In his last comments as city manager, published in the Nov. 30 edition of the Bainbridge Review, Mark Dombroski said the City is in its current position on the general fund side because of decisions made by the citizens on the image of the island. He noted, “Poulsbo decided they were going to be the home of Wal-Mart and The Home Depot; they made that decision, and they’re benefiting from that sales tax… We decided we want the rural feel and now we have to pay for that.”
Leaving aside the question of whether we want more retail development, there are two basic questions here:
Market Demand for Retail on Bainbridge Island
Despite the feeling of spaciousness here, ours is a relatively small place when it comes to population. In Puget Sound there are 29 cities larger than our own. We have a population of about 23,000. Our cohort group includes Oak Harbor, Mountlake Terrace, and Maple Valley.
Most big box chains want a much bigger population than ours. In Sacramento, which is arguably overbuilt with retail by about 15 to 20 percent, the Petco and PetSmart stores together have an average of 125,000 people per store. Barnes and Noble and Borders average 183,000 people per store. Target averages 168,000.
What about “lifestyle” retail, the malls with Chico’s and Ann Talbots and Banana Republic? Couldn’t we get around everyday reality by making ourselves into a Mecca for weekend browsing? Unlikely. These centers usually have a drawing population of about 400,000 people or more.
This doesn’t mean small cities don’t become major retail centers, but to do so they need to steal sales from their neighbors. In government circles, this is known as the “fiscalization of land use,” shaping planning to boost city revenues. If there is one place this is difficult, however, it is on an island, for a very simple reason: Fish don’t shop.
Even before the recession, there was evidence that we already had enough retail on the island. You could tell that by how long it was taking to lease up stores and the types of stores that were opening. The top of every real estate cycle seems to bring a plethora of home furnishings stores, coffee shops, and art galleries. Now the thinly capitalized stores that do not sell essentials are closing. We are also seeing where developers pushed retail into the wrong places, like the Sea Star building on Bjorn, which has a particularly acute parking problem. If retail demand was particularly strong here, we probably wouldn’t have a mattress store in a prime slot at the shopping center.
We are about in balance on our supermarkets. The general rule of thumb is three square feet of supermarket space per capita, so we need about 70,000 square feet. Between Safeway and the Town and Country, we have about 77,000 square feet. The excess is probably offset by the higher margins at Town and Country. The island can’t support three supermarkets, so if Town and Country does close downtown, condominiums will probably go in in its place. Giving the owners more development rights is a disincentive to keeping that store open.
The Effect of New Retail on City Finances
Near the peak of the boom, in 2007, the City of Bainbridge Island reported about $3 million in sales tax revenue. Slightly more than a third of this sales tax revenue came from construction-related sales. If you looked at the on-going sales tax, the amount that is sustainable and that is not dependent on large volumes of development, annual sales tax collections averaged only about $81 per resident, or $203 per household.
The average cost of salaries and benefits for a city hall employee is about $100,000 per year, so it takes about 500 households to support one city hall employee. Put another way, it takes the people living in more than two Harbor Square projects to support each employee.
Where to From Here?
The problem here isn’t the people, who live here because of the way this place is now, but the size and efficiency of our government. We simply need to scale back its scope and operation, and make what remains more efficient. This doesn’t mean that we have to cut off supports for the arts and humanities or other social programs, but we need to find a way to pay for these. The obvious first steps involve combining our Court with Poulsbo or contracting it out to the county, getting rid of the Harbormaster, hiring part-time legal counsel, and radically downsizing the information technology department. This is the stuff of day-to-day management.
The bigger, more strategic issue is what we want this island to be like. Although many people work here, we are essentially a bedroom community. There are ways of creating work here that would make downtown a more interesting and vital place, without changing its fundamental character. A pure “shops and condos” approach is a bankrupt one for our downtown. We need to figure out how to make this particular place vital again, to reposition it for the future, without selling it out.
