About that Andersonville study ...

Some points worth considering about the Andersonville Study of Retail Economics discussed at Tuesday's Evanston Downtown Plan Committee meeting and the Andersonville Chamber of Commerce:

1.) Only 10 local businesses were surveyed out of over 100 in the neighborhood.  One might ask whether this number is representative and far-reaching enough to draw conclusions.

2.) The consumer preference survey is admittedly “unscientific” yet the authors make a number of assertions based on the results.

3.) The study uses some chain businesses like Border’s and Cinemark that are in neighborhoods other than Andersonville thus making the study no longer one of Andersonville but of businesses in Andersonville and other Chicago neighborhoods.

4.) The study does not discuss cross-consumer behavior, whereby some consumers are drawn to a neighborhood by a regional/national chain and then also patronize locally-owned businesses (i.e. Evanston’s movie theatres).

5.) The study assumes most locally-owned business profits stay in the local community but fails to account for local businesses which are owned by multiple owners in different communities.  A good example is the three major partners of the Clean Plate Club Restaurant Group (California, Long Grove, Evanston).  This also raises the question of what defines, “locally-owned”?

6.) The fundamental premise of the “local premium” is flawed.  First, by reducing the local economic impact of chain businesses because of their size and large revenue stream, the study fails to account for the greater amount of property tax and sales tax that flows to Chicago and its schools because of the larger amount of square footage in the chain stores and the sales tax revenue that is twice that of the local stores identified in the study.  All neighborhoods and their families, including Andersonville, benefit from this additional tax revenue.  Second, since the study does not cite any opportunity cost about the use of the land that chain businesses are on, one must conclude that the market is behaving in a way that recognizes the highest and best use of the land.

7.) The study treats all labor as having the same economic impact and does not account for where the employees come from or live.  As we know, the Chicago labor market is rather fluid, with employees often living and working in different locations.  Unless the employee who takes home a paycheck from a locally-owned (or chain) business also lives in the neighborhood, much of that economic benefit is leaving Andersonville.

8.) The Andersonville Chamber of Commerce proudly hails its work on promoting locally-owned businesses and it should.  What’s somewhat surprising, however, is that on its website under “benefits to members” are “money saving opportunities with Chamber discounts at Office Depot through our Member-to-Member Discount Program”.  It is interesting to note that Office Depot does not have location in Andersonville (closest store is 2.5 miles south in Lakeview), is based in Delray Beach, FL, and offers some of the same products as other locally-owned stores in Andersonville.  Perhaps if the Andersonville COC were so concerned about locally-owned businesses, it would have arranged their member-to-member discount with Office Max, which is locally-owned (Madison Dearborn Partners).

9.) The study is correct in noting that household discretionary spending is a function of household income.  That’s why it makes sense that Andersonville has developed land economic policies which are bringing in much greater residential densities and higher household incomes to support its retail and restaurant community – quite similar to Evanston.  What doesn’t make sense is that the executive director of the Andersonville Chamber of Commerce would write a letter in local Evanston newspapers that attacks the very land policies in Evanston that Andersonville has benefited from.  The letter, incidentally, shows a complete misunderstanding of the proposed development at 708 Church Street, suggesting, for example, that the developers are asking for TIF monies, when they are not at all.