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Quotas bad for Banff business says report

A quota system on chain stores and restaurants in Banff would be detrimental to the local economy, according to a new study commissioned by Banff’s business heavyweights.

A quota system on chain stores and restaurants in Banff would be detrimental to the local economy, according to a new study commissioned by Banff’s business heavyweights.

An economic prosperity analysis claims there are big risks associated with proposed legislation to cap corporate chains, including limited lease opportunities and reduced visitor spending in shops and restaurants.

The 39-page report states market forces should dictate what businesses exist, and that restrictions will limit the ability of Banff’s commercial sector to best meet visitor needs, particularly in a competitive global tourism market.

Officials with the Banff Lake Louise Hotel Motel Association say the economic analysis they commissioned Vancouver-based Vann Struth Consulting Group to do shows regulating chain businesses is a “clear threat to economic prosperity. ”

“If you don’t have a functioning economy, nothing works, and our challenge as a community is to grow our economic prosperity, ” said Darren Reeder, BLLHMA’s executive director.

“We’re a one-industry town - tourism - and we have no other industry that fulfills our income-earning potential and generates more wealth year-over-year. ”

Banff has scheduled a Jan. 31 public hearing on proposed legislation to establish a quota for the number of chain stores and restaurants in the tourist town.

Some of the options include back-casting quotas to reflect the mix that existed during the 2008-2009 period when visitor surveys were done, capping at current levels or allowing a cushion, like 10 per cent more.

The downtown area is home to many restaurants and shops carrying corporate names, including Starbucks, Tim Hortons, McDonald’s, Gap, and Lululemon, as well as restaurants like Tony Roma’s, Chili’s and The Keg located in hotels.

It is unclear what all businesses in Banff think about the proposed legislation, but a council-struck working group, which was made of business representatives in town, did indicate quotas may be worth exploring.

Regulation of corporate giants has been a hot topic for well over a decade, but heated up with the arrival of Indigo Books in 2007 and the closure of the family-run Banff Book and Art Den after 43 years of business.

More recently, the arrival of Montreal-based David’s Tea, which has close to 30 stores across Canada and parts of the United States, sparked passionate debate amid concerns for the viability of locally-owned Banff Tea Company.

Proponents of some form of regulation say they want to preserve the mountain town’s community character - which is rated as equally important in Banff’s community plan as the economy.

A group of residents has hired Howard J. Kozloff, who has experience with resort towns and currently runs a real estate investment, development and advisory company in New York, to make a presentation to council on Jan. 31.

Businesswoman and long-term resident Susanne Gillies-Smith, who owns the Banff Tea Co., says she hopes council considers a quota system, arguing a unique downtown experience will draw visitation.

“I think a quota system could work, but I am hoping this is a stepping stone to the larger picture about what Banff is offering to the rest of the world, ” she said.

“My main concern is preserving some sort of community character and preserving what Banff is, and giving the visitor a unique experience, and preserving the community that can deliver that. ”

There is no way to forecast how many chain restaurants or retail shops will be in Banff in the future in the absence of restrictions, but recent trends show an increase in formula restaurants and decrease in chain shops.

Restrictions on formula restaurants and retail stores have been instituted in about 20 communities in the United States, and at Qualicum Beach on B.C.’s Vancouver Island where there are restrictions on fast-food outlets.

But, according to the new economic prosperity analysis, American communities with restrictions on chain businesses, such as Pacific Grove, Coronado or Calistoga, for example, cannot accurately be compared with Banff.

The report says most of those communities have significantly higher incomes, with an older age profile, with relatively little economic reliance on their local tourist sector. For the most part, there is also easy access to a full range of shopping and dining options in nearby communities.

On the other hand, the report says, Banff is fundamentally different, where there are lower-than-average incomes, and limited scope for income growth based on its reliance on a labour-intensive tourism market.

The consultants also say Banff has limited access to alternative shopping - with Canmore 25 kilometres away and the city of Calgary about 100 km away - and relies heavily on the health of the local commercial sector.

“These other communities are able to prohibit or limit formula businesses without paying any real cost in terms of diminished consumer choice or income, ” said the authors of the report. “The risk of disrupting the commercial sector carries far greater consequences for community wellbeing in Banff. ”

The report’s authors say there are logical implications that would directly affect the community’s economy if restrictions are put in place, including decreasing the pool of potential tenants for landlords.

“This immediately lowers the demand for commercial space and creates a similar sequence of lower lease rates leading to lower commercial assessments and lower tax revenues, ” according to the report.

Vann Struth Consulting Group also says the restrictions would reduce the competitive pressure on some businesses that would otherwise need to compete with formula-based businesses.

And, the group says, if restrictions cause the mix of businesses to differ from what would otherwise occur should market forces play out, Banff’s business sector would be presenting an “inferior mix ” of goods and services to visitors.

They put forward an argument that this could lead to decreased visitor spending in Banff as tourists may shop or dine in restaurants in Calgary or elsewhere.

“Lower visitor spending means fewer jobs and lower incomes for residents, lower profits for businesses, lower lease rates paid to landlords, lower commercial property assessments and lower commercial property tax revenue, ” they say.

Banff is already a relatively isolated community within limited commercial options given the cap on development and, according to the report, further restrictions on the range of available shops and restaurants might further limit the ability of the town to meet the needs of residents and visitors.

“Given the changing market dynamics in Banff and uneven economic conditions around the world, the emphasis in Banff should be on improving the range and value of spending opportunities, not limiting them, ” states the report.

Rocky Mountain Outlook

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