Model Legislation

• Local
• Regional
• State
• National

The following big-box policy initiatives were researched and compiled with the help of our friends at the Institute for Local Self-Reliance’s New Rules Project.

LOCAL POLICIES

Economic and Community Impact Review

Many communities require an economic and community impact review before approving new retail construction exceeding a certain size. Review criteria vary from place to place and include impact on business districts, employment, tax revenue, public services, traffic, and the natural environment. Impact studies are conducted by independent consultants and often include a public hearing to gather citizen input.

Click here for more details and model legislation from communities across the country including Bennington, VT, Carbondale, CA, Greenfield, MA, Homer, AK, Los Angeles, CA.

Comprehensive Plans

A comprehensive plan is a vision statement outlining general guidelines for local development. The plan is implemented through the zoning code, which specifies rules concerning land use. A number of communities’ comprehensive plans are designed to preserve and strengthen local businesses, limit commercial development to retail districts, and restrict corporate chains.

Click here for more details and model legislation from communities across the country including Kent County, MD, Skaneateles, NY, Corvallis, OR.

Development Moratoria

Most states allow cities to enact temporary moratoria on commercial development to allow time for planning. Several communities have suspended big-box development in order to consider the impact of superstores and revise the comprehensive plan and zoning code.

Click here for more details and model legislation from communities across the country including Bennington, VT, Easton, MD, Fort Collins, CO

Formula Business Restrictions

Formula businesses are those required by contract to use standardized methods of operation, decor, uniforms, or other features virtually identical to businesses located elsewhere. Since chain stores usually insist on standardized operations, ordinances banning or restricting formula restaurants or businesses are a significant deterrent to large chains.

Click here for more details and model legislation from communities across the country including Arcata, CA, Bainbridge Island, WA, Bristol, RI, Calistoga, CA.

Local Purchasing Preferences

Many cities and states give preference to local businesses for procurement decisions. Even if local suppliers cost slightly more, using their services benefits city and state economies by boosting local economic activity, employment, and tax revenue.

Click here for more details and model legislation from communities across the country including Albuquerque, NM, Columbus, OH, Ketchikan, AK and the state of MT, AK, NM, WV and WY.

Neighborhood Serving Zones

National chain stores often turn shopping areas into destinations for tourists or others who live outside the immediate area. This causes a rise in commercial rents, which forces out small, locally owned businesses. Neighborhood serving zoning laws require new stores to demonstrate that a majority of their sales will be derived from the surrounding neighborhood.

Click here for more details and model legislation from communities across the country including Palm Beach, FL.

Store Size Caps

Many communities have enacting zoning rules prohibiting stores over a certain size either city-wide or in certain neighborhoods. This helps nurture small, pedestrian-oriented business districts and their locally-owned businesses, preserves the character of the community, and prevents increased traffic. Size caps force chain stores to build smaller outlets or not to build at all.

Click here for more details and model legislation from communities across the country including Brookside in Kansas City, MO, North Beach in San Francisco, CA
City: Agoura Hills, CA, Ashland, OR, Belfast, ME, Bennington, VT, Boxborough, MA.

REGIONAL POLICIES

Regional Impact Review

Large stores and shopping centers have effects that reach beyond the borders of their host towns. Neighboring areas often experience negative economic, community, and environmental impacts, including increased traffic and higher road maintenance costs. Regional impact reviews help neighboring communities to come together to review proposed developments that are large enough to affect the entire region.

Click here for more details and model legislation from communities across the country including Cape Cod Commission, MA, New Jersey (proposed), Vermont

Regional Tax-Base Sharing

The drive for increased tax revenue can lead local governments to make land use decisions based on increasing tax revenue while limiting burdens on public services. Thus, governments may ignore other land-use issues and community needs and compete with neighboring towns to offer developers tax breaks or lax environmental regulations. With regional tax-base sharing, all towns within a metropolitan area agree to share tax-proceeds from new development. This eliminates interregional competition, maintains open space and vibrant downtown areas, encourages towns to cooperate on regional goals, and more equitably distributes tax burdens and public services.

Click here for more details and model legislation from communities across the country including Twin Cities Metropolitan Area, MN, Sacramento, CA (proposed)

STATE POLICIES

Fair Share Health Care

Large retailers have been providing unaffordable and inadequate health care that forces their employees to go on Medicaid or another state-funded program. As a means to alleviate the growing cost of state-funded health care due to big-box reliance on state funded health care for their employees, states legislatures have been introducing Fair Share Health Care legislation. It requires large corporations to pay a percentage of the payroll costs on health care. If they don’t, they have to pay the difference into a fund that will help pay for state-funded health care programs.

Click here for more details and legislation drafted by National Labor Caucus of State Legislators, Maryland’s Fair Share Health Care and talking points for Fair Share Health Care.

Big Box Tax

Large retailers often impose costs on local governments in the form of Medicaid for low-wage employees and increased infrastructure and public service costs associated with sprawl. Proposed taxes on large retailers would help offset these costs, encourage businesses to locate in existing downtown areas, and could be used to fund programs that foster small business growth and provide health insurance plans for small businesses and the self-employed.

Click here for more extensive information and model proposed legislation from Minnesota and Maine.

Corporate Income Tax Reform

Existing tax laws often contain loopholes that allow multi-state companies to avoid paying their fair share of state income taxes. Small businesses located in only one state are at a competitive disadvantage since they have to pay taxes on all of their earnings. About half of U.S. states have enacted one of both of the following reforms.

Combined Reporting: Combined reporting requires that companies combine profits from all subsidiaries before determining what portion of their profits are taxable in each state. This enables states to tax the percentage of an out-of-state subsidiary’s profits that are attributable to a firm’s in-state operations. Seventeen states had adopted such legislation as of August 2004.

Throwback Rules: Many corporations have some income that is not taxed at all because it comes from sales in states where it has no physical presence. Throwback rules mean that such income is taxed in the state where the company does have facilities. Twenty-five states have adopted throwback rules.

Click here for more details and model legislation from Vermont.

Curbing Corporate Welfare

Governments often try to lure businesses with tax breaks and other subsidies. Often, these businesses increase public service costs, spark bidding wars, destroy as many jobs as they create, and undermine local businesses. Regional tax-base sharing (discussed above) as well as the following rules, help to curb corporate welfare.

Anti-Piracy Laws: These laws prevent bidding wars by barring aid to a company that is relocating from one state or city to another.
Click here for more details and model legislation from states across the country including Alabama, California, Michigan, New Mexico, Puerto Rico, Wisconsin and Gary, Indiana.

Living Wage: Living wage laws generally require that businesses that have contracts with the city or receive subsidies or tax breaks provide a specific wage and benefits package that is higher than the federally mandated minimum. Some laws offer incentives for employers to provide health insurance, paid sick leave, and vacations.
Click here for more details and model legislation from communities across the country including Detroit, MI, Minneapolis, MN, Oakland, CA, St. Paul, MN, San Francisco, CA, Santa Fe, NM, Santa Cruz, CA, Santa Monica, CA

Tax Increment Financing (TIF) Reform: TIF laws were originally intended to provide developers with an incentive to build in struggling urban neighborhoods. However, because of loose rules, TIF has actually been used to fund sprawling development in affluent suburbs.
Click here for more details and proposed legislation from Missouri.

Internet Sales Tax Fairness

Under current law, most internet and mail order firms are exempted from collecting state and local sales taxes. This subsidizes distant companies that do not contribute to communities, reduces tax revenue for state and local governments, and provides a tax break for those who have internet access and credit cards. States are dealing with this issue by trying to simplify tax rules on interstate trade and encouraging mail order and internet suppliers to collect and pay a use tax for sales within those jurisdictions.

Click here for more details and model legislation from Arkansas, California, Indiana, North Carolina, South Dakota.

Limiting Vertical Integration

When manufacturers own retail outlets, they can manipulate prices to narrow the difference between wholesale and retail prices, forcing independent and franchise retailers out of the market. Cities and states can address this issue by restricting manufacturers’ abilities to own or operate retail outlets. For example, Gas Station Divorcement Laws prohibit oil companies and refineries from operating gas stations.

Click here for more details and a model act amending existing state antitrust laws.

Mandatory Impact Review

Several states are considering legislation that would require communities to conduct impact assessments before approving proposed big-box store developments. (See also Community Impact Review and Regional Impact Review above.)

Click here for more details and model legislation from California, New Jersey, Vermont.

Pharmacy Equity Laws

Despite consumer preferences for face-to-face pharmacy service, insurance plans have offered incentives causing more and more people to use mail order pharmacy companies. This is because the top three pharmacy benefit management companies (PBMs), which provide prescription drug benefits for HMOs, own their own mail order companies. State equity laws, which have passed in at least five states, require insurers to make co-pays equal regardless of the type of pharmacy used.

Click here for more details and model legislation from Illinois.

Protecting Franchisees

Franchise corporations can provide their locally owned stores with the economies of scale advantages available to large businesses. However, most franchise contracts are unbalanced, pushing the financial risk toward the small business owner while funneling the profits to the franchise corporation. Franchise laws can ensure that the franchise corporation and the franchise owner fairly share authority, rights, and responsibilities.

Click here for more details and model legislation from Iowa.

NATIONAL POLICIES

Antitrust: Price Discrimination

The Federal Robinson-Patman Act was intended to protect small, independent businesses in an environment increasingly controlled by large firms with huge market power. The Act prohibits manufacturers and suppliers from providing discounts and other preferential treatment to some buyers, if such practice lessens competition or injures individual competitors. However, many antitrust scholars and enforcers dislike the act’s focus on maintaining a decentralized economy, and more allegations of violations have not been fully investigated.

Click here for more details and the full text of the Robinson-Patman Act.