Loading...
HomeMy WebLinkAbout01-21-23 Public Comment - B. Noelle - On-Street Paid Parking Comments from Downtown Business OwnerFrom:babs noelle To:Agenda Cc:Ellie Staley Subject:On-Street Paid Parking Comments from Downtown Business Owner Date:Saturday, January 21, 2023 7:29:20 PM Attachments:Comments on Downtown On-Street Paid Parking Proposal.pdf CAUTION: This email originated from outside of the organization. Do not click links or open attachments unless you recognize the sender and know the content is safe. Please see attached. Thank you. -- babs noelle >>>ringleader<<< 2011 Winner of the American Art Awards, Jewelry Division and 2013 Prospera Woman Entrepreneur of the Year alara jewelry 42 w. main street bozeman, montana 59715 (406) 522-8844 "Named One of the 20 Coolest Jewelry Stores in North America, Three Years Running, and Second Coolest in 2010" alara jewelry42 w. Main Street bozeman, mt 59715406.522.8844 Named the #2 Coolest Jewelry Store in North America in 2010 www.alarajewelry.com Mayor Andrus, Deputy MayorCunningham, Commissioner Pomeroy, Commissioner Madjic, and Commissioner Coburn: First of all, please know that all nine of us on the recently-convened On-Street Paid Parking Committee wholeheartedly believe that the concept of “local community” is the lifeblood of downtown. Not just from the perspective of “we want to continue serving our local residents” because we all know that consumer group is our very important base ; but because that sustained sense of “local” is what draws tourism in increasing numbers; and because that is where we want to continue to live and work . From that spins our heavy focus on considering and accommodating downtown workers–most notably, entry-level workers about whom I understand some of you have identified as constituents that need solutions regarding the high cost of living. The issue of on-street paid parking is part and parcel of the affordability question. If workers cannot house themselves here, and widespread transportation solutions are not in place, then know that each downtown worker, by default, is pretty likely to live too far away to walk or bike…and they will be therefore bringing cars downtown to work at their jobs. Downtown has been the engine of commerce in this town for a long time, and so it represents the highest density of workers in the valley, and by far has the largest commercial tax base. This by no means implies that there aren’t ways for all that to reverse, whether slowly but steadily–or quickly. If paid parking just pushes workers to workplaces in other areas of town, we won’t have the necessary manpower to keep downtown Bozeman a place where people shop, eat, and celebrate. If paid parking demands that employers pay for employee parking, there are businesses that don’t have the margin to pay it. Great–here comes more of the corporate chains, and we’ve got a downtown that looks like most others…which gives everyone less reason to come downtown. But, I feel that some numbers are in order. My guess is that perhaps they will “speak” more to some of you than broad concepts, no matter how fervently we believe in those concepts, and no matter how well we are representing the downtown business constituency of roughly 800 business and property owners, as well as approximately 2,500 workers. Unlike City Staff, who have been thinking about and working on the on-street paid parking plan for a long time, please know that quite a few of us stakeholders only got the chance to see the report and support materials quite recently. Since I have a full-time job, and so little time to prepare something that you will hopefully consider, please know that in the name of expediency, I am using national numbers from two sources, one of which is the US Department of Labor Bureau of Labor Statistics, and the other of which is the data provided by the Retail Owners Institute, a national organization that gathers data from multiple governmental sources, and collates the gathered data by individual type of retail business. Please note that some of these actual numbers will seem false when you are thinking of the particular downtown Bozeman businesses that fall into a given category. But, if you take the numbers in the aggregate, and you factor in that there is nothing “average” about how the recent growth history of Bozeman has affected and continues to affect downtown businesses , you will realize that these numbers are most likely conservative. They are certainly not exaggerative. But, regardless, that’s why looking at percentages–as opposed to hard numbers–is the best illustration. Between the pre-pandemic area growth and our pandemic area hyper-growth (and resultant astronomical home price increases), the inflated costs of goods and shipping, and the supply chain challenges of the pandemic that by Bozeman being “rural” made more dramatic than in large metropolitan areas, and you have a recipe for quite a bit of strife for business owners. But, when the home price increases spur on skyrocketing residential rental costs and you sprinkle on other types of consumer inflation, you can see how downtown Bozeman business owners responded. My informal poll showed that most (I did not poll all businesses downtown, but all in my sample asserted that) downtown Bozeman businesses have, in order to attract or maintain staff, raised wages and benefits for workers anywhere from 10% to 25%, and have already budgeted for more raises for this calendar year. But don’t take my word for it. Here is the national average data, and again, please note that while I do not believe that the bulk of businesses downtown are about to go under (since business owners will typically make adjustments as they are able, so as to avoid such a disaster); but rather, that what business owners downtown are attempting to absorb already is plenty–without having another impact thrown at them that is completely avoidable at this exact time. Quite simply, the trends, without adding on-street paid parking to the mix, don’t look pretty or upbeat. And it is the trends, fueled by government-gathered data, I am asking you to view and digest. It’s so weird to talk about how growth simultaneously fuels business and exhausts the humans who work–but that is the truth about the situation. Please don’t turn our special downtown business community into an unnecessary and unintended victim of the one-two-three punch of our area’s pre-pandemic growth (including university growth), pandemic hyper-growth, and nationwide inflation, by investing a lot of money into a system that can’t really be tested. This has been, and continues to be, an exhausting and unsure time for small business owners. Since the risk of implementing on-street paid parking will be 100% bore by the individual businesses who will need to survive a 10% decrease in cars parking downtown (and the resultant reduction in business, which could quite reasonably be assumed to be also in the 10% decrease range), and since this risk is not necessary to take at this time , I humbly ask you to consider that there is no compelling reason to implement on-street paid parking right now. To begin, here are the compiled numbers on retail business profitability, expressed in nationwide averages for all of the listed retail businesses you can currently (or until recently) find in downtown Bozeman, for the years 2019 to 2021. The yellow cells indicate business types that dropped below 5% net profit (considered on the low end of “safe” for a retail business) in the indicated year. The red cells indicate business types that are “in the red.” I recommend the focus be on the change in cell color, as opposed to the actual numbers. Net Profit as a Percentage of Sales 2019 2020 2021 Art Galleries 8.9% 9.9% 10.9% Auto Parts Stores 3.0% 3.3% 4.6% Bakeries 6.9% 7.7% 6.6% Bars 5.8% 5.5% -4.1% Candy Stores 8.5% 6.8% 6.5% Coffee Shops 3.1% 6.2% 7.1% Cosmecs 6.8% 7.3% 6.4% Full-Service Restaurants 4.4% 4.5% -0.8% Gi/Souvenir Stores 6.3% 6.2% 7.8% Grocery Stores 1.0% -3.5% 0.0% Hardware Stores 4.1% 4.3% 7.2% Hobby & Toy Stores 4.1% 2.8% 10.9% Jewelry Stores 4.1% 4.5% 5.6% Limited-Service Restaurants 4.0% 4.8% 6.3% Meat Shops 2.4% 3.9% 6.0% Men's Clothing Stores 0.3% 0.8% 0.9% Musical Instrument Stores 4.6% 3.6% 1.8% Opcal Stores 4.7% 5.7% 5.5% Pet Supply Stores 1.0% 4.3% 5.5% Shoe Stores 2.8% 4.7% -2.7% Sporng Goods Stores 2.3% 3.5% 7.5% Thri/Used Stores 5.2% 5.7% 6.4% Tires Stores 3.5% 2.5% 4.5% Women's Clothing Stores 1.4% 2.1% 2.8% Focusing on the trends these three years of national average data show, this should seem a reasonable recap of the pre-pandemic and “heart of the pandemic” time frame. Adding in the 2022 data shows the pattern becoming increasingly alarming: Net Profit as a Percentage of Sales 2019 2020 2021 2022 Art Galleries 8.9% 9.9% 10.9% 8.9% Auto Parts Stores 3.0% 3.3% 4.6% 2.6% Bakeries 6.9% 7.7% 6.6% 0.0% Bars 5.8% 5.5% -4.1% -10.7% Candy Stores 8.5% 6.8% 6.5% 4.5% Coffee Shops 3.1% 6.2% 7.1% 0.5% Cosmecs 6.8% 7.3% 6.4% 4.4% Full-Service Restaurants 4.4% 4.5% -0.8% -7.4% Gi/Souvenir Stores 6.3% 6.2% 7.8% 5.8% Grocery Stores 1.0% -3.5% 0.0% 1.0% Hardware Stores 4.1% 4.3% 7.2% 5.2% Hobby & Toy Stores 4.1% 2.8% 10.9% 8.9% Jewelry Stores 4.1% 4.5% 5.6% 3.6% Limited-Service Restaurants 4.0% 4.8% 6.3% -0.3% Meat Shops 2.4% 3.9% 6.0% -0.6% Men's Clothing Stores 0.3% 0.8% 0.9% -1.1% Musical Instrument Stores 4.6% 3.6% 1.8% -0.2% Opcal Stores 4.7% 5.7% 5.5% 3.5% Pet Supply Stores 1.0% 4.3% 5.5% 3.5% Shoe Stores 2.8% 4.7% -2.7% -4.7% Sporng Goods Stores 2.3% 3.5% 7.5% 5.5% Thri/Used Stores 5.2% 5.7% 6.4% 4.4% Tires Stores 3.5% 2.5% 4.5% 2.5% Women's Clothing Stores 1.4% 2.1% 2.8% 0.8% So, as the real effects of labor cost increases and rising costs of goods kick in, it starts showing up in the overall 2022 profitability numbers. No governmental statistics or predictions support that this trend will be reversing of its own volition in the meaningful future. Which comes to the predictions for 2023. I imagine many business owners have all but given up on trying to reliably predict for this year, because the last four years of data can hardly be used as any sort of guide. But, the US Department of Labor and Retail Owners Institute have numbers that help to predict. Those numbers include: ● The percentage of total expenses labor represents, as an “ideal range;” and I used the numbers at the high end of that range...because I believe most businesses here are outside the “ideal” range completely. These numbers fall into two categories: ○ hospitality/food/grocer ○ other retail ● The percentage increase in labor expenses that continues to affect businesses. These numbers fall into the same two categories listed above. By combining those percentages, one can determine the increase in overall expenses attributable to labor expense increases: Ideal % of Exp Labor Increase in New % of Exp Increase in Exp (at high end) Labor Costs that are Labor (just Labor) 20.0% 9.8% 22.0% 2.0% 20.0% 9.8% 22.0% 2.0% 30.0% 21.9% 36.6% 6.6% 30.0% 21.9% 36.6% 6.6% 20.0% 9.8% 22.0% 2.0% 30.0% 21.9% 36.6% 6.6% 20.0% 9.8% 22.0% 2.0% 30.0% 21.9% 36.6% 6.6% 20.0% 9.8% 22.0% 2.0% 30.0% 21.9% 36.6% 6.6% 20.0% 9.8% 22.0% 2.0% 20.0% 9.8% 22.0% 2.0% 20.0% 9.8% 22.0% 2.0% 30.0% 21.9% 36.6% 6.6% 30.0% 21.9% 36.6% 6.6% 20.0% 9.8% 22.0% 2.0% 20.0% 9.8% 22.0% 2.0% 20.0% 9.8% 22.0% 2.0% 20.0% 9.8% 22.0% 2.0% 20.0% 9.8% 22.0% 2.0% 20.0% 9.8% 22.0% 2.0% 20.0% 9.8% 22.0% 2.0% 20.0% 9.8% 22.0% 2.0% 20.0% 9.8% 22.0% 2.0% The numbers in the rightmost column can therefore be subtracted from the Net Profit Numbers in the previous table. Resulting in this, where some more businesses join the “red group:” Net Profit as a Percentage of Sales 2019 2020 2021 2022 2023 (with labor) Art Galleries 8.9% 9.9% 10.9% 8.9% 7.0% Auto Parts Stores 3.0% 3.3% 4.6% 2.6% 0.7% Bakeries 6.9% 7.7% 6.6% 0.0% -6.5% Bars 5.8% 5.5% -4.1% -10.7% -17.2% Candy Stores 8.5% 6.8% 6.5% 4.5% 2.6% Coffee Shops 3.1% 6.2% 7.1% 0.5% -6.0% Cosmecs 6.8% 7.3% 6.4% 4.4% 2.5% Full-Service Restaurants 4.4% 4.5% -0.8% -7.4% -13.9% Gi/Souvenir Stores 6.3% 6.2% 7.8% 5.8% 3.9% Grocery Stores 1.0% -3.5% 0.0% 1.0% -5.6% Hardware Stores 4.1% 4.3% 7.2% 5.2% 3.3% Hobby & Toy Stores 4.1% 2.8% 10.9% 8.9% 7.0% Jewelry Stores 4.1% 4.5% 5.6% 3.6% 1.7% Limited-Service Restaurants 4.0% 4.8% 6.3% -0.3% -6.8% Meat Shops 2.4% 3.9% 6.0% -0.6% -7.1% Men's Clothing Stores 0.3% 0.8% 0.9% -1.1% -3.0% Musical Instrument Stores 4.6% 3.6% 1.8% -0.2% -2.1% Opcal Stores 4.7% 5.7% 5.5% 3.5% 1.6% Pet Supply Stores 1.0% 4.3% 5.5% 3.5% 1.6% Shoe Stores 2.8% 4.7% -2.7% -4.7% -6.6% Sporng Goods Stores 2.3% 3.5% 7.5% 5.5% 3.6% Thri/Used Stores 5.2% 5.7% 6.4% 4.4% 2.5% Tires Stores 3.5% 2.5% 4.5% 2.5% 0.6% Women's Clothing Stores 1.4% 2.1% 2.8% 0.8% -1.1% Now, for the other unavoidable expense: commercial/retail rent increases. Again, from the same sources, using the same technique: ● The percentage of total expenses rent represents, as an “acceptable range.” Again, arguments can be made that things might be outside that range in downtown Bozeman. Here, I used 20% for everyone. ● Typical commercial rental rate increases. Here, I used 7% for everyone: ○ Many leases have an “accelerator clause” written into them, and the accelerator is tied to inflation. Despite inflation being higher, I chose the 7% amount, since… ○ Other leases do not have an “accelerator clause,” so the effect of inflation on tenant’s leases will show up as an aggregated amount of inflation at the time when a lease renews. So, while not all leases renew in any given year (so some tenants won’t see the increase until later), others will experience an “all at once” increase that is far higher than inflation in the immediately preceding year. ○ As a result, 7% is a conservative across-the-board number to use. By combining those percentages, one can determine the increase in overall expenses attributable to labor expense increases = 1.5% Adding that percentage to the labor cost increase percentage results in this outlook: Net Profit as a Percentage of Sales 2019 2020 2021 2022 2023 (with labor & rent) Art Galleries 8.9% 9.9% 10.9% 8.9% 5.5% Auto Parts Stores 3.0% 3.3% 4.6% 2.6% -0.8% Bakeries 6.9% 7.7% 6.6% 0.0% -8.0% Bars 5.8% 5.5% -4.1% -10.7% -18.7% Candy Stores 8.5% 6.8% 6.5% 4.5% 1.1% Coffee Shops 3.1% 6.2% 7.1% 0.5% -7.5% Cosmecs 6.8% 7.3% 6.4% 4.4% 1.0% Full-Service Restaurants 4.4% 4.5% -0.8% -7.4% -15.4% Gi/Souvenir Stores 6.3% 6.2% 7.8% 5.8% 2.4% Grocery Stores 1.0% -3.5% 0.0% 1.0% -7.1% Hardware Stores 4.1% 4.3% 7.2% 5.2% 1.8% Hobby & Toy Stores 4.1% 2.8% 10.9% 8.9% 5.5% Jewelry Stores 4.1% 4.5% 5.6% 3.6% 0.2% Limited-Service Restaurants 4.0% 4.8% 6.3% -0.3% -8.3% Meat Shops 2.4% 3.9% 6.0% -0.6% -8.6% Men's Clothing Stores 0.3% 0.8% 0.9% -1.1% -4.5% Musical Instrument Stores 4.6% 3.6% 1.8% -0.2% -3.6% Opcal Stores 4.7% 5.7% 5.5% 3.5% 0.1% Pet Supply Stores 1.0% 4.3% 5.5% 3.5% 0.1% Shoe Stores 2.8% 4.7% -2.7% -4.7% -8.1% Sporng Goods Stores 2.3% 3.5% 7.5% 5.5% 2.1% Thri/Used Stores 5.2% 5.7% 6.4% 4.4% 1.0% Tires Stores 3.5% 2.5% 4.5% 2.5% -0.9% Women's Clothing Stores 1.4% 2.1% 2.8% 0.8% -2.6% You will note that the rightmost column above is identical to the rightmost column in the “Appendix B” of the Parking Proposal, where it is labeled “NO OPTION,” since labor cost increases and rent increases are unavoidable. On-Street Paid Parking Unintended Consequences So, if we accept the conservative range of percentage expense increases of 2.0% to 6.6% attributable to labor and 1.5% attributable to rent, then it should not be altogether surprising that the ostensible “increase in percentage of expenses” attributable to the “loss of 10% of cars parking” in downtown. While City Staff does not solidly believe that a 10% decrease in cars stopping in downtown is necessarily equivalent to a 10% decrease in revenues, consider this: ● No one believes that the 10% of decrease in downtown parkers will be coming from the vehicles brought to our area during the 3-month tourist season. It will be local and regional shoppers from which the 10% loss is incurred. And local/regional shoppers are coming to downtown with the known intent to shop, as opposed to a “perhaps intent” to shop, since they “don’t know what downtown has to offer, specifically.” ● For the sake of simplicity, calling the 10% decrease in cars parking in downtown roughly equivalent to a 10% decrease in revenues is well within a reasonable assumption. A 10% loss of revenue due to a 10% loss in downtown parking volume is equivalent to a total increase of expenses (and therefore decrease in profit margin) of 7.3% for hospitality/restaurant/grocery, and 2.2% for other types of retail. By adding these “additional expenses” to the previous data, the result is the final table shown in Appendix B, shown again at the very end of this narrative. I am not one that generally thinks “the sky is falling.” I’m a bootstrapper. I am a caring employer. I am a person that volunteers time to downtown with devotion, longevity, and vigor. I’m not a yeller, a screamer, or a rabble-rouser. I am hoping that my comments are not dismissed as being against progress. Because I believe downtown has plenty of life left in it, and the downtown business community has the energy and the will to make sure progress is exactly what we achieve. Thank you, as always, for your service to the Bozeman community. Respectfully, Babs Noelle Alara Jewelry 42 W. Main Street Bozeman, MT 59715 Net Profit as a Percentage of Sales 2019 2020 2021 2022 2023 (NO OPTION) 2023 (WITH PKING) Art Galleries 8.9% 9.9% 10.9% 8.9% 5.5% 3.3% Auto Parts Stores 3.0% 3.3% 4.6% 2.6% -0.8% -3.0% Bakeries 6.9% 7.7% 6.6% 0.0% -8.0% -15.3% Bars 5.8% 5.5% -4.1% -10.7% -18.7% -26.0% Candy Stores 8.5% 6.8% 6.5% 4.5% 1.1% -1.1% Coffee Shops 3.1% 6.2% 7.1% 0.5% -7.5% -14.8% Cosmecs 6.8% 7.3% 6.4% 4.4% 1.0% -1.2% Full-Service Restaurants 4.4% 4.5% -0.8% -7.4% -15.4% -22.7% Gi/Souvenir Stores 6.3% 6.2% 7.8% 5.8% 2.4% 0.2% Grocery Stores 1.0% -3.5% 0.0% 1.0% -7.1% -14.4% Hardware Stores 4.1% 4.3% 7.2% 5.2% 1.8% -0.4% Hobby & Toy Stores 4.1% 2.8% 10.9% 8.9% 5.5% 3.3% Jewelry Stores 4.1% 4.5% 5.6% 3.6% 0.2% -2.0% Limited-Service Restaurants 4.0% 4.8% 6.3% -0.3% -8.3% -15.6% Meat Shops 2.4% 3.9% 6.0% -0.6% -8.6% -15.9% Men's Clothing Stores 0.3% 0.8% 0.9% -1.1% -4.5% -6.7% Musical Instrument Stores 4.6% 3.6% 1.8% -0.2% -3.6% -5.8% Opcal Stores 4.7% 5.7% 5.5% 3.5% 0.1% -2.1% Pet Supply Stores 1.0% 4.3% 5.5% 3.5% 0.1% -2.1% Shoe Stores 2.8% 4.7% -2.7% -4.7% -8.1% -10.3% Sporng Goods Stores 2.3% 3.5% 7.5% 5.5% 2.1% -0.1% Thri/Used Stores 5.2% 5.7% 6.4% 4.4% 1.0% -1.2% Tires Stores 3.5% 2.5% 4.5% 2.5% -0.9% -3.1% Women's Clothing Stores 1.4% 2.1% 2.8% 0.8% -2.6% -4.8% 2022 2023 (rent & labor) 2023 w/park 12 9 3 = 5% or lower net margin | considered "low" 7 13 21 = negave net margin