congress Street. So the distance would be measured from Olympia Sports’ front door to the crosswalk at the corner of Congress and Oak streets, and then along the sidewalk to the space Cadillac is vacating.

If that distance is more than 200 feet, a formula business could locate there – assuming the cap of 23 businesses allows for another formula business to open at the time.

If you’re trying to lease this commercial space, “you’ve got your hands tied six ways,” said Tom Moulton, who owns and leases the location in question. “You’re incredibly restricted because of [the formula law].” 

At the CDC meeting during which Suslovic raised questions about the law’s implementation, the three-member committee voted unanimously against his proposal to “sunset,” or discontinue the law this summer, pending a task force’s report on business conditions downtown. 

When the formula law was passed last November, it called for the formation of a similar task force to specifically study its effects and suggest changes. That group has not yet been appointed. CDC chairman Jim Cloutier said the introduction of Suslovic’s competing proposal has caused the delay. 

During that meeting, Cloutier also admitted, for the first time publicly, that the formula law was created in response to the possibility a Hooters restaurant could open downtown. 

In fact, that possibility still exists, despite the law enacted specifically to stop it.

The closure of Quiznos brings the number of formula businesses affected by the ordinance to 22 (Cadillac’s locations won’t close for several months). Though Hooters could not open in the space occupied by The Stadium, as Stadium owner Mike Harris had planned (due to its proximity to a Margaritas restaurant), the racy chain could open in a different location now or in the future, whenever the total dips below 23 and a suitable space becomes available.

On a related note, the developers of the Riverwalk residential, retail and office complex on the eastern waterfront may seek exemption from the formula law so they can lease space to a franchise restaurant.

Riverwalk partner Drew Swenson told councilors at their meeting earlier this month that the nearly $100 million project has been “substantially placed at risk” due to the restrictions. He said several nationally known, “four-star” restaurants have ceased negotiations with Riverwalk because of the law’s limits.

In a subsequent interview, Swenson said the law’s limits on the size of a formula restaurant’s “service area” – dining, bar and waiting area, excluding kitchen and storage space – are especially problematic for a project of Riverwalk’s size. Formula restaurant service areas are limited to 3,000 square feet in this part of town, but Riverwalk has over 7,000 square feet of commercial space it planned to fill with a restaurant. 

Swenson said city officials have long known of Riverwalk’s intention to attract a sizeable restaurant to its development. The city has partnered with Riverwalk on some aspects of the project. No formal exemption request has yet been made.

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