Bozeman, MT
Like many progressive municipalities, the City of Bozeman was concerned about the economic and fiscal impacts of large-format retail stores. In most states, these stores at least provide a net increase in sales tax revenues, which exceeds the loss of sales to existing stores and can compensate for other fiscal effects. However, Montana has no sales tax, leaving municipalities like Bozeman with major concerns about the short and long-term fiscal and economic benefits of this type of development. EPS was hired to determine the quantifiable economic, fiscal, and land use impacts of large-format retail development and to evaluate the feasibility of impact fees and/or other mechanisms to mitigate the costs of this type of development.
EPS researched industry-wide and project specific studies on the impacts of “big box” development. The potential impacts were then categorized as store type specific, chain specific, and unique to a particular site. EPS developed a series of locally adjusted sales and employment numbers that reflected the performance of large-format development in the Bozeman region. A fiscal impact analysis was constructed to compare the impacts of one prototypical large-format retailer with several mid-box retailers, including the operational and one-time capital impacts. EPS also measured other economic impacts, including effects on wages, local purchases, and housing demand. The impact analysis did not support the development of impact fees specific to large-format stores but identified potential impacts that could be addressed through a formal development negotiation structure. EPS also recommended changes to the existing impact fee structure and regional land use designations in the comprehensive plan to address some of the identified concerns.