A nationally-known economist has concluded that a 510,000 s.f. mall including a Lowe’s, Wal-Mart and Kohl’s, proposed for Route 117 in Leominster, Massachusetts will produce little or nothing by way of jobs and property taxes, and will result in a steep loss of sales to existing businesses in the city. According to the new study, The Fiscal and Economic Impact Of A Proposed Shopping Center Project On The City of Leominster, conducted by Virginia-based economist Tom Muller, “the addition of a large shopping center with a Wal-Mart Supercenter as its prime anchor will result in substantial excess retail space that the market cannot absorb.” Muller notes that “although the proposed new center would employ 869 retail workers, this gain is expected to be offset by losses at various businesses, both large and small within the market area.” The developer, New England Development has promised “more than 800 new jobs” resulting from the mall as one of its main selling points — but the Muller report says that the net job figure — after subtracting job losses elsewhere in the trade area — is virtually zero. “No net additions to retail jobs in the regiona are anticipated,” Muller concludes. Muller determined that “95% of all sales will come from the same geographic retail store market area as the labor market”, and that “reduction in sales at existing stores will be followed by a reduction in retail jobs roughly proportional to sales losses.” Only 5% of sales will come from outside the market area — but these gains would be offset by the fact that “Wal-Mart requires fewer workers per dollar of sale compared to other businesses.” This means they employ far fewer workers in their store than other area merchants. The second major claim of New England Development is that the mall will create “over $400,000 in new, annual real estate taxes”. However, Muller estimates that the net revenues from the mall will be less than 13% of that figure. “The net annual tax gain to the City over time would be no more — and taking all service costs into account — most probably less than $51,000.” Given the fact that there are roughly 17,000 housing units in Leominster, the mall would save the typical residential taxpayer about $3 a year, or 25 cents per month. Muller’s calculations only looked at the cost of providing police services to the mall, but did not include fire protection, road maintenance, or general government overhead costs. So the net revenues stated in the Muller report are on the high side of actual projected figures. “Any longer term net gain,” Muller concluded, “would at best be only marginal. From an economic perspective of the project providing additional long-term net revenue to the City, an alternative use of the site would be significantly more advantageous.” Muller found that the proposed mall would generate total sales of $185.6 million annually, of which, $105 million would come from the primary Leominster market, and another $72 million from the secondary market. One of the hardest hit sectors would be grocery stores. “We expect that 60% or more of supermarket sales at Wal-Mart will come from supermarkets located in the primary market area,” Muller noted. Altogether, Leominster stores are projected to lose about $95 million in sales from this project. Muller predicts “there will be considerable displacement at existing stores in both Leominster and nearby communities.”
New England Development stated that from retail jobs at the mall, “millions of dollars in yearly wages will be recycled into Leominster.” But Muller’s research shows that average wages from manufacturing jobs in Worcester County are nearly twice as high as department store-type jobs. “Any use,” Muller wrote, “other than retail and restaurants, such as manufacturing or wholesale trade, would add much higher paying jobs than retail.” Muller also said that using industrial land for industrial purposes would create “little if any displacement of existing jobs, because such jobs would typically export their product to other regions rather than compete with existing businesses.” Muller was retained by the citizen’s group Leominster First to conduct the economic impact statement. For more information about the Leominster impact study, contact [email protected]
