Response to the International Council of Shopping Centers White Paper By Grow Raleigh Great

Introduction Earlier this year residents and homeowners from various parts of Raleigh met to discuss their common concerns about proposed developments near their homes and neighborhoods. We formed the group, Grow Raleigh Great, and went on to articulate our concerns about development in a paper entitled, “Unintended Consequences, Neighborhoods and the Impact of Raleigh’s UDO and Comprehensive Plan.” We petitioned to appear before City Council and publicly shared our concerns at a City Council meeting. We are grateful that City Council referred our concerns to the City’s Comprehensive Planning Committee where we have engaged in several discussions about the UDO and the Comprehensive Plan. As with all such meetings, the discussions have been open and all viewpoints have been welcomed. We look forward to future discussions during Comprehensive Planning Committee meetings as well as at a special public workshop in City Council Chambers. On July 15, 2014 representatives of the North Carolina chapter of the International Council of Shopping Centers (ICSC) sent a private letter and white paper to Raleigh City Council expressing concerns about the recommendations that are being discussed with Grow Raleigh Great during the above mentioned public meetings. Notably, one of the signatories of the letter was Mack Paul who is representing a number of controversial rezoning cases. Other signatories are from communities other than Raleigh and have not participated in developing Raleigh’s Comprehensive Plan or the more recent public discussions with the Comprehensive Planning Committee. Grow Raleigh Great is writing this paper to address the local chapter’s concerns and to clarify inaccuracies, misconceptions, and incomplete information. The ICSC white paper reinterprets the national organization's research and introduces several biased conclusions that are inconsistent with the source data and makes a wildly inaccurate statement about banning grocery stores in Raleigh. We have organized our response into several topics rather than going line-by-line through the ICSC paper.

Background Raleigh’s 2030 Comprehensive Plan is the City’s vision for future growth and development. The Comprehensive Plan is also the City’s policy document regarding growth and development that was crafted by thousands of Raleigh residents. At the core of the controversy are the definitions for mixed-use centers known as Neighborhood Mixed Use and Community Mixed Use. These new mixed-use centers are intended to promote new types of development within Raleigh. According to the Comprehensive Plan, Neighborhood Mixed Use “applies to neighborhood shopping centers and pedestrian-oriented retail districts. The service area of these

districts is generally about a one mile radius or less. Typical uses would include corner stores or convenience stores, restaurants, bakeries, supermarkets (other than super-stores/centers), drug stores, dry cleaners, video stores, small professional offices, retail banking, and similar uses that serve the immediately surrounding neighborhood.” In contrast Community Mixed Use “applies to medium-sized shopping centers and larger pedestrian oriented retail districts such as Cameron Village. Typical commercial uses include large-format supermarkets, larger drug stores, department stores and variety stores, clothing stores, banks, offices, restaurants, movie theaters, hotels, and similar uses that draw from multiple neighborhoods.” The distinctions in size, scale, and intensity between Neighborhood and Community Mixed Use are clear. Neighborhood Mixed Use services a nearby neighborhood within one mile. Community Mixed Use draws from multiple neighborhoods located beyond one mile. Neighborhood Mixed Use has corner stores, convenience stores, restaurants, bakeries, and smaller supermarkets. Community Mixed Use has large-format supermarkets, larger drug stores, department stores, etc. Neighborhood Mixed Use is small and Community Mixed Use is large. Raleigh’s new development ordinance, the UDO, provides new zoning districts to support these types of centers. The NX zoning district was intended for Neighborhood Mixed Use centers and the CX zoning district was intended for Community Mixed Use centers. Grow Raleigh Great’s biggest concern is that the two zoning districts are virtually identical in terms of retail sales. There are no restrictions in either district on the size of structures that can be built except for the following. Any size structure with up to seven stories can be built in an NX district. Any size structure up to twelve (possibly more) stories can be built in a CX district. NX districts are limited to ten acres. Moreover, aside from pawn shops (permissible in CX districts but not NX) there is no distinction in retail uses between NX and CX districts. Grow Raleigh Great notes that the restrictions are so liberal that any conceivable structure from a hot dog stand (such as Snoopy’s on Atlantic Avenue) to a big box shopping plaza such as a Super Target or Super Walmart can be built within NX districts. Grow Raleigh Great argues that such a wide range of permissible options is counter to the vision for Neighborhood Mixed Use found in the Comprehensive Plan.

A Proposal During three public meetings with the Comprehensive Planning Committee and Planning Staff, discussion has centered on the predictability of development. One of the goals of the UDO was to move away from “flexibility” to “predictability” (as stated by former Planning Director, Mitch Silver). Under the UDO homeowners and developers alike should have a clear and reasonable understanding of what can or cannot be built. As it stands today, virtually anything can be built in an NX district. When anything can be built, we have a situation that is, by definition, unpredictable. To provide predictability, discussion at these meetings has centered on establishing size and scale metrics for what can and cannot be built in Neighborhood Mixed Use centers.

These metrics should not be arbitrary but should take into account and balance industry standards and metrics, best practices, and community input. These metrics should be based on input from industry groups such as the ICSC and the Food Marketing Institute, another industry group for supermarkets. In the next sections of this paper we review these standards in terms of size and scale.

Size and Scale within Neighborhood Mixed Use Centers The ICSC uses the term “Neighborhood Center” to refer to centers with a service radius of three miles. This classification contrasts with the Comprehensive Plan’s description of Neighborhood Mixed Use centers that have a service radius of one mile or less. Despite this clear difference, let’s look at what the ICSC has to say about size and scale for these centers. The ICSC white paper shows the average size of anchors for a neighborhood center to range from 21,000 to 35,000 square feet. This range of sizes agrees well with the Food Marketing Institute’s (FMI) definition of a superstore as a grocery store that is more than 30,000 square feet. We note that the Comprehensive Plan includes supermarkets but excludes superstores and supercenters from Neighborhood Mixed Use areas. The Comprehensive Plan does include large format supermarkets in Community Mixed Use areas. Grow Raleigh Great supports 30,000 square feet as a limit for anchor stores in Neighborhood Mixed Use areas. Stores with more than 30,000 square feet would be appropriate for Community Mixed Use areas. Note that this is much larger than what the ICSC says is appropriate for centers that service one mile or less. Unfortunately, the ICSC exclude this category in their white paper to City Council. Nevertheless, these convenience centers are less than 30,000 square feet and average about 13,000 square feet. Grow Raleigh Great supports Neighborhood Mixed Use centers limited to 30,000 square feet and finds that the ICSC and the Food Marketing Institute provide data and definitions in support of this proposal. Ref: http://www.icsc.org/uploads/research/general/US_CENTER_CLASSIFICATION.pdf

Size and Scale within Community Mixed Use Centers The ICSC uses the term “Community Center” to refer to centers with a service radius of three to six miles. ICSC data shows that anchors for a Community Center are greater than about 30,000 square feet and average about 50,000 square feet. These numbers correspond well with retail centers that the City of Raleigh is now mapping to Commercial Mixed Use (CX). The ICSC white paper makes the extraordinary claim that a number of existing shopping plazas could not be built if Neighborhood Mixed Use centers are limited to 30,000 square feet. However, this claim is false. Here is the list of shopping plazas that the ICSC white paper claims could not be built:

A review of these shopping plazas reveals that they are all being mapped to the CX zoning district (note: the Shoppes at Bedford Falls doesn’t exist. Falls of Neuse and Dunn is currently empty land. Grow Raleigh Great agrees that CX is the appropriate zoning district for these large shopping plazas. They have a large service area, they service multiple neighborhoods, and by any reasonable interpretation, they match the Comprehensive Plan’s description of Community Mixed Use. Consequently, Grow Raleigh Great argues that the ICSC’s own metrics and the examples cited support the argument that shopping plazas with anchors greater than 30,000 square feet are not appropriate for neighborhoods. Thus, 30,000 square feet is by any reasonable interpretation a good demarcation between Neighborhood Mixed Use and Community Mixed Use and is supported by consensus with the ICSC’s metrics and the Food Marketing Institute’s definition of superstore.

Trends The ICSC’s white paper contends that grocers are moving away from the neighborhood concept and are building increasingly larger stores that now average 50,000 square feet. Although we are not experts in the grocery store business, we do note the following article in Time, “Your Grocery Store May Soon Be Cut in Half”, that was published June 2, 2014. According to this article chains such as Aldi and Trader Joe’s successfully operate stores under 20,000 square feet. The article also links to additional articles documenting how traditional grocers such as Walmart, Kroger, and Publix are experimenting with smaller format stores. Notably, one of those articles dated May 7, 2014 is entitled, “Publix quietly working on smaller prototype store” and details its plans for a 20,000 square foot store. Regardless of what the actual trend is, Grow Raleigh Great’s contention is that if a retailer wants to build 50,000 square foot stores, then a neighborhood is an inappropriate place to do so. Large format grocery stores should be located in Community Centers in accordance with Raleigh’s Comprehensive Plan and with ICSC data. Furthermore, this claim contradicts the ICSC’s own data showing that anchors of Neighborhood Centers range in size from 21,000 to 35,000 square feet (table given on page 3 of the ICSC white paper as well as at: http://www.icsc.org/uploads/research/general/US_CENTER_CLASSIFICATION.pdf). As stated above, stores greater than 30,000 square feet fit well within Community Centers as defined by the ICSC. Yet, after opening their white paper by detailing their own shopping center classifications that were, in their words, "based on data that underwent years of scrutiny from industry experts", they abandon that data

and begin discussing the average size of grocery stores in the U.S. At this point they also misrepresent data from the Comp Plan by asserting that NMU is intended to serve multiple surrounding neighborhoods while conflating CMU and RMU together as servicing regional populations. In reality, the Comp Plan states that NMU "serves the immediately surrounding neighborhood" (singular), while it is the job of CMU to "draw from multiple neighborhoods" and only RMU is considered regional.

The Need for More Gradations and Metrics Contrary to the ICSC’s claim, Grow Raleigh Great does NOT support a ban on stores greater than 30,000 square feet. We do not support placing larger stores in NX zoning districts. Yet, simply assigning all larger stores to CX zoning districts only defers the problem. Doing so still leaves a CX district that starts with 30,000 square feet and an unlimited upper bound. Moreover, simply assigning larger stores to CX introduces a new problem. Although there are virtually no differences between NX and CX in terms of retail uses (other than pawnshops), there are other differences. For example, NX does not allow dormitories, fraternities, or sororities. NX does not allow adult establishments. NX does not allow overnight lodging except for certain types such as bed and breakfast. NX does not allow bars, or food trucks. NX does not allow light industrial, manufacturing, or most types of vehicle repair. CX does allow these and other uses to varying degrees. Yet, these uses are prohibited or limited in NX. Some important metrics that could be very useful should also be considered to distinguish zoning districts. These include the number of trip generations, anticipated traffic volumes, and required parking. If Raleigh’s future will include walkable commercial areas, then we need to discourage the use of automobiles. There is a clear need for at least one additional zoning district. One suggestion is to create a “CX-Small” zoning district to include structures greater than 30,000 possibly combined with restrictions on trips, traffic volumes, and parking and permit uses similar to NX. Such a zoning district could encompass larger format grocery stores and reduce the use of automobiles. A counterpart to CX-Small is a “CX-Large” zoning district for very large developments such as Cameron Village. CX-Large would permit larger structures, more trips, traffic volume, and parking. As a consequence there would be no ban on stores greater than 30,000 square feet as the ICSC white paper has alluded to. Without more gradations in zoning we find that many shopping plazas that are designated as Neighborhood Mixed Use centers in the Comprehensive Plan’s Future Land Use Map are now being mapped to CX to avoid loss of entitlements. However, doing so is adding many new uses that go beyond current entitlements. One or more additional zoning districts can correct this situation and agrees with the ICSC’s table of “U.S Shopping-Center Classification and Characteristics” which includes three shopping center categories for areas less than one mile to six miles.

Conclusion We find that the standards of the ICSC and the Food Marketing Institute align well with the Comprehensive Plan’s vision for Neighborhood Mixed Use centers. We support using reasonable interpretations of these standards.

We look forward to continuing the discussion about revising the UDO to align it with the vision and policies of the Comprehensive Plan. The Comprehensive Plan, in turn, envisions new types of developments including small mixed use centers for the future of Raleigh. We look forward to future meetings with the Comprehensive Planning Committee as well as with City Council and staff. We want smart and reasonable development. We truly want to Grow Raleigh Great.