Retail market analysis for downtown Middlesboro

 Retail market analysis for downtown Middlesboro Discover Downtown Middlesboro, Inc. November 2013 C O N T E N T S Introduction Study area Demographic, economic, and housing characteristics of the Middlesboro region Observations Recommendations Implementation General limitations and disclaimer Appendix 1: Middlesboro and Bell County residents’ buying power for selected retail products Appendix 2: Sales void analysis for Middlesboro Appendix 3: Sales void analysis for 5-­‐ and 10-­‐mile radii from downtown Middlesboro Appendix 4: Sales void analysis for a 15-­‐mile radius from downtown Middlesboro Appendix 5: Shopping centers over 60,000 SF and within 50 miles of downtown Middlesboro Appendix 6: Resources 1 3 4 27 31 50 52 53 57 59 61 63 67 Downtown Middlesboro Retail Market Analysis -­‐ i T A B L E S Table 1 2 3 4 5 6 7 8 9 10 11 Description Population size by decade, 1910-­‐2010, in Middlesboro, Bell County, Kentucky, and the United States, and percent change over the previous decade Bell County population projections by age group, 2020-­‐2050 Numbers and percentages of households, by household income group, in Middlesboro and Bell County, with comparisons to the percentages of households by household income group in Kentucky and the US Median and per capita income, and percentages of households with income from various sources, in Middlesboro, Bell County, Kentucky, and the US in 2011 Median age in 2000 and 2010 in Middlesboro, Bell County, Kentucky, and the US Residence one year ago for people 1 year old and older in Middlesboro, Bell County, Kentucky, and the US Employment, by occupation, in Middlesboro and Bell County, 2000-­‐2010 Employment, by industry, in Middlesboro and Bell County, 2000-­‐2010 Educational attainment in Middlesboro and Bell County, 2000-­‐2010 Various housing characteristics in 2000 and 2011 in Middlesboro, Bell County, Kentucky, and the US Estimates of the annual retail buying power of Bell County residents, by major retail category Page 4 5 6 6 7 8 9 10 11 12 14 Downtown Middlesboro Retail Market Analysis -­‐ ii 12 13 14 15 16 17 18 19 20 Estimates of the annual retail buying power of Bell County residents for five retail categories Estimates of the annual retail buying power of residents of the Knoxville and Kingsport-­‐Bristol Metropolitan Statistical Areas for five retail products/services often purchased on out-­‐of-­‐town trips Estimates of the annual retail buying power of Cumberland Gap National Historical Park visitors and of the people driving through Middlesboro on US Rt. 25 and driving through downtown Middlesboro on Cumberland Avenue Estimates of the annual retail buying power of the households represented by downtown Middlesboro workers, by major retail category Retail sales voids in Middlesboro Retail sales voids within five-­‐ and ten-­‐mile radii of downtown Middlesboro Retail sales voids within a 15-­‐mile radius of downtown Middlesboro Number and distribution of businesses by two-­‐digit North American Industry Classification System code for Middlesboro and Bell County A sample of big-­‐box stores within 50 miles of Middlesboro 15 16 17 18 19 20 22 23 24 Downtown Middlesboro Retail Market Analysis -­‐ iii I N T R O D U C T I O N Middlesboro is a small town with a proud history. Just a mile from the Cumberland Gap, the town claims to be the birthplace of ragtime music and the home of the nation’s oldest golf course in continuous operation -­‐ and it is the only town in the US located wholly within a meteor crater. It has a history of making big plans, reflected in its monikers over the years – “Pittsburgh of the South”, “Little Las Vegas”, “First Gateway to the West”, “Athens of the Mountains” – and boasted the one of the first opera houses in the Eastern Kentucky Coalfield and the first electric streetcar west of Washington, DC. Over the past several decades, the economies of Middlesboro and Bell County have been battered around. The coal industry is going through a challenging transition, and communities whose economies have been coal-­‐based are searching for a new foundation from which to re-­‐grow. The repercussions of this difficult transition have whiplashed the economies of Middlesboro and other communities within the region. The manufacturing industry has also gone through a difficult period, with factories throughout the region downsizing or closing altogether as manufacturing jobs have gradually moved overseas. Even the opening of the Cumberland Gap Tunnel in 1996 has brought a mixed bag of benefits and setbacks, making it easier for visitors to reach Middlesboro and Bell County – but also making it easier for County residents to work and shop in other towns and cities. The landscape of Middlesboro’s and Bell County’s economic challenges has been mapped by many other studies. The conclusions are essentially the same: With the region’s population shrinking, younger people moving away, incomes below state and national averages, and a perniciously high unemployment rate, economic growth must now be based on creativity, collaboration, and determination. Discover Downtown Middlesboro, Inc. launched this retail market analysis and downtown business development strategy in mid-­‐2013, with the following objectives: 1. To identify opportunities for immediate and long-­‐term growth. What sectors are missing from the Middlesboro market? In what business categories is Middlesboro experiencing sales leakages? 2. To provide data and other information needed by those considering starting a new business or expanding an existing business. Downtown Middlesboro Retail Market Analysis -­‐ 1 3. To explore the potential for downtown housing and how downtown housing might serve as a driver for downtown economic development. 4. To provide an analysis, supported by data, to help prepare a strategic plan for downtown Middlesboro. 5. To help familiarize partners, investors, and foundations with downtown Middlesboro’s economic development opportunities and encourage them to become actively involved in revitalizing the district. Retail market analysis is not an exact science. Instead, it is a tool for helping civic leaders make sound decisions about how the local and regional retail marketplace is currently performing, about how market demand for various products and services might change in the future, and about new opportunities that, with guidance and support, might take root and grow. This report is therefore intended to help inform and provide some guidance for these decisions. This analysis/report was prepared by Discover Downtown Middlesboro, Inc., with assistance from the Community Land Use and Economics Group, LLC, a Virginia-­‐based firm specializing in downtown economic development. The first section of this report provides a baseline analysis of data relevant to downtown Middlesboro’s retail development, such as demographic characteristics of the people who live in Middlesboro, Bell County, and the region; estimates of how the area’s population is expected to change over the next few decades; retail characteristics of the County, Middlesboro, and downtown Middlesboro; and data from a 2013 survey of downtown businesses conducted by Discover Downtown Middlesboro, Inc. The second section outlines some of our key observations. And, the third section suggests some strategies and actions to help strengthen downtown Middlesboro’s economy and to create new, economically sustainable downtown businesses and jobs. Downtown Middlesboro Retail Market Analysis -­‐ 2 S T U D Y A R E A This study focuses on gathering and interpreting information about the market condition, constraints, and opportunities for downtown Middlesboro, a mixed-­‐use area stretching east-­‐west along Cumberland Avenue between 1st and 24th Streets and north-­‐south from Canal and Lothbury Avenues to Chester and Winchester Avenues. While this study focuses on economic development in downtown Middlesboro, it necessarily draws on demographic and economic data from throughout the community, County, and region. Downtown Middlesboro Retail Market Analysis -­‐ 3 I . D E M O G R A P H I C , E C O N O M I C , A N D H O U S I N G C H A R A C T E R I S T I C S O F T H E M I D D L E S B O R O R E G I O N DEMOGRAPHIC CHARACTERISTICS A household’s demographic characteristics strongly influence its retail shopping preferences and habits. Household income is, of course, a major determinant of how a household makes its retail purchases – but other characteristics are important, also. Younger households, for example, are more likely to buy furniture than older households, and young people make more of their purchases online than older people. Household size, ethnicity, numbers of earners, and homeownership status also have a significant influence on how, where, and when people shop, what they buy, and how much they spend. Population size: The populations of both Middlesboro and Bell County have been shrinking over the past several decades. Middlesboro’s population has dropped by 40 percent from its historic high level in 1950 (14,482) to just 10,334 in 2010, its lowest point in almost a century. Similarly, Bell County’s population has dropped from its historic high of 47,602 in 1950 to just 28,691 in 2010 – a drop of 66 percent since 1950. Year Middlesboro % chng Bell County % chng Kentucky % chng USA % chng 1910 7,305 76% 28,447 81% 2,289,905 7% 92,228,496 21% 1920 8,041 10% 33,988 19% 2,416,630 6% 106,021,537 15% 1930 10,850 35% 38,747 14% 2,614,589 8% 123,202,624 16% 1940 11,777 9% 43,812 13% 2,845,627 9% 132,164,569 7% 1950 14,482 23% 47,602 9% 2,944,806 3% 151,325,798 14% 1960 12,607 -­‐13% 35,336 -­‐26% 3,038,156 3% 179,323,175 19% 1970 11,878 -­‐6% 31,121 -­‐12% 3,220,711 6% 203,302,031 13% 1980 12,251 3% 34,330 10% 3,660,777 14% 226,545,806 11% 1990 11,328 -­‐8% 31,506 -­‐8% 3,685,296 1% 248,709,873 10% 2000 10,384 -­‐8% 30,060 -­‐5% 4,041,769 10% 281,421,906 13% 2010 10,334 -­‐0.5% 28,691 -­‐5% 4,339,367 7% 308,745,538 10% Table 1: Population size by decade, 1910-­‐2010, in Middlesboro, Bell County, Kentucky, and the United States, and percent change over the previous decade (Source: US Census Bureau) Downtown Middlesboro Retail Market Analysis -­‐ 4 Population projection: The Kentucky State Data Center projects that Bell County’s population will drop by 23 percent over the next four decades, from 28,691 residents in 2010 to just 22,026 in 2050 (Table 2). With fewer people, the County will have less local market demand for retail goods and services. The Kentucky State Data Center projects that, as the County’s population shrinks, it will also become older. Between 2010-­‐2030, for example, the number of Bell County residents 65 years old or older is expected to grow by 31 percent, while all other age groups become smaller in number. % change % change, % change Age group 2020 2010-­‐2020 2030 2010-­‐2030 2050 2010-­‐2050 0-­‐19 6,430 -­‐8.4% 5,960 -­‐15.1% 5,067 -­‐27.8% 20-­‐44 8,137 -­‐8.6% 7,636 -­‐14.2% 6,509 -­‐26.9% 45-­‐64 7,684 -­‐7.0% 6,491 -­‐21.4% 5,581 -­‐32.4% 65+ 5,397 19.7% 5,896 30.8% 4,869 8.0% 27,648 25,983 22,026 Table 2: Bell County population projections by age group, 2020-­‐2050 (Source: Kentucky State Data Center, reported by the University of Kentucky College of Agriculture’s Cooperative Extension Service) Household income: Roughly half of Middlesboro’s and Bell County’s households earn less than $25,000 annually. By comparison, roughly 30 percent of Kentucky’s households and 25 percent of the nation’s households earn less than $25,000 (Table 3). Middlesboro’s and Bell County’s median household income and per capita income are also well below state and national levels (Table 4). In 2011, 28.1 percent of Middlesboro’s residents and 31.1 percent of Bell County’s residents lived in poverty, versus 19.0 percent in Kentucky and 15.3 percent nationwide. The pattern of low household income and high poverty rates is also evident in data about the sources of household income in Middlesboro and Bell County. For example, roughly 59 percent of Middlesboro and Bell County’s households have income from earnings (wages, investments, etc.) – versus 74 percent for Kentucky residents and 78 percent for US residents overall. Households in Middlesboro and Bell County are more likely than others in the state or nation to have Social Security income or Supplemental Security income or to receive cash assistance or Food Stamp/SNAP benefits (Table 4). Downtown Middlesboro Retail Market Analysis -­‐ 5 Household income Total households Less than $10,000 $10,000 -­‐ $14,999 $15,000 -­‐ $24,999 $25,000 -­‐ $34,999 $35,000 -­‐ $49,999 $50,000 -­‐ $74,999 $75,000 -­‐ $99,999 $100,000 -­‐ $149,999 $150,000 -­‐ $199,999 $200,000 or more # hslds 4,079 951 623 664 426 467 527 240 96 45 40 Middlesboro % of hslds 23.3% 15.3% 16.3% 10.4% 11.4% 12.9% 5.9% 2.4% 1.1% 1.0% # hslds 10,632 2,223 1,292 1,759 1,330 1,499 1,312 551 406 66 84 Bell County % of hslds 20.9% 12.2% 16.5% 12.5% 14.1% 12.3% 6.2% 3.8% 0.6% 0.8% % of households Kentucky USA 10.2% 7.6% 7.3% 5.8% 13.0% 11.5% 11.8% 10.8% 14.8% 14.2% 17.8% 18.3% 10.9% 11.8% 9.4% 11.8% 2.5% 4.2% 2.3% 3.9% Table 3: Numbers and percentages of households, by household income group, in Middlesboro and Bell County, with comparisons to the percentages of households by household income group in Kentucky and the US (Source: US Census Bureau) Median household income Per capita income Percent of individuals below poverty line Sources of household income: Households with earnings Households with Social Security income Households with retirement income Households with Supplemental Security income Households with cash assistance income Food Stamps/SNAP benefits in the past 12 months Middlesboro $ 20,069 $ 13,189 28.1% 58.6% 38.6% 16.3% 11.9% 3.9% 28.6% Bell Co. $ 24,724 $ 11,526 31.1% 59.3% 40.5% 18.6% 11.5% 3.2% 25.7% Kentucky $ 41,576 $ 22,515 19.0% 74.1% 32.0% 19.5% 6.7% 2.4% 14.9% USA $ 51,144 $ 27,334 15.3% 78.3% 28.4% 17.5% 5.1% 2.9% 11.9% Table 4: Median and per capita income, and percentages of households with income from various sources, in Middlesboro, Bell County, Kentucky, and the US in 2011 (Source: US Census Bureau) Downtown Middlesboro Retail Market Analysis -­‐ 6 Age: The region’s population is becoming older. Between 2000 and 2011, the median age of Middlesboro’s residents increased by 4.1 percent, from 38.6 in 2000 to 40.2 in 2011. In Bell County, median age jumped by 11 percent, from 37.0 to 41.1 (Table 5). Population by age Total population Under 5 5-­‐9 10-­‐14 15-­‐19 20-­‐24 25-­‐34 35-­‐44 45-­‐54 55-­‐59 60-­‐64 65-­‐74 75-­‐84 85 and over Median age 2011 ACS 10,366 645 530 659 778 670 1,426 1,346 1,472 763 628 913 400 136 40.2 Middlesboro 2000 Census % change 10,384 -­‐0.2% 632 2.1% 629 -­‐15.7% 747 -­‐11.8% 740 5.1% 623 7.5% 1,272 12.1% 1,487 -­‐9.5% 1,379 6.7% 603 26.5% 504 24.6% 913 0.0% 642 -­‐37.7% 213 -­‐36.2% 38.6 4.1% 2011 ACS 28,744 1,703 1,388 2,037 2,075 1,788 3,355 3,808 4,333 2,305 1,561 2,553 1,240 598 41.1 Bell County 2000 Census % change 30,060 -­‐4.4% 1,826 -­‐6.7% 1,979 -­‐29.9% 2,188 -­‐6.9% 2,169 -­‐4.3% 1,875 -­‐4.6% 4,055 -­‐17.3% 4,563 -­‐16.5% 4,191 3.4% 1,677 37.4% 1,408 10.9% 2,213 15.4% 1,439 -­‐13.8% 477 25.4% 37.0 11.1% Table 5: Median age in 2000 and 2011 in Middlesboro, Bell County, Kentucky, and the US (Source: US Census Bureau) During this 11-­‐year period, Bell County lost younger people. Almost all of its population loss occurred in age groups under 45 years of age. In Middlesboro, however, the pattern is more complicated. Middlesboro lost people between 5-­‐14 years of age and between 35-­‐44 years of age – so, in essence, it lost families with school-­‐age children. In all, Middlesboro lost 141 adults between 35-­‐44 years of age and 187 children between 5-­‐14 years of age. While there is no concrete data to demonstrate why these families left, it is almost certain that they left to find jobs, or to find better-­‐paying jobs. Downtown Middlesboro Retail Market Analysis -­‐ 7 While Middlesboro has lost families with school-­‐age children, over the past decade it has added 200 residents between 20-­‐34 years of age – not a huge number, but an encouraging one. Mobility: When we examined mobility patterns, we found that, while Middlesboro and Bell County are losing residents, a higher percentage of Middlesboro and Bell County were living in the same house in 2010 and 2009 than is the case with Kentucky and US residents (Table 6). This suggests that, while population loss is occurring, those who remain in Middlesboro and the County are less likely to move to new homes within the jurisdiction than those in other parts of the state and nation. According to the US Census Bureau’s data on county-­‐to-­‐county migration flows, Bell County residents who moved between 2006-­‐2010 were most likely to move to Fayette, Knox, Rowan, or Whitley Counties or to Claiborne County, Tennessee. Residence one year ago Middlesboro Bell County Kentucky US Population 1 year and over 10,216 28,344 4,261,590 302,754,921 Same house 9,316 25,621 3,607,792 256,096,024 % living in same house 91.2% 90.4% 84.7% 84.6% Different house in the US 900 2,723 636,739 44,835,757 Same county 525 1,628 371,154 28,025,830 % living in same county 58.3% 59.8% 58.3% 62.5% Different county 375 1,095 265,585 16,809,927 Same state 101 524 149,750 9,728,252 Different state 274 571 115,825 7,081,675 Abroad -­‐ -­‐ 17,059 1,823,140 Table 6: Residence one year ago for people 1 year old and older in Middlesboro, Bell County, Kentucky, and the US (Source: US Census Bureau) Unemployment: The unemployment level is high. As of the 2011 American Community Survey’s publication date, 16.3 percent of Middlesboro residents over 16 years of age were unemployed, as were 11.8 percent of Downtown Middlesboro Retail Market Analysis -­‐ 8 Bell County’s over-­‐16 residents. By contrast, 8.9 percent of Kentucky’s over-­‐16 residents and 8.7 percent of those in the US were unemployed. Employment: The decline of coal and manufacturing industries is readily apparent in employment data for Middlesboro and Bell County (Tables 7 and 8). For example, the number of Middlesboro residents working in national resources, construction, and maintenance occupations declined by 26 percent between 2000-­‐2010. Both Middlesboro and Bell County lost lots of jobs in production (e.g., manufacturing), transportation, and material moving in that time period – a 20 percent decline in Middlesboro and 36 percent in the County. The Census Bureau’s employment data reveals several interesting points about the Middlesboro region’s economy. For instance, while Middlesboro has attracted some new national chain businesses in the last decade – particularly along the entryway near the Cumberland Gap Tunnel – it has lost nearly 100 retail sector jobs, partly because the retail sector weakened, nationwide, during the economic downturn of the mid-­‐2000s, partly because of high unemployment in the Middlesboro area, and partly because part-­‐time jobs in national chains have displaced some full-­‐time jobs in locally owned retail businesses. But there is also some encouraging data. In particular, the numbers of jobs in several industry sectors – information; finance/insurance/real estate; and professional, scientific, and management services, in particular – have grown. Each of these industries includes pockets of “knowledge economy” and creative-­‐sector businesses that could grow considerably in the future. Middlesboro Bell County Occupation 2000 2010 % change 2000 2010 % change Civilian employed population 16 years old and older 3,460 3,328 -­‐3.8% 8,939 9,024 1.0% Mgmt., business, science, arts occupations 837 987 17.9% 2,165 2,507 15.8% Service occupations 632 624 -­‐1.3% 1,562 1,765 13.0% Sales and office occupations 1,009 960 -­‐4.9% 2,117 2,338 10.4% Natural resources, construction, maintenance occupations 465 343 -­‐26.2% 1,395 1,269 -­‐9.0% Production, transportation, material moving occupations 517 414 -­‐19.9% 1,790 1,145 -­‐36.0% Table 7: Employment, by occupation, in Middlesboro and Bell County, 2000-­‐2010 (Source: US Census Bureau) Downtown Middlesboro Retail Market Analysis -­‐ 9 Industry Civilian employed population 16 years old and older Agriculture, forestry, fishing/hunting, mining Construction Manufacturing Wholesale trade Retail trade Transportation + warehousing, and utilities Information Finance + insurance; real estate, rental, leasing Prof., scientific, + mgmt., and admin. and waste mgmt. services Educational services, and health care + social assistance Arts, entertainment, recreation; accommodation + food services Other services, except public administration Public administration Middlesboro 2000 2010 % change 3,460 3,328 -­‐3.8% 140 52 -­‐62.9% 234 185 -­‐20.9% 467 421 -­‐9.9% 76 66 -­‐13.2% 649 551 -­‐15.1% 88 98 11.4% 49 140 185.7% 78 168 115.4% 127 174 37.0% 877 917 4.6% 279 246 -­‐11.8% 220 178 -­‐19.1% 176 132 -­‐25.0% 2000 8,939 587 581 1,201 177 1,286 480 66 211 253 2,467 594 525 511 Bell County 2010 % change 9,024 1.0% 549 -­‐6.5% 496 -­‐14.6% 803 -­‐33.1% 176 -­‐0.6% 1,355 5.4% 510 6.3% 238 260.6% 251 19.0% 472 86.6% 2,673 8.4% 636 7.1% 504 -­‐4.0% 361 -­‐29.4% Table 8: Employment, by industry, in Middlesboro and Bell County, 2000-­‐2010 (Source: US Census Bureau) Education: The percentages of the region’s residents with high school and college degrees are lower than those of the state and nation (Table 9). Roughly 68 percent of Middlesboro residents and 65 percent of County residents are high school graduates, versus 82 percent and 85 percent, respectively, for the state and nation. And only 12 percent of Middlesboro residents and 11 percent of Bell County residents have college degrees; by comparison, 21 percent of Kentucky residents and 28 percent of US residents are college graduates. But, the data is nonetheless encouraging. Between 2000-­‐2010, the number of Middlesboro residents with an associate’s degree has nearly doubled, and those in Bell County with associate’s degrees has increased by two-­‐thirds. The number of residents with graduate or professional degrees has increased by 10 percent in Middlesboro and by 40 percent in Bell County. And, the number of residents with less than a 9th grade education dropped by nearly one-­‐third in both Middlesboro and Bell County between 2000-­‐2010. The percentages of residents in both Middlesboro and the County with high school and college degrees have grown over the past decade. So, while educational attainment is still below state and national norms, it is considerably better than in 2000. Downtown Middlesboro Retail Market Analysis -­‐ 10 Educational attainment Population 25 years and over Less than 9th grade 9th-­‐12th grade, no diploma High school graduate (includes equivalency) Some college, no degree Associate's degree Bachelor's degree Graduate or professional degree Percent high school graduate or higher Percent bachelor's degree or higher 2000 7,084 1,354 1,376 2,333 1,013 220 402 386 61.5% 11.1% Middlesboro 2010 % change 7,084 0.0% 874 -­‐35.5% 1,416 2.9% 2,421 3.8% 1,111 9.7% 404 83.6% 435 8.2% 423 9.6% 67.7% 10.1% 12.1% 9.0% 2000 20,042 5,014 3,675 6,644 2,266 643 914 886 56.6% 9.0% Bell County 2010 % change 19,753 -­‐1.4% 3,327 -­‐33.6% 3,566 -­‐3.0% 6,870 3.4% 2,721 20.1% 1,065 65.6% 968 5.9% 1,236 39.5% 65.1% 15.0% 11.2% 24.4% Table 9: Educational attainment in Middlesboro and Bell County, 2000-­‐2010 (Source: US Census Bureau) HOUSING CHARACTERISTICS As Middlesboro’s and Bell County’s populations have grown smaller, overall demand for new housing has declined – but changing demographics might mean that demand for certain types of housing could grow. A few relevant housing characteristics (Table 10): § A higher percentage of Middlesboro’s households rent their homes (44.3 percent) than residents of the County (32.2 percent), state (30.5 percent) or nation (33.9 percent). § Middlesboro has a slightly higher percentage of one-­‐person owner-­‐occupied housing units (45.1 percent) than the County (39.1 percent), state (38.5 percent), or nation (37.0 percent). § Middlesboro and Bell County have higher percentages of two-­‐bedroom homes than the state and nation. More than 43 percent of the occupied housing units in Middlesboro are two-­‐bedroom units, as are more than 36 percent of those in Bell County. But only 28 percent of occupied housing units in Kentucky are two-­‐bedroom units; nationwide, only 27 percent. Downtown Middlesboro Retail Market Analysis -­‐ 11 Characteristic Housing tenure Total housing units Occupied housing units Vacant housing units Occupancy status Total occupied housing units Owner-­‐occupied housing units Renter-­‐occupied housing units Vacancy status Vacant housing units For rent For sale only Rented or sold, not occupied For seasonal or occasional use For migratory workers Other vacant1 2000 4,955 89.7% 10.3% 4,443 56.7% 43.3% 512 45.1% 12.7% 5.1% 7.4% -­‐ 29.7% Middlesboro 2011 4,760 85.7% 14.3% 4,079 55.7% 44.3% 681 11.7% 1.6% -­‐ 21.4% -­‐ 65.2% 2000 13,341 90.0% 10.0% 12,004 67.6% 32.4% 1,337 30.5% 10.2% 6.2% 7.2% 0.1% 45.8% Bell County 2011 13,210 80.5% 19.5% 10,632 67.8% 32.2% 2,578 9.1% 2.9% 25.8% 8.4% -­‐ 53.8% 2000 1,750,927 90.8% 9.2% 1,590,647 70.8% 29.2% 160,280 27.6% 12.9% 8.4% 19.0% 0.4% 31.6% Kentucky US 2011 2000 2011 1,921,067 115,904,641 131,034,946 87.5% 91.0% 87.6% 12.5% 9.0% 12.4% 1,681,085 105,480,101 114,761,359 69.5% 66.2% 66.1% 30.5% 33.8% 33.9% 239,982 10,424,540 16,273,587 20.2% 25.1% 20.4% 12.5% 11.6% 3.8% 12.7% 6.7% 7.5% 15.9% 34.3% 30.0% 0.3% 0.2% 0.2% 38.4% 22.1% 30.2 Table 10: Various housing characteristics in 2000 and 2011 in Middlesboro, Bell County, Kentucky, and the US (Source: US Census Bureau) §
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The costs of homeownership are substantially lower in Middlesboro and Bell County than in the state and nation. For example, the median monthly owner costs for homes with a mortgage in Middlesboro and Bell County are $790 and $763, respectively – versus $1,110 in Kentucky and $1,560 nationwide. Almost 14 percent of Middlesboro residents and more than 23 percent of Bell County residents live in mobile homes (versus 12 percent in Kentucky and 7 percent nationwide). 1
“Other vacant” includes housing units that do not fit other categories, such as housing units used by caretakers and units, abandoned housing units, and units held by property owners for personal reasons. Downtown Middlesboro Retail Market Analysis -­‐ 12 §
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Similarly, the median monthly rent paid by renter-­‐occupied housing units is lower in Middlesboro and Bell County than in the state or nation -­‐ $457 in Middlesboro and $431 in the County, versus $623 in Kentucky and $871 nationally. Both Middlesboro and Bell County have lost housing units over the past decade. In 2000, there were 4,995 housing units in Middlesboro and 13,341 in the County; by 2011, Middlesboro had a net loss of 235 housing units, and Bell County 131 housing units. By contrast, the state and nation gained housing units. The loss of housing units over the past decade has trimmed Middlesboro’s and Bell County’s housing vacancy rates. For example, Middlesboro’s homeowner vacancy rate was 2.5 percent in 2000; by 2011, it was 0.5 percent. Its rental vacancy rate dropped from 10.7 percent in 2000 to 4.2 percent in 2011. RETAIL BUYING POWER Using information on the demographic characteristics of households in Middlesboro and Bell County (from the US Census Bureau) and on the amount of money that households with various demographic characteristics typically spend on a range of retail products and services (from the US Bureau of Labor Statistics), we estimated the amount of money that people who live in Middlesboro, Bell County, and surrounding counties are likely to spend annually on these products and services. Some of these purchases are made locally; others are undoubtedly made in other communities, online, and from catalogs. Based on the demographic characteristics of Middlesboro residents (particularly household income levels), we estimate that Middlesboro residents currently spend approximately $64 million annually on retail products and services – some of which is being spent locally, and some of which is being spent outside the community. We estimate that Bell County residents spend approximately $171 million (this estimate includes expenditures by residents of Middlesboro and other towns within the County, plus the unincorporated portions of the County). We have included detailed estimates of the retail buying power of Middlesboro and Bell County households for roughly 100 products and services in Appendices 1 and 2. Downtown Middlesboro Retail Market Analysis -­‐ 13 Product or service category Food and beverages Housekeeping supplies Furniture and home furnishings Apparel and apparel services Transportation Health care Entertainment Personal care Reading Education Tobacco products and smoking supplies Miscellaneous Total Middlesboro $ 16,588,000 1,559,000 2,974,000 3,837,000 16,123,000 7,989,000 5,913,000 1,334,000 235,000 2,597,000 45,000 5,136,000 $ 64,330,000 Bell County 43,770,000 4,114,000 7,857,000 10,127,000 43,220,000 21,593,000 15,691,000 3,547,000 623,000 6,476,000 121,000 13,725,000 170,864,000 Table 11: Estimates of the annual retail buying power of Middlesboro and Bell County residents, by major retail category (Sources: US Census Bureau; US Bureau of Labor Statistics; CLUE Group). See Appendix 1 for detailed estimates. In addition to helping estimate the amount of retail buying power that exists in Middlesboro and Bell County by product category, the analysis also makes it possible to examine retail buying power by household income level and by other household demographic characteristics. For example, Table 12 summarizes the retail buying power of Bell County residents, by household income level, for the products and services in five retail categories. This makes it possible to more closely examine whether enough market demand might exist for a particular product at a particular price point to support adding new product lines to existing businesses or developing new businesses to absorb unmet retail market demand. Of course, many people visit Middlesboro – tourists, people visiting friends and relatives, and people visiting Middlesboro to conduct business, for example – and each of these groups of people spends some money when they visit. While visitors are more likely to primarily buy things they need during their visit, such as food and gasoline, than to make larger-­‐ticket purchases or to buy things that are difficult to carry, such as furniture or appliances, there are exceptions – particularly for businesses that offer exceptional service and that build ongoing relationships by phone and internet with one-­‐time or occasional visitors. Downtown Middlesboro Retail Market Analysis -­‐ 14 Household income Under $10,000 $10,000 -­‐ $14,999 $15,000 -­‐ $24,000 $25,000 -­‐ $34,999 $35,000 -­‐ $49,999 $50,000 -­‐ $74,999 $75,000 -­‐ $99,999 $100,000 -­‐ $149,999 $150,000 -­‐ $199,999 $200,000 and above Groceries $ 4,575,000 2,803,000 3,947,000 3,367,000 4,193,000 3,983,000 2,243,000 1,498,000 256,000 381,000 $27,344,000 Dining out 2,798,000 1,168,000 1,564,000 1,543,000 1,815,000 2,423,000 1,402,000 1,061,000 205,000 275,000 14,255,000 Furniture Men’s and Sports, recreation, + furnishings boys’ clothing exercise equipment 1,279,000 316,000 67,000 724,000 213,000 86,000 857,000 182,000 63,000 934,000 237,000 69,000 1,115,000 376,000 163,000 1,332,000 319,000 121,000 735,000 186,000 42,000 561,000 131,000 48,000 123,000 30,000 12,000 151,000 43,000 12,000 7,812,000 2,034,000 684,000 Table 12: Estimates of the annual retail buying power of Bell County residents for five retail categories (Sources: US Census Bureau; US Bureau of Labor Statistics; CLUE Group). Given Middlesboro’s proximity to several major population centers, we examined the buying power of households in the Knoxville and Kingsport-­‐Bristol Metropolitan Statistical Areas for products and services that residents of these areas might be likely to spend when traveling out of town, such as food, lodging, and gasoline (Table 13). If downtown Middlesboro were able to capture only a fraction of a percent of these expenditures, it might be able to support several new businesses. For example, one-­‐tenth of one percent of the amount that residents of these two MSAs spend on dining out is approximately $600,000 – more than enough to support one new downtown restaurant and boost the sales of existing downtown restaurants. We also estimated the buying power of people who visit Cumberland Gap National Historical Park and people who drive through Middlesboro and downtown Middlesboro (Table 14). § Cumberland Gap National Historical Park: According to the National Park Service, the Cumberland Gap National Historical Park attracted 854,000 visitors in 2012. If we conservatively assume that all 854,000 Park visitors visited with other members of their household (rather than visiting alone), these visitors Downtown Middlesboro Retail Market Analysis -­‐ 15 would represent 328,461 households2. And, if we assume that the household demographics of these households are those of the national average, we estimate that Park visitors spend roughly $587 million annually dining out, plus an additional $42 million on alcoholic beverages in restaurants. They also spend $798 million on gasoline and motor oil, $65 million for lodging on out-­‐of-­‐town trips, and $24 million on movie and theatre tickets. Attracting just a fraction of a percentage of Park visitors – and their purchasing power – to downtown Middlesboro could mean hundreds of thousands of dollars in new retail and restaurant sales for downtown businesses (Table 15). Product/service Dining out Alcoholic beverages consumed in restaurants Gasoline and motor oil Lodging on out-­‐of-­‐town trips Movie, theatre, and other admissions Knoxville MSA $ 472,314,000 32,881,000 474,300,000 39,691,000 23,707,000 Kingsport-­‐ Bristol MSA 137,716,000 9,468,000 139,904,000 11,158,000 6,751,000 Combined 610,030,000 42,349,000 614,204,000 50,849,000 30,458,000 Table 13: Estimates of the annual retail buying power of residents of the Knoxville and Kingsport-­‐Bristol Metropolitan Statistical Areas for five retail products/services often purchased on out-­‐of-­‐town trips (Sources: US Census Bureau; US Bureau of Labor Statistics; CLUE Group). §
US Rt. 25 and Cumberland Avenue vehicles: Using Annual Average Daily Traffic (AADT) data from the Kentucky Transportation Cabinet’s Division of Planning, we found that an average of 20,795 vehicles travel on US Rt. 25E just north of Happy Hollow Road on a daily basis, with 23,918 vehicles on US Rt. 25E at Dansbury Avenue. On Cumberland Avenue in downtown Middlesboro, we found that AADT counts range from 12,552 (Cumberland between 22nd and 24th Streets) to 16,424 (Cumberland at 15th Street). In both instances, we used the lower of these two traffic counts, and we conservatively assumed that each vehicle represents only one household. We then estimated the retail buying power the households represented by these vehicles (Table 10). There is, of course, considerable overlap between these households and Middlesboro’s and Bell County’s resident households, for which we have also estimated 2
According to the US Census Bureau, the average household size in the US in 2012 was 2.6 people. Downtown Middlesboro Retail Market Analysis -­‐ 16 retail buying power – but examining each consumer group that passes by, or through, downtown Middlesboro helps understand the potential magnitude that each group might have on downtown sales. Product/service Dining out Alcoholic beverages consumed in restaurants Gasoline and motor oil Lodging on out-­‐of-­‐town trips Movie, theatre, and other admissions Cumberland Gap People driving People driving NHP visitors US Rt. 25 Cumberland Ave 586,779,000 37,149,000 22,424,000 41,701,000 2,640,000 1,594,000 797,868,000 50,513,000 30,490,000 63,153,000 3,998,000 2,413,000 23,856,000 1,510,000 912,000 Table 14: Estimates of the annual retail buying power of Cumberland Gap National Historical Park visitors and of the people driving through Middlesboro on US Rt. 25 and driving through downtown Middlesboro on Cumberland Avenue (Sources: US Census Bureau; National Park Service; Kentucky Transportation Cabinet; US Bureau of Labor Statistics; CLUE Group). Finally, we estimated the retail buying power of the roughly 550 people who work in downtown Middlesboro (Table 15). We assumed that some of these 550 downtown workers are members of the same household – so, we conservatively estimated that they represent 440 households (80 percent of the 550 workers). We assumed that their household income demographics paralleled those of the overall population of Middlesboro. We found that the households represented by downtown workers spend roughly $6.9 million on retail goods and services annually. Given that downtown workers are a captive workday market for downtown businesses, the percentage of retail buying power that downtown businesses could likely capture from this market segment is much higher than the percentages likely to be captured from tourists, US Rt. 25 drivers, or most other market segments. Downtown Middlesboro Retail Market Analysis -­‐ 17 Product or service category Food and beverages Housekeeping supplies Furniture and home furnishings Apparel and apparel services Transportation Health care Entertainment Personal care Reading Education Tobacco products and smoking supplies Miscellaneous Total Households of downtown workers $ 1,789,000 168,000 320,000 413,000 1,739,000 862,000 638,000 144,000 25,000 280,000 5,000 554,000 $ 6,937,000 Table 15: Estimates of the annual retail buying power of the households represented by downtown Middlesboro workers, by major retail category (Sources: US Census Bureau; US Bureau of Labor Statistics; CLUE Group). SALES VOID ANALYSIS Next, we compared estimates of the actual sales currently captured (on an annualized basis) by businesses in Middlesboro and vicinity against estimates of retail buying power for the products and services sold by these businesses3 (Table 16). We found that Middlesboro’s businesses are capturing about $140 million more in gross sales than Middlesboro’s households are spending (Table 16), meaning that Middlesboro is attracting shoppers from outside the community. With just four exceptions, every store category has a sales surplus. 3
Many types of products are sold in more than one type of store, but businesses report sales according to their store/business category, not according to the specific products they sell. For that reason, estimates of actual retail sales are reported according to store category, not according to product or service. Downtown Middlesboro Retail Market Analysis -­‐ 18 NAICS 441 442 4431 444 445 446 447 448 451 452 453 454 722 Store category Motor vehicle + parts dealers Furniture + home furnishings stores Electronics + appliance stores Bldg. materials, garden equip., supply stores Food + beverage stores Health + personal care stores Gasoline stations Clothing + clothing accessories stores Sporting goods, hobby, book, music stores General merchandise stores Miscellaneous store retailers4 Nonstore retailers5 Food services + drinking places Total retail trade Total food/drink Total retail trade and food/drink Supply 17,555,000 2,559,000 888,000 616,000 31,086,000 14,901,000 28,936,000 16,920,000 2,548,000 83,849,000 1,641,000 2,900,000 17,169,000 204,399,000 17,169,000 221,568,000 Demand 14,231,000 1,402,000 2,013,000 2,828,000 12,660,000 6,620,000 9,352,000 3,695,000 1,419,000 15,495,000 2,469,000 2,920,000 7,013,000 75,104,000 7,013,000 82,117,000 Void 3,324,000 1,157,000 (1,125,000) (2,212,000) 18,426,000 8,281,000 19,584,000 13,225,000 1,129,000 68,354,000 (828,000) (20,000) 10,156,000 129,295,000 10,156,000 139,451,000 Table 16: Retail sales voids in Middlesboro (Source: ESRI). See detailed version in Appendix 2. Not surprisingly, the community’s general merchandise store category (Walmart, Dollar General, etc.) has a larger sales surplus than any other store category, and this surplus is almost certainly responsible for the leakages in the four store categories for which sales demand exceeds sales supply. But, this surplus appears to come at the expense of retail sales within the region. When we conducted sales void analyses for the areas within 5-­‐, 10-­‐, and 15-­‐mile radii of downtown Middlesboro (Tables 17 and 18), we found that the area within a five-­‐mile radius has a sales surplus. And, the area within a ten-­‐mile radius has an overall surplus, also, 4
“Miscellaneous store retailers” include florists, used merchandise stores, pet/pet supply stores, office supply stores, gift stores, and several others. 5
“Nonstore retailers” include door-­‐to-­‐door sales, home delivery sales, vending machines, mail-­‐order houses, and online stores. Downtown Middlesboro Retail Market Analysis -­‐ 19 although more modest than that of the area within the five-­‐mile radius. But the area within the 15-­‐mile radius of downtown Middlesboro is experiencing a sales leakage of roughly $22 million. NAICS Store category 5-­‐mile radius 10-­‐mile radius 441 Motor vehicle + parts dealers 20,065,000 23,779,000 (3,714,000) 21,839,000 40,945,000 (19,106,000) 442 Furniture + home furnishings stores 2,796,000 2,367,000 429,000 4,904,000 4,051,000 853,000 4431 Electronics + appliance stores 931,000 3,222,000 (2,291,000) 1,290,000 5,325,000 (4,035,000) 444 Bldg. materials, garden equip., supply stores 826,000 4,715,000 (3,889,000) 1,110,000 8,179,000 (7,069,000) 445 Food + beverage stores 32,302,000 21,031,000 11,271,000 33,845,000 35,941,000 (2,096,000) 446 Health + personal care stores 15,777,000 10,998,000 4,789,000 15,928,000 19,030,000 (3,102,000) 447 Gasoline stations 43,207,000 15,770,000 27,437,000 46,720,000 27,378,000 19,342,000 448 Clothing + clothing accessories stores 17,074,000 6,130,000 10,944,000 17,183,000 10,332,000 6,851,000 451 Sporting goods, hobby, book, music stores 2,800,000 2,416,000 384,000 3,063,000 4,161,000 (1,098,000) 452 General merchandise stores 85,725,000 25,183,000 60,542,000 88,023,000 42,480,000 45,543,000 453 Miscellaneous store retailers 2,116,000 3,929,000 (1,813,000) 2,308,000 6,608,000 (4,300,000) 454 Nonstore retailers 2,911,000 6,308,000 (3,397,000) 3,434,000 12,138,000 (8,704,000) 722 Food services + drinking places 24,812,000 11,883,000 12,929,000 26,296,000 20,237,000 6,059,000 Total retail trade 226,530,000 125,838,000 100,692,000 239,647,000 216,568,000 23,079,000 Total food/drink 24,812,000 11,883,000 12,929,000 26,296,000 20,237,000 6,059,000 Total retail trade and food/drink 251,342,000 137,721,000 113,621,000 265,943,000 236,805,000 29,138,000 Table 17: Retail sales voids within five-­‐ and ten-­‐mile radii of downtown Middlesboro (Source: ESRI). See detailed version in Appendix 3. This data suggests a number of things about retail market performance in Middlesboro and the region. For example: § Sales leakages in several categories – electronics and appliance stores; building materials and garden equipment stores; and sporting goods, hobby, book, and music stores – are almost certainly being offset by sales surpluses in the “general merchandise” category. So, for example, while Middlesboro appears to Downtown Middlesboro Retail Market Analysis -­‐ 20 have a sales leakage of $1,125,000 in the electronics and appliance stores category, part of Middlesboro’s general merchandise stores’ surplus includes some or all of these sales. §
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Big-­‐box discount stores often capture the majority of grocery and pharmacy sales in the regions in which they operate stores. The fact that Middlesboro nonetheless has sales surpluses in these two categories (“food and beverage stores” and “health and personal care stores”) suggests that the community serves as a strong regional anchor. Middlesboro also has fairly significant sales surpluses in the furniture/home furnishings and clothing/clothing accessories store categories. These are categories in which big-­‐box stores often dominate. These are also categories in which businesses have a better chance of survival as part of a cluster of related businesses, giving customers the opportunity to visit several stores and compare styles, prices, and other characteristics before making a purchase. Each of the geographic areas we examined – Middlesboro and the areas within 5-­‐, 10-­‐, and 15-­‐mile radii of Middlesboro – has sales surpluses in the “food services and drinking places” and “gasoline stations” categories. This strongly suggests the presence of tourists within the region. Cumulatively, retail businesses within a 10-­‐mile radius of downtown Middlesboro appear to be generating a net sales surplus – but, the farther from Middlesboro the businesses are, the thinner the net surpluses appear to be. For example, Middlesboro has a net sales surplus of $3.3 million in the “motor vehicle and parts dealers” store category – but the area within five miles of Middlesboro has a sales leakage of $3.7 million in this store category, and the leakage grows to $19.1 million within ten miles of Middlesboro. This pattern is repeated for every major store category other than gasoline stations and restaurants (the two categories where the impact of tourism is most apparent). The area within a 10-­‐mile radius of downtown Middlesboro has an overall sales surplus of $29.1 million – but the area within a 15-­‐mile radius has an overall sales leakage of $22.5 million. It is unlikely that people who live within this 10-­‐15 mile band around Middlesboro would patronize Middlesboro businesses for convenience-­‐oriented products and services like groceries and gasoline (unless they work in Middlesboro or routinely pass through it), but they are close enough to shop in Middlesboro for destination products and services. We do not have data about whether residents of this geographic band shop in Middlesboro Downtown Middlesboro Retail Market Analysis -­‐ 21 for destination products and services, but it is very likely that they are responsible for a portion of the retail sales surpluses that Middlesboro and the region within ten miles of Middlesboro currently attract. NAICS 441 442 4431 444 445 446 447 448 451 452 453 454 722 Store category Motor vehicle + parts dealers Furniture + home furnishings stores Electronics + appliance stores Bldg. materials, garden equip., supply stores Food + beverage stores Health + personal care stores Gasoline stations Clothing + clothing accessories stores Sporting goods, hobby, book, music stores General merchandise stores Miscellaneous store retailers Nonstore retailers Food services + drinking places Total retail trade Total food/drink Total retail trade and food/drink Supply 33,489,000 6,976,000 4,910,000 7,638,000 56,502,000 48,536,000 51,148,000 18,743,000 3,574,000 123,394,000 3,722,000 5,781,000 38,333,000 364,413,000 38,333,000 402,746,000 Demand 73,458,000 7,230,000 9,303,000 14,677,000 64,422,000 34,292,000 49,665,000 18,277,000 7,460,000 75,483,000 11,744,000 23,117,000 36,075,000 389,128,000 36,075,000 425,203,000 Void (39,969,000) (254,000) (4,393,000) (7,039,000) (7,920,000) 14,244,000 1,483,000 466,000 (3,886,000) 47,911,000 (8,022,000) (17,336,000) 2,258,000 (24,715,000) 2,258,000 (22,457,000) Table 18: Retail sales voids within a 15-­‐mile radius of downtown Middlesboro (Source: ESRI). See detailed version in Appendix 4. BUSINESS MIX Using data from Polk City Directories, we examined the numbers and distribution of businesses, by industry category, in Middlesboro and Bell County (Table 19). We found that two-­‐thirds (67.2 percent) of Bell County’s business entities are based in Middlesboro. And we found that, again, Middlesboro appears to be a dominant retail center, with retail businesses comprising 21 percent of all its business entities, the highest percentage of all industry categories in Middlesboro and Bell County. Downtown Middlesboro Retail Market Analysis -­‐ 22 NAICS 11 21 22 23 31-­‐33 42 44-­‐45 48-­‐49 51 52 53 54 55 56 61 62 71 72 81 92 99 Industry Agriculture, forestry, fishing, and hunting Mining, quarrying, and oil/gas extraction Utilities Construction Manufacturing Wholesale trade Retail trade Transportation and warehousing Information Finance and insurance Real estate and rental and leasing Professional, scientific, and technical services Management of companies and enterprises Admin. + support, and waste mgmt. + remediation Educational services Health care and social assistance Arts, entertainment, and recreation Accommodation and food services Other services (except public administration) Public administration Not classified Bell Co. 0.4% 2.2% 0.4% 4.8% 2.4% 2.7% 19.1% 2.3% 2.2% 3.8% 3.7% 5.9% 0.1% 1.2% 3.2% 14.2% 1.6% 6.2% 15.5% 7.1% 1.0% Middlesboro 0.1% 1.6% 0.3% 5.3% 3.1% 3.5% 21.1% 1.4% 2.6% 4.2% 4.1% 5.3% 0.1% 1.2% 1.8% 14.0% 1.6% 6.5% 16.0% 4.9% 1.2% Middlesboro as % of Bell Co. 0.1% 1.1% 0.2% 3.6% 2.1% 2.4% 14.1% 0.9% 1.7% 2.8% 2.7% 3.6% 0.1% 0.8% 1.2% 9.4% 1.1% 4.4% 10.8% 3.3% 0.8% 67.2% Table 19: Number and distribution of businesses by two-­‐digit North American Industry Classification System code for Middlesboro and Bell County (Sources: Polk City Directories, CLUE Group) REGIONAL RETAIL CONTEXT We compiled an inventory of shopping centers and malls over 60,000 square feet and within 50 miles of downtown Middlesboro (Appendix 5). Downtown Middlesboro Retail Market Analysis -­‐ 23 Distance -­‐ 14 20 31 31 32 36 37 37 37 37 39 39 40 41 41 41 44 45 47 49 49 Store Middlesboro Walmart Supercenter Store #739 New Tazewell Walmart Store #1159 Barboursville Walmart Store #1189 Harlan Walmart Store #1743 Corbin Kmart #9513 Williamsburg Walmart Supercenter Store #1048 Morristown Kmart #7063 Manchester Walmart Store #545 Corbin Walmart Supercenter Store #1259 Jefferson City Walmart Supercenter Store #724 Jacksboro Walmart Supercenter Store #1466 Knoxville Walmart Supercenter Store #1319 London Kmart #7354 Clinton Walmart Supercenter Store #4635 Knoxville Kmart #7460 Knoxville Walmart Supercenter Store #2310 Morristown Walmart Supercenter Store #685 London Walmart Supercenter Store #1113 Knoxville Kmart #4033 Knoxville Walmart Supercenter Store #1318 Jonesville Walmart Supercenter Store #3772 Knoxville Walmart Supercenter Store #1320 Table 20: A sample of big-­‐box stores within 50 miles of Middlesboro (Sources: International Council of Shopping Centers, CLUE Group) We found that there are over 500,000 square feet of shopping mall and shopping center space within 30 miles of downtown Middlesboro, with the Middlesboro Mall – anchored by Belk, JCPenney, and Roses – accounting for 317,000 square feet. There are over 6 million square feet within 50 miles (much of the latter Downtown Middlesboro Retail Market Analysis -­‐ 24 within the Knoxville metropolitan area). In addition to these shopping malls and shopping centers, there are dozens of freestanding big-­‐box stores within the region. Within 50 miles of Middlesboro, there are roughly 3.2 million square feet of Walmart and Kmart store space alone (Table 20). There are 20 Dollar General stores within 30 miles of Middlesboro, and over 100 within 50 miles. DOWNTOWN BUSINESS SURVEY Discover Downtown Middlesboro, Inc. conducted a survey of downtown businesses in the summer of 2013, asking a wide range of questions about businesses’ characteristics, the types of customers they serve, and the types of businesses and activities that attract customers to the district and to their businesses. In all, 46 business entities participated in the survey, including retail businesses, restaurants, nonprofit organizations, and medical and professional offices. Among the survey findings: § The youngest business participating in the survey has been open only two months – but several have been in operation over 100 years. The average amount of time businesses have been in operation is 28.9 years. Most of those in operation over 25 years are service-­‐sector businesses, although there are a handful of retail businesses that report being in operation that long (the thrift shop, the pharmacy, flower shop, and pawn shop, for example). § Only a small handful of the businesses report being open after 5pm. § When asked what their busiest day of the week is, businesses reported the complete gamut of possibilities. Similarly, different businesses reported being busiest at different times of year. § When asked why people come downtown, other than work, most of the businesses cited restaurants and errands (like paying bills and visiting medical and professional offices). § When asked, “What are some other businesses you would most like to see locate downtown”, over half of the survey respondents listed restaurants and bars. Several mentioned clothing stores. § One-­‐quarter (26 percent) of the businesses said that they have added jobs recently. § About one-­‐third of the businesses (39 percent) own the buildings in which their businesses are located. Downtown Middlesboro Retail Market Analysis -­‐ 25 §
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Virtually all of the businesses – 96 percent – are located in older/historic buildings. Almost 60 percent report that they have made repairs, ranging from roof repairs and new carpet to major renovations. Downtown Middlesboro Retail Market Analysis -­‐ 26 I I . O B S E R V A T I O N S 1. Population loss all but eliminates organic growth in demand for new retail products and services. As households move away from Middlesboro and Bell County, retail demand shrinks. Without a strategy for increasing the region’s population, for attracting more visitors, for increasing household income, or for increasing the geographic reach of its businesses, the region’s retail industry will gradually slow down. 2. Stagnant growth in personal and household income also exacerbates the problem of generating new demand for retail products and services. There are hundreds of households in the Middlesboro region with incomes high enough to support higher price-­‐point products and services than are generally available in Middlesboro and Bell County. For example, over 550 households in Bell County have annual incomes of $100,000 or above. There are not quite enough of these high-­‐earning households to support a wide variety of businesses – but there are probably enough to support some new product lines in existing businesses and/or to support one or two businesses offering several product lines, if the businesses are effectively merchandised and marketed. 3. The strength of big-­‐box superstores (like Walmart and Kmart) makes it nearly impossible for businesses in several store categories to flourish within the Middlesboro region. General merchandise stores – particularly big-­‐box stores like Walmart – dominate many major store categories in the Middlesboro/Bell County area, absorbing almost all retail purchases made in these categories by consumers within the region. This makes it very difficult for smaller chain stores and independently owned businesses in these categories to succeed. Even of a store’s merchandise overlaps only slightly with that offered by a big-­‐box store, losing as little as 10 percent of its sales can put a small business in danger of failure. 4. As the population of the Middlesboro region becomes older, demand for retail products and services will shift. A person’s age significantly shapes the things they buy and the ways they shop. For example, unlike younger households, older households have usually already furnished their households and do not need new furniture or home furnishings. Grandparents can often afford to spend more for gifts for their grandchildren than their children (their grandchildren’s parents) can. And, of course, older people spend more on healthcare than younger people. As the Middlesboro region’s population grows older, the products and services for which demand exists will change, also. Downtown Middlesboro Retail Market Analysis -­‐ 27 5. As the region’s population becomes older, the need for elder housing will grow, also. Aging baby boomers are less likely to want to retire to traditional assisted living and retirement homes. Instead, they are likely to prefer living within walking distance of shops and services. For that reason, a growing number of communities are successfully creating assisted living and retirement housing in older downtowns, and in older downtown buildings like department stores and hotels. 6. Tourism is a significant part of Middlesboro’s economy. The presence of visitors is particularly evident in the region’s sales surpluses in the “food and drink” category within a solid 15-­‐mile radius of downtown Middlesboro. The added sales revenue generated by tourists makes it possible for Middlesboro to support some product lines and businesses that its residents alone would not be able to support, enriching the community and region. 7. Bell County is becoming known as a center for adventure tourism. The County appears to be gaining some traction as a sports-­‐related tourism site and is experiencing growing success in attracting visitors by offering off-­‐road vehicle trails, whitewater rafting, and other outdoor activities. 8. However, Bell County’s dry status limits economic growth. While tourism has become a very important component of Middlesboro’s and the County’s economies, helping offset job losses in mining and industry, continued tourism growth is almost certain to be stymied by the County’s restrictions on the sale of alcoholic beverages. Its dry status is also likely to significantly discourage the development of creative sector businesses and jobs within the County. 9. Relatively few downtown businesses have online storefronts. Downtown Middlesboro has good broadband service, thanks largely to ConnectKentucky, which has won national recognition for its good work in bringing high-­‐speed internet service to rural parts of the state. However, very few of downtown Middlesboro’s retail businesses appear to have online storefronts or informational websites. 10. Growth in 20-­‐34 year age cohort could lead to growth in knowledge economy and creative sector jobs. Although the populations of Middlesboro and Bell County are becoming older, Middlesboro has actually gained approximately 200 residents in the 20-­‐34 age bracket within the past decade. This is not a large number – but, given the overall aging trend within the region, it is a somewhat promising sign. People in this age cohort are often crucial to the growth of knowledge economy and creative sector businesses. Downtown Middlesboro Retail Market Analysis -­‐ 28 With training, capitalization, and mentorship for young adults, it is possible that Middlesboro could cultivate business growth in these sectors. 11. Several key downtown buildings are in need of rehabilitation/redevelopment for new uses. Key among these is the Elks Home, at downtown Middlesboro’s “100 percent corner” at the intersection of 20th Street and West Cumberland Avenue. Its reuse could be a powerful stimulus to attracting new businesses and new investment in the center of the downtown district. 12. The region’s low cost of living and affordable downtown rents could offer strategic advantages in attracting new businesses and residents. These could be particularly important strategic advantages for developing and/or attracting businesses whose customer base is national or global, such as internet-­‐
based businesses. 13. While there is little demand for more housing units in Middlesboro, there is some demand for different types of housing units. In particular, there could be some market demand for walkable downtown housing for young professionals and empty-­‐nest households and for elder housing (particularly independent and assisted living units). 14. As is the case with most older and historic downtowns, downtown Middlesboro’s primary, secondary, and tertiary trade areas vary considerably, depending on business type and industry sector. Traditionally, a commercial district’s primary trade area is the geographic area from which a majority of its businesses’ customers come – typically the area (usually a radius) from which roughly 60-­‐70 percent of its business sales come. Its secondary trade area is the area from which an additional 20 percent of sales come, and its tertiary trade area accounts for the remainder of its sales. In situations in which all commercial centers are more-­‐or-­‐less equivalent, this type of trade area delineation works reasonably well. This is usually the case with big-­‐box stores and for shopping malls composed mostly of national retail chains, for example, because customers can find essentially the same products in these stores, regardless of the location, making the radius from which the commercial center attracts customers relatively predictable. But this is not the case with older and historic downtowns, which usually offer more eclectic and distinctive mixes of products and services. Downtown Middlesboro Retail Market Analysis -­‐ 29 Downtown Middlesboro appears to attract people from a geographically large market area for some of its products and services (medical services, for example), while other downtown businesses appear to attract people from within the community and, in some cases, primarily from within the district itself. 15. Most new commercial development in Middlesboro has taken place at the edge of town, rather than downtown. Although there are a number of vacant spaces in downtown Middlesboro, much of the new retail growth Middlesboro has attracted in recent years has taken place on the periphery of town. This low-­‐density, auto-­‐oriented commercial development threatens to erode the visual characteristics and design traditions that could otherwise help give Middlesboro market distinctiveness within the region. Downtown Middlesboro Retail Market Analysis -­‐ 30 I I I . R E C O M M E N D A T I O N S Downtown Middlesboro could, conceivably, make a big play to transform the district’s economy by attracting a new economic engine, like Paducah6 has done with arts, or Greenwood, Mississippi7 has done with food, or Floyd, Virginia8 has done with music. In almost all of these instances, the district has benefited from a community alumnus or alumna who has brought a new industry to the community, a new group of people who have brought new energy to the community, or a visionary idea for which a unique and timely market opportunity exists. But, instances like these of substantial transformation are very rare. Most communities that have successfully improved the economic performance of their downtown districts have done so by focusing tightly on two or three clearly-­‐defined market-­‐based strategies; dividing strategies into small steps; engaging a broad network of partners to help implement these strategies; and deploying a range of tools to help reach their long-­‐term goals. We recommend that Discover Downtown Middlesboro, Inc. and its public-­‐ and private-­‐sector partners pursue an economic development strategy that involves ongoing, incremental movement forward, with several carefully planned catalytic projects and with an expanded arsenal of tools to stimulate and support business development. 1. Overall strategy. We recommend focusing on three major market-­‐based strategies: § Strengthening downtown Middlesboro’s attractiveness as a regional retail and entertainment hub, attracting a larger number of visitors and shoppers from outside Middlesboro and Bell County. § Increasing the number of downtown housing units (particularly upper floor housing units). § Developing a core of new small industries and industry clusters downtown. 6
http://www.paducahalliance.org/artist-­‐relocation-­‐program 7
http://abcnews.go.com/US/MadeInAmerica/made-­‐america-­‐viking-­‐range-­‐corp-­‐helps-­‐revitalize-­‐
greenwood/story?id=13027553 8
http://www.smithsonianmag.com/travel/A-­‐Musical-­‐Tour-­‐Along-­‐the-­‐Crooked-­‐Road.html Downtown Middlesboro Retail Market Analysis -­‐ 31 These three major strategies should become the framework for organizing and prioritizing downtown development activities, particularly for choosing business development activities, capital development and financial incentives, marketing activities, organizational partnerships, building rehabilitation/development activities, and land use actions. 2. Prioritize development of these product lines and businesses. Middlesboro’s retail market is a challenging one. With an aging population and no significant new population growth, retail development must necessarily be guided by several guidelines: § Adding product lines that fill small niches within the local and regional retail market (e.g., § Over time, growing promising product lines into freestanding businesses. § Expanding retail and service-­‐sector offerings that will attract visitor dollars but that also appeal to area residents. These are among the product lines and businesses for which we believe greatest market demand exists, or that have reasonable chances of developing a local or regional market: § 2-­‐4 new restaurants, offering a range of dining experiences. The fact that Bell County is a dry county is a major obstacle to restaurant development and to capturing a larger share of tourism expenditures. To compensate for this drawback, it will be crucial that new restaurants offer special dining experiences that, in addition to serving local needs, can attract visitors away from restaurants in neighboring alcohol-­‐serving counties. Some examples from other communities: o A restaurant in New Jersey hires amateur singers as waiters and waitresses. When customers ask their servers what the restaurant’s ice cream selection is, the server calls all the other servers over to the table, and they sing the ice cream menu to the tune of Handel’s “Hallelujah Chorus”, in four-­‐part harmony. o A restaurant/grille in Elroy, Texas specializes in serving wild game. o A growing number of restaurants grow their own produce on site, either on land behind or adjacent to the restaurant or on its roof. Bastille Café and Bar, in Ballard, Washington, has been growing produce on its roof since 2009. Uncommon Ground, in Chicago, grows food in a 2500 square foot rooftop garden and even heats the restaurant’s water with rooftop solar Downtown Middlesboro Retail Market Analysis -­‐ 32 panels. Le Virtu Restaurant, in Philadelphia, grows herbs vertically on a planting wall, allowing customers to snip a handful to take home as they leave the restaurant. o
There are several restaurants in the US that feature floor-­‐to-­‐ceiling or wrap-­‐around aquariums. o
The number of downtown bowling alleys offering gourmet food service has grown in the past few years. §
A small cluster of destination apparel stores. Apparel stores almost always work best when they are co-­‐located with other apparel stores because, when people shop for clothing, shoes, and clothing accessories, they usually like to visit several shops so that they can compare styles and prices before deciding what to buy. For this reason, we recommend that Middlesboro create a small cluster of apparel stores that, in addition to relying on one another to attract customers, can also function as destination stores, attracting people from a broader area by offering one or more unique products, services, or experiences. Given the region’s relatively low household incomes, the cluster of apparel stores should focus primarily on merchandise at lower price points. This could include both new merchandise as well as high-­‐quality used merchandise (designer brands, for example, perhaps sourced from yard sales, estate sales, and second-­‐hand stores in larger cities). A few operating models that have worked well in other communities for this price-­‐point niche include: o Clothing by the pound: The Garment District, in Massachusetts, unstraps an 850-­‐pound bale of clothing – all sizes, all types – every morning when the store opens, selling clothing in the bale for $1.50 per pound. The clothing-­‐by-­‐the-­‐pound feature gives the store an opportunity to quickly sell previously unsold merchandise, and it brings customers into the store early in the day. It also attracts customers eager to find bargains from a wide geographic area. o Second-­‐hand designer clothing, sourced from yard sales, estate sales, and second-­‐hand stores in larger cities and from direct purchases from the public. o
Second-­‐hand infants’ and children’s clothing and furnishings. There are several national franchise businesses in this niche, such as Once Upon a Child and Children’s Orchard. Downtown Middlesboro Retail Market Analysis -­‐ 33 o
Second-­‐hand women’s plus-­‐size and men’s big/tall clothing, which tend to have broad regional appeal. A cluster of apparel-­‐related stores might actually be ONE store that operates from several nearby storefronts. Or, it might operate as a small department store9. §
A used sporting goods store specializing in ATV clothing and accessories, complementing ATV sales available elsewhere in the community and region, as well as offering used hunting and fishing gear and with a strong online presence for both sales and for attracting used merchandise for resale. There are several possible product lines for which some market demand exists in Middlesboro and the Bell County region – but there is not enough demand to support a freestanding business. These are mostly higher price-­‐point products not likely to be carried by discount stores. Some of these product lines might succeed if added to existing downtown businesses. These include: §
§
§
Uniform sales or rentals Specialized books, such as books on regional history and culture, religious books, and new and collectible comic books Specialized hardware and small building supplies Downtown business development must be supported by two policies: § Creating new housing downtown in order to expand the number of 24/7 customers for downtown businesses. § Making downtown Middlesboro the priority location for new commercial development in Middlesboro. These will be discussed in greater detail below. 9
It might, in fact, operate as a community-­‐owned department store. There are now more than two dozen community-­‐owned stores in small towns throughout the US, such as The Mercantile in Powell, Wyoming and Quimper Mercantile in Port Townsend, Washington. These stores are usually capitalized by shares of stock and/or operated as co-­‐ops. The Institute for Local Self Reliance, a Minnesota-­‐based nonprofit organization, provides a free guide to launching community-­‐owned stores on its website: http://www.ilsr.org/wp-­‐
content/uploads/2012/04/community_store_howto.pdf. Downtown Middlesboro Retail Market Analysis -­‐ 34 3. Look for opportunities to develop and attract “location-­‐neutral” retail businesses. There are two violin makers in downtown Bellows Falls, Vermont. The Pecan House, in downtown Cuero, Texas, ships pecans and pecan food specialties throughout the world. A store in downtown Keokuk, Iowa specializes in Carrhartt clothing. Downtown Staunton, Virginia has one of the nation’s top sellers of plastic model kits. These are all examples of businesses that sell most of their merchandise online and, to a lesser extent, to tourists. Because their customers are primarily global, rather than local, these businesses could be located almost anywhere and still succeed in reaching customers. Businesses like these help enrich downtown districts, providing unique products and services that the community would not otherwise be able to support and attracting visitors who might not otherwise visit. Strategically, downtown Middlesboro could be a good location for one or more location-­‐neutral specialized retail businesses. Commercial rental rates and commercial property prices are relatively low; high-­‐speed internet service is good; and the community is close to a vast wealth of natural resources. 4. Make downtown Middlesboro the city’s priority location for new businesses – particularly retail businesses. Every new business that opens outside downtown Middlesboro drains some economic activity away from the downtown district. The community and County simply do not have enough consumer buying power to support new commercial space – particularly retail space – until the downtown is fully occupied. And, given that Middlesboro’s and Bell County’s populations are expected to shrink over the next several decades, market demand will continue to shrink, as well, making the need for new commercial space almost nonexistent. Most of the new commercial development that has taken place in Middlesboro in recent years has been clustered on the edge of town, near the Cumberland Gap National Historical Park. But this cluster of low-­‐
density, auto-­‐oriented development does little to distinguish Middlesboro from other communities within the region, most of which have similar chain stores and fast-­‐food restaurants on their peripheries, as well. And redeveloping older buildings usually generates more property tax revenue, on a per-­‐acre basis, than low-­‐density, auto-­‐oriented development10. 10
Joe Minicozzi, an urban planner in North Carolina, has written extensively on the fact that the property tax benefits of downtown development are overwhelmingly better for local governments than lower-­‐density Downtown Middlesboro Retail Market Analysis -­‐ 35 A growing number of communities have recognized the importance of concentrating business development downtown. For example, Davidson, North Carolina (which, with roughly 11,000 people, is slightly smaller than Middlesboro) attributes much of its economic development success to focusing on walkability and on targeting new growth downtown rather than in outlying areas. And in the 1980s, Collierville, Tennessee enacted an ordinance that charged a development impact fee on new commercial buildings built outside the downtown district, using the revenues from the impact fee to support downtown revitalization activity. Given the region’s population losses and accompanying losses in retail market demand, we encourage Middlesboro’s public-­‐ and private-­‐sector civic leaders to make a strong commitment to funnel as much new commercial development into downtown Middlesboro, rather than continuing to permit its development on the edge of town. 5. Make downtown Middlesboro the city’s priority location for small industries. One of the fastest-­‐
growing industrial development trends is the development of small, environmentally clean industries with fewer than 25 employees. And, many of these new, small industries are locating in older and historic downtowns, where workers can easily walk to restaurants, banks, the post office, and other services. This is particularly true of knowledge-­‐sector and creative economy industries, whose (generally) younger workers prefer historic buildings to newer ones. A few examples: § White Star Manufacturing, in Austin, Texas, is a full-­‐service clothing manufacturer that produces prototype garments for clothing designers, as well as offering short runs and mass production. The company’s founders recognized that an increasing number of clothing designers were interested in bringing production back to the US – but that so many garment manufacturing businesses had closed that there was enormous new demand for this service. § When Fat City cycles went out of business in 1994, about a dozen of its former employees created a new bicycle manufacturing firm, Independent Fabrication, in downtown Somerville, Massachusetts. development outside the downtown area. See, for example, “The Smart Math of Mixed-­‐Use Development”, http://www.planetizen.com/node/53922 Downtown Middlesboro Retail Market Analysis -­‐ 36 The employee-­‐owned company makes several standard bike models, but it specializes in making high-­‐end custom bikes for serious amateur cyclists. §
Theological Threads, in downtown Beverly, Massachusetts, makes custom vestments for clerics of many different religions. §
William Rees makes concert harps and Celtic harps from a storefront shop in downtown Rising Sun, Indiana. §
Victory Silks, a small company that manufactures custom horseracing silks, operated in downtown Duncan, Oklahoma until its owner retired and sold the business to one of her former employees, who has now moved the business to downtown Comanche, Oklahoma, just a few miles away. Downtowns that have been successful in attracting and developing small industries have found the following tools to be helpful, and we recommend these for downtown Middlesboro: §
Creating a coworking space: Coworking spaces provide inexpensive office, meeting, and work space for independent workers and small firms. People can rent space for several hours a day, an occasional day, or can make a longer-­‐term commitment. Unlike facilities that simply offer temporary office space, coworking spaces actively encourage collaboration and synergy among tenants. As the number of coworking spaces has expanded, they have become more varied – and, sometimes more specialized. For example, there are now coworking spaces that specialize in sewing, woodworking, arts, machining, and mobile app development. GangPlank11, in Flagstaff, Arizona, does not charge a membership fee or rent; instead, users spend some of their time working on projects for the city government and local industries, which support the space. While not explicitly intended to be incubators of small industries, many coworking spaces do, in fact, serve as de facto small industry incubators, providing a flexible and creative work environment for small manufacturers (particularly in creative industries) and tech innovators, with access to people with complementary skills. Almost 100 towns and cities have now combined coworking space with 11
http://gangplankhq.com Downtown Middlesboro Retail Market Analysis -­‐ 37 §
business accelerators that provide structured training (particularly in coding and software development), seed financing, and access to venture capital. Should a coworking space gain traction in downtown Middlesboro, Discover Downtown Middlesboro, Inc. and its partners might explore the possibility of expanding it to include an accelerator. Creating a downtown incentive zone to encourage development of small industries: For example, Winchester, Virginia has created a downtown technology zone12, providing an attractive package of incentives, from fee waivers to rebates on utility taxes and business licenses for small technology companies that locate downtown. To date, downtown Winchester has attracted more than 50 new tech-­‐related businesses. The Commonwealth of Kentucky offers a number of financing programs and incentives to encourage development and growth of certain types of small businesses and industries, particularly those involved in agribusiness, renewable energy, bioscience, and other tech-­‐related businesses (see Appendix 6). Many of these programs could help support development of tech-­‐ and research-­‐related businesses in downtown Middlesboro, whether in individual spaces or in a coworking space – and they could be valuable tools for expanding a coworking space into an accelerator. 6. Enable the sale of alcoholic beverages in restaurants. Bell County’s restriction on sales of alcoholic beverages in restaurants has discouraged tourism-­‐based economic development for years. As tourism becomes more vital to the region’s economy, offering alcoholic beverage sales will become more important in preventing the loss of tourism dollars to neighboring “wet” counties. We recognize that this is a controversial idea that has been debated in the County for years. Other communities have successfully made the shift to alcoholic beverage sales by outlining and discussing the pros and cons of all major points over a period of several years. In Lubbock, Texas, for example, the County developed separate ballot initiatives for packaged liquor sales and for by-­‐the-­‐drink sales in restaurants. Both initiatives passed, with slightly more votes cast in favor of by-­‐the-­‐drink sales. http://winva.com/wp-­‐content/uploads/2013/07/technologyZone_WC.pdf 12
Downtown Middlesboro Retail Market Analysis -­‐ 38 7. Work with downtown businesses to strengthen their online presence and improve the effectiveness of their websites. Online sales now account for almost ten percent of consumers’ discretionary spending in the United States. For younger shoppers, this percentage is even higher. And, online sales have grown by double digits for 12 consecutive quarters – and are likely to continue growing throughout the next decade. Having an online presence is particularly important for businesses in communities with significant numbers of tourists. By offering a great in-­‐store experience to visitors and by maintaining periodic contact with visitors by email, phone, and/or mail, downtown businesses can often use their websites to turn one-­‐time visitors into long-­‐term customers. There are a number of good, easy-­‐to-­‐use, and affordable online services that offer online storefronts for small businesses. Shopify.com, for example, provides over 100 ready-­‐made storefront templates to retail businesses. For $14/month, businesses can feature up to 25 items online, under their own domain names; Shopify.com handles credit card processing (for an average credit card processing fee) and provides ongoing information on online sales so that businesses can fulfill their online orders. For $29/month, businesses can feature an unlimited number of items. 8. Expand downtown Middlesboro’s arsenal of business development tools. Developing new downtown businesses will require intentional and focused action. Some of the tools that we believe might be effective in helping cultivate and support new businesses in downtown Middlesboro include: § A forgivable loan program: Forgivable loan programs have been very successful tools in several communities for supporting the development and expansion of priority businesses and product/service lines. Waterville, Maine’s forgivable loan program13 provides loans of $15,000-­‐$50,000 for businesses that the downtown’s retail market analysis identified as high priority additions to the district’s business mix. Businesses must agree to be open for a certain minimum number of hours each week, and 13
http://www.watervillemainstreet.org/DFL_BackgroundDataForm.pdf Downtown Middlesboro Retail Market Analysis -­‐ 39 §
priority is given to businesses that locate in ground-­‐floor storefronts. To apply, businesses complete an application, submit a business plan, and pay a fee equal to one percent of the amount for which they are applying. If approved, businesses pay interest only on the loan for five years, after which the loan principal is forgiven. Waterville’s forgivable loan program is funded by Tax Increment Finance revenues – but other communities have used other sources to finance similar programs, including Community Development Block Grants, foundation grants, and business improvement district revenues. A pop-­‐up business program: Pop-­‐ups are temporary businesses that operate for several months, usually to test a new product or business concept. In most instances, owners of vacant storefront buildings agree to provide vacant storefront space for free for several months to temporary businesses that have been vetted by the downtown development organization sponsoring the initiative, with the hope that one or more of the pop-­‐ups will become permanent businesses (and long-­‐term tenants). In the short run, pop-­‐ups help create energy for the district, attracting locals and visitors curious to see what the temporary business offers. In most cases, downtown pop-­‐up businesses have served as de facto retail incubators, providing entrepreneurs with an opportunity to see if there is enough market demand to support a particular product or service. Several years ago, for example, Florence, South Carolina’s downtown development program organized and sponsored a pop-­‐up business competition. Potential businesses developed and submitted business plans, and the downtown development organization chose the two whose business plans seemed most realistic and that seemed like the best fit for the downtown’s existing retail mix. The two winning businesses received three months of free rent. In the two years that the downtown development program has offered the annual competition, three of the four pop-­‐ups have signed long-­‐term leases after their trial runs. In a couple of towns, downtown property owners have opted to create permanent pop-­‐up businesses, offering (usually) 11-­‐week leases to temporary businesses, followed by a one-­‐week period for a new temporary business to move in. Businesses that succeed then rent their own storefront spaces downtown. Downtown Middlesboro Retail Market Analysis -­‐ 40 §
Retail website incentive grant program: Small grants of as little as $100 to help downtown retail businesses develop online stores could greatly accelerate downtown Middlesboro’s online retail presence. §
Restaurant development program: Restaurants have capital-­‐intensive start-­‐up costs, and it often takes some time for them to develop clientele, so they often need financial assistance. Some restaurants are launched and owned by small groups of private investors, typically operating as a limited liability company, ensuring adequate capital to cover start-­‐up costs and to defray operating losses during the start-­‐up phase. There are a growing number of specialized programs to support restaurant development, as well. For example: o
o
Winston-­‐Salem, North Carolina’s Restaurant Row program provides loans for up to 70 percent of the start-­‐up costs for restaurateurs willing to locate in a targeted section of the downtown district. The City then uses some Community Development Block Grant money to defer loan repayments for participating restaurants for two years, giving the restaurants time to establish a solid customer base. Allentown, Pennsylvania’s Restaurant Row grant program offers outright grants to help defray the costs of interior construction, fixtures, façade design/improvements, and signs for restaurateurs willing to open a restaurant within a seven-­‐block section of downtown Allentown. Grants cover 50 percent of eligible expenses, up to a maximum of $50,000. §
Crowdfunding: The number of new businesses that have raised start-­‐up capital through crowdfunding has more than tripled in 2013. Through crowdfunding, many people contribute small amounts of money in a project they support. For example, SweetBar, a bakery in California, raised over $20,000 from 100 people via Kickstarter.com, an online crowdfunding service. Supporters pledged between $5 and $1,000 each, with the business providing rewards for each funding level. People who contributed $40 each received fresh-­‐baked muffins and cappuccino for two people; those who contributed $60 had their names added to the bakery’s “Sweet Bar Wall of Sweet Hearts” website and received an invitation to a VIP supporter party; those who contributed $1,000 received private baking lessons with the bakery’s chef. Downtown Middlesboro Retail Market Analysis -­‐ 41 Crowdfunding might not be a good solution for every business, but it is already proving to be an important tool for raising money for the new businesses that are the highest priorities for downtown districts (as well as for helping existing businesses expand). 9. Expand the arsenal of downtown property rehabilitation and development tools. We recommend considering these tools, in particular: § Property tax abatement: Abating the property taxes that would otherwise result from increased property value when a downtown building is renovated can be a valuable incentive for property owners. At Bell County’s current property tax rate of $0.2740 per $100 of real estate value, abating property tax on a $100,000 building rehabilitation would save the property owner $2,740 over the course of ten years. § Code improvements: San Angelo, Texas offers refunds for a significant percentage of the costs of removing asbestos from downtown buildings, installing sprinklers, and providing secondary building egress, if required by life safety codes. The State of Vermont offers a 50 percent tax credit, up to $50,000, for installing elevators and sprinklers to bring buildings up to life safety code standards. If property owners do not have enough taxable income to offset with the credit, they can request a bank credit certificate instead, which they can then exchange for cash at a Vermont bank. § Demolition permits: Several communities use the revenue from demolition permits throughout the community to downtown historic preservation projects. § Federal tax credits: The federal government offers three income tax credit programs, all of which have supported downtown building rehabilitation projects throughout the nation: o The federal historic rehabilitation tax credit program provides an income tax credit equal to 20 percent of the cost of qualified rehabilitation expenses14 for certified historic buildings15. 14
“Qualified rehabilitation expenses” (QREs) include most bricks-­‐and-­‐mortar rehabilitation costs, along with architectural, engineering, and other professional fees and construction-­‐period financing and utility costs. Building Downtown Middlesboro Retail Market Analysis -­‐ 42 o
The program is administered jointly by the National Park Service and the Internal Revenue Service. Property owners can carry the tax credit forward 20 years and/or backward one year. The building’s rehabilitation must follow the Secretary of the Interior’s Guidelines for Rehabilitation, and the property owner must not sell or transfer ownership of the property for five years after it is placed in service. There are several other program regulations; for details, see “Historic Preservation Tax Incentives”, available on the National Park Service’s website16. The low income housing tax credit program (LIHTC) provides an income tax credit roughly equal to four percent (for projects involving property acquisition) or nine percent (for those that involve construction or rehabilitation, but not acquisition) of project costs, annually, for ten years. Over the course of the ten-­‐year period, the effective yield is approximately 30 percent for the four percent credit and 70 percent for the nine percent credit. Apartments financed with the low income housing tax credit must remain “affordable” for at least 30 years. To date, the low income housing tax credit program has provided financing for more than two million affordable apartments. The US Department of Housing and Urban Development provides basic information on the low income housing tax credit program on its website17. o
The New Markets tax credit program (NMTC) provides a 39 percent tax credit to investors who, in exchange for the tax credit, make investments in business development projects (including most commercial property rehabilitation projects) in qualified Census tracts. A acquisition, site improvements (such as sidewalks and landscaping), and costs associated with building additions are not considered to be qualified expenses. 15
Buildings are considered “historic” if they are listed on the National Register of Historic Places, if they are eligible for listing on the National Register, or if they are located in a historic district listed on the National Register and contribute positively to the architectural, historic, and/or cultural characteristics of the district. 16
http://www.nps.gov/tps/tax-­‐incentives/taxdocs/about-­‐tax-­‐incentives-­‐2012.pdf 17
http://portal.hud.gov/hudportal/HUD?src=/program_offices/comm_planning/affordablehousing/training/web/ lihtc/basics Downtown Middlesboro Retail Market Analysis -­‐ 43 new report, The NMTC – At Work in Communities Across America18, provides an overview of the tax credit and case studies of a number of projects that have used New Markets credits, including several historic preservation projects. The three tax credits can be combined, providing a very powerful financial tool and incentive for rehabilitating historic commercial buildings. They can also be transferred to investors who, in exchange for using the tax credits, invest equity into the building rehabilitation project. 10. Focus on developing locally owned businesses, rather than on trying to attract national retail chains. With rare exceptions, national retailers are market followers, rather than market leaders. National retailers look for locations in which a strong customer base has already been firmly established, with predictable pedestrian and vehicular traffic counts, specific types of nearby supportive businesses, and specific demographic characteristics. For example, Olive Garden – a restaurant mentioned by several downtown business survey participants as a desirable new potential business for downtown Middlesboro – looks for locations with 75,000-­‐150,000 residents within a five-­‐mile radius, and with a minimum of 30,000 vehicles per day passing by the site. Ross Dress for Less looks for sites with a minimum of 100,000 residents within a five-­‐mile radius, daily vehicular traffic counts of at least 40,000 vehicles, and 160 linear feet of street frontage for the shop, with fashion-­‐oriented co-­‐tenants nearby. 11. Attract and retain young entrepreneurs. Like many small, rural communities, Middlesboro is losing younger people – particularly those who leave town to go to college, then find jobs elsewhere. But a growing number of small towns are putting together programs to lure young entrepreneurs, and we recommend that Middlesboro explore possibilities for creating such a program. A few examples: § A Rural Opportunity Zone program in Kansas19 repays up to $15,000 in student loans over the course of five years for young graduates willing to move to one of 50 rural Kansas counties. The program has had roughly one applicant per day since it was implemented in 2011. 18
http://nmtccoalition.org/the-­‐nmtc-­‐at-­‐work-­‐in-­‐communities-­‐across-­‐america/ http://www.kansascommerce.com/index.aspx?NID=320 19
Downtown Middlesboro Retail Market Analysis -­‐ 44 §
§
Paducah launched its Paducah Artist Relocation Program (www.paducaharts.com) in 2000 to attract artists to a neighborhood adjacent to its downtown. In addition to national marketing to attract artists, the program provides 100 percent financing to artists interested in rehabilitating an existing building or building a new one, free building lots, grants to cover architectural fees, and other benefits. Since the program was launched, more than 70 artists from throughout the country have moved to Paducah. Concerned that his town’s small synagogue’s congregation was growing smaller, a Dothan, Alabama business man recently donated $1 million of his own money to offer $50,000 grants to Jewish families willing to relocate there. To date, the program has attracted six new families, with a total of 18 new residents. 12. Increase the supply of downtown housing. Upper-­‐floor residents provide a built-­‐in, 24/7 market for downtown businesses, particularly for convenience-­‐oriented businesses like restaurants, pharmacies, and food stores. And, by providing additional rental income for property owners, they make it more feasible for property owners to maintain and periodically rehabilitate their buildings. The nation’s population is expected to grow by more than 30 percent in the next 50 years. And most real estate economists expect that most of the demand for new housing will be in high-­‐density, mixed-­‐use districts – in essence, historic downtowns with dense, cohesive cores of 2-­‐4-­‐floor historic storefront buildings. Because the population of the Middlesboro/Bell County region is not growing, the region does not need to increase its net number of housing units. However, we believe that, just as there is a strong national market for downtown housing, there is some demand for downtown apartments and condominiums in Middlesboro, particularly for young adults and empty-­‐nest households who might prefer living in a walkable environment, close to restaurants and services. Conservatively, we believe that downtown Middlesboro could support development of approximately 15-­‐20 upper-­‐floor apartments within the next two years, plus 5-­‐8 condominiums, for these two demographic groups, with a mix of affordable/workforce and market-­‐rate units. Should downtown business development accelerate, these estimates could increase by as much as 50 percent. Downtown Middlesboro Retail Market Analysis -­‐ 45 In order to develop upper-­‐floor housing, downtown development organizations often need to conduct an inventory of available upper-­‐floor space, ensure that upper-­‐floor spaces comply with local zoning and building codes (and/or that local zoning and building codes actively support, rather than restricting, upper-­‐floor housing development). We recommend the following: § Appoint a short-­‐term task force to review the city’s building code, identify any regulatory and/or procedural barriers, and recommend corrections. § Review articles about upper-­‐floor housing in Main Street Now. §
The Illinois Main Street Program offers numerous resources on upper-­‐floor development on its website. §
Create a task force to become familiar with historic, low income housing, and New Markets tax credits and to then help downtown property owners use tax credits to help finance development of upper-­‐floor housing20. §
Develop a package of incentives to encourage upper floor development. Some communities have created incentive programs specifically to help property owners use upper floor spaces. For example, Rock Island, Illinois created a Tax Increment Finance (TIF) district, generating revenue to capitalize a loan pool that makes up to five forgivable loans of $20,000 per unit each year. The community also adopted the International Existing Building Code, amended its zoning ordinance to streamline the process of developing mixed-­‐use buildings downtown, and listed its downtown district in the National Register of Historic Places so that property owners could take advantage of the federal historic rehabilitation tax credit. §
Develop a package of incentives to encourage downtown workers to live downtown. For example, five employers in downtown Detroit have joined together to offer a package of incentives to encourage downtown workers to move downtown and to reward workers who already live 20
The National Park Service and National Trust for Historic Preservation have published a very helpful guidebook on using historic and low-­‐income housing tax credits, Affordable Housing Through Historic Preservation: A Case Study Guide to Combining the Tax Credits, by William Delvac, Susan Escherich, and Bridget Hartman (1995). Downtown Middlesboro Retail Market Analysis -­‐ 46 downtown21. The incentive package includes forgivable loans of up to $20,000 for first-­‐time downtown home (house or condominium) buyers, a rent allowance for first-­‐time downtown apartment renters, and bonuses for existing downtown apartment renters who renew their leases. §
Communicate with property owners to share case studies of downtown upper-­‐floor housing, to encourage them to redevelop their upper-­‐floor spaces, and to discuss ways in which Discover Downtown Middlesboro, Inc. and its partners can help with the redevelopment process. 13. Redevelop the Elks Home for use primarily as independent and assisted living units. As Middlesboro’s and Bell County’s populations age, there will be increasing market demand for independent and assisted living housing units. As is the case with Millennials and empty nest households seeking out downtown apartments and condominiums, demand nationally for downtown elder housing has grown rapidly over the past decade. We believe that the historic Elks Home building could make an ideal site for independent and assisted living units, offering close proximity to restaurants, retail shops, and medical and professional services. There are many good examples that might serve as models for the rehabilitation and adaptive use of the Elks Home for independent and assisted living. One that we think might be a particularly good model, in terms of building age, comparable community household income demographics, and project financing is the Historic Hotel Iowa, in downtown Keokuk, Iowa. The Hotel Iowa was built in 1913 and was operated as a hotel for approximately 60 years before falling into disrepair. The building was rehabilitated for use as an independent senior apartment building in 2006 and was completely leased four months before rehabilitation work was completed. The $5.4 million project received $3.3 million in low income housing tax credits and $700,000 in historic rehabilitation tax credits, along with $320,000 of HOME funds22 (a federal program administered by the US Department of Housing and Urban Development) for inclusion of several very low income housing units. 21
www.detroitlivedowntown.org/incentives/ http://portal.hud.gov/hudportal/HUD?src=/program_offices/comm_planning/affordablehousing/programs/ home/ 22
Downtown Middlesboro Retail Market Analysis -­‐ 47 The facility offers 53 one-­‐ and two-­‐bedroom units, ranging in size from 502-­‐843 square feet, with a mix of affordable and market-­‐rate units. One-­‐bedroom market-­‐rate units rent for $645/month; two-­‐bedroom units rent for $725/month. Affordable units rent for $432-­‐$610/month, with maximum income limits of $25,140 for one-­‐person households and $28,740 for two-­‐person households. Rents include all utilities, including garbage service from each floor to the facility’s dumpster. The facility offers a number of amenities, including an exercise room, a library/reading room, a computer room, a television lounge and laundry facilities. Through a relationship with the Keokuk Area Hospital’s home healthcare program, it maintains a nurse’s station on site. For those who are interested, it also offers one communal meal a day (all units include kitchens). There is a ground-­‐floor hair salon, and off-­‐
street parking is available to the building’s residents. 14. Explore the possibility of creating a small downtown hotel or inn. A small downtown boutique hotel could not only bring more visitors into the downtown area but could also help support new and existing restaurants. There are many good examples from small towns throughout the nation. For example: § The Abingdon Manor Inn and Restaurant in Latta, South Carolina offers one entrée in its restaurant each night – and the first guest who calls and makes dinner reservations for a specific date gets to choose what that evening’s entrée will be. Because of this tradition, the restaurant often books up months in advance, with guests inviting their family, friends, and coworkers to join them there for their special meals. The inn’s seven lodging rooms are often reserved as a block for family reunions, small corporate retreats, and book clubs looking for a night away. § Tremont on Main, in downtown Marshalltown, Iowa, spans three contiguous downtown storefronts. It offers three ground-­‐floor restaurants (a breakfast/lunch grille, a fine dining restaurant, and a sports bar), seven second-­‐floor hotel rooms, and several meeting rooms. The couple that owns the hotel lives on the third floor of one of the three buildings. 15. Conduct further research on where downtown customers come from. The downtown business survey conducted in the summer of 2013 asked participating businesses to list the zipcodes from which their customers come. We suspect that customers might come from an even broader range than many downtown business owners realize. Downtown Middlesboro Retail Market Analysis -­‐ 48 We have found that large regional maps placed in businesses, asking visitors to place a pin or dot on the map to indicate where they live, is a very effective tool for gathering this information. Maps are mounted on foam board and placed in a prominent place inside a cross section of the district’s businesses for one week. When completed, the maps provide a good profile of where people who visit different types of downtown businesses come from. The data is often surprising, always interesting – and usually fun for customers. We recommend that Discover Downtown Middlesboro place maps in 6-­‐10 downtown businesses for one week every three months over the course of the next year, gathering information on where customers come from during different shopping seasons. Downtown Middlesboro Retail Market Analysis -­‐ 49 I M P L E M E N T A T I O N Transforming the economy of a historic downtown requires diligence, creativity, and coordination of many groups working together collaboratively. A few suggestions for using this market analysis and implementing the recommendations in this report: § Break large tasks into small steps. Large tasks often seem impossible until they are broken down into small, discreet steps that can be easily implemented by an individual, organization, or agency in a relatively short period of time. § Divide and conquer. It would be impossible for any one entity to singlehandedly undertake all the tasks that need to take place to strengthen downtown Middlesboro. Just as there are literally hundreds of small actions that have contributed to the need for revitalization, strengthening downtown Middlesboro’s economy and improving the infrastructure to effectively encourage and facilitate economic growth will require literally hundreds of small actions, over years, by many different stakeholders and partners. § Start with many small projects … and a few catalytic ones. Starting with smaller projects helps stakeholders and other partners develop the skills and collaborative partnerships needed to gradually tackle more complicated projects – and doing so can mobilize scores of volunteers, building a broader base of support for the overall revitalization initiative. At the same time, moving forward with a few catalytic projects can accelerate the timeline and provide tangible evidence that positive change is taking place. § Monitor changes. Over the next 3-­‐5 years, carefully monitor changes in the numbers of downtown businesses opening and closing, the numbers of people employed by downtown businesses, the numbers of people attending special events and festivals, and new investment in physical improvements to existing buildings as well as investment in new commercial construction in downtown Middlesboro. § Spread the word broadly. It is particularly important that all downtown business owners and property owners be kept up to speed on what’s happening and that no business or property owner feels left out. As with so many aspects of downtown revitalization, there is no one single tool that will reach all Downtown Middlesboro Retail Market Analysis -­‐ 50 business and property owners. Use a variety of tools, including email distribution lists, announcements in community bulletins, announcements at public meetings, websites, and personal contact. §
Take a leap of faith. In our 25-­‐plus years of working with communities throughout the United States and around the world on downtown revitalization and development, we have consistently found that the single biggest obstacle to revitalization is skepticism. When people believe that revitalization will succeed, it almost always does. Downtown Middlesboro Retail Market Analysis -­‐ 51 G E N E R A L L I M I T A T I O N S A N D D I S C L A I M E R Retail market analyses, their components (such as retail sales void analyses), and derivative business development plans provide important guidance on how a commercial center should, theoretically, be able to perform and on the sales levels businesses should be able to achieve. However, a number of factors affect the actual performance of retail businesses and commercial centers, including the skills of the business operator, level of business capitalization, the quality of the physical environment, changes in overall economic conditions, the effectiveness of business and district marketing programs, and many other factors. The information in this report is intended to provide a foundation of information for making retail development decisions in downtown Middlesboro, but it does not, and cannot, ensure retail success. As is true of all demographic, economic, and market studies, the reliability of our analysis is limited to the reliability and quality of the data available. Our research assumes that all data made available by federal, state, county and municipal sources and from other community organizations is accurate and reliable. The retail market catchment areas of commercial districts are not confined to the boundaries of Census tracts or political jurisdictions. We have therefore had to make estimates based on available data and on our professional judgment. Given these limitations, our report reflects what we believe are reasonable estimates of trends, current conditions, and future possibilities. Downtown Middlesboro Retail Market Analysis -­‐ 52 A P P E N D I X 1 Middleboro and Bell County residents’ buying power for selected retail products and services Buying power Category Food + beverages Groceries Dining out Alcoholic beverages (consumed at home) Alcoholic beverages (consumed in restaurants) Housekeeping supplies Laundry and cleaning supplies Other household products Stationery, gift wrap Postage Delivery services Furniture and furnishings Household textiles Furniture Floor coverings Major appliances Small appliances, misc. housewares Window coverings Infants' equipment Laundry + cleaning equipment Outdoor equipment Lamps + lighting fixtures Clocks and other household decorative items Telephones + accessories Lawn + garden equipment Middlesboro Bell County 10,307,000 5,415,000 493,000 373,000 467,000 772,000 160,000 155,000 5,000 220,000 719,000 39,000 391,000 242,000 19,000 32,000 53,000 59,000 39,000 192,000 65,000 71,000 27,244,000 14,255,000 1,295,000 976,000 1,218,000 2,060,000 419,000 403,000 14,000 576,000 1,907,000 107,000 1,056,000 639,000 53,000 90,000 139,000 155,000 97,000 489,000 171,000 193,000 Downtown Middlesboro Retail Market Analysis -­‐ 53 Power tools Hand tools Office furniture for home use Indoor plants + fresh flowers Closet and storage items Furniture rental Luggage Computers/hardware (nonbusiness use) Computer software/accessories (nonbusiness use) Other misc. household equipment Apparel and footwear Men's clothes Boys' clothes Women's clothes Girls' clothes Clothes for children under 2 Footwear Watches, jewelry + repair Shoe repair Tailoring, alterations, repair Laundry + dry cleaning Fabric and patterns for making clothing Clothing storage Transportation Vehicle purchase Gasoline and motor oil Other vehicle expenses (maintenance, insurance, etc.) Public transportation Health care Health insurance 112,000 37,000 10,000 79,000 29,000 22,000 27,000 312,000 17,000 188,000 561,000 207,000 1,229,000 274,000 258,000 835,000 180,000 2,000 10,000 254,000 26,000 1,000 4,542,000 5,279,000 5,507,000 795,000 4,681,000 289,000 96,000 26,000 208,000 75,000 62,000 67,000 818,000 46,000 498,000 1,498,000 535,000 3,237,000 714,000 677,000 2,209,000 489,000 4,000 27,000 667,000 68,000 2,000 12,226,000 14,124,000 14,758,000 2,112,000 12,679,000 Downtown Middlesboro Retail Market Analysis -­‐ 54 Medical services Nonprescription drugs Nonprescription vitamins Prescription drugs Eyeglasses and contact lenses Hearing aids Topicals and dressings Medical equipment (rental + sales) 1,631,000 230,000 128,000 1,042,000 121,000 31,000 100,000 25,000 Entertainment Social, recreation, and health club memberships Fees for participant sports Movie, theatre, and other admissions Admissions to sporting events Fees for recreational lessons All other fees and admissions (incl. on out of town trips) Musical instruments + accessories (sales + rentals) Cable and satellite services A/V equipment, recorded music + movies, gaming systems Pets, pet supplies, pet care Toys, games, arts, crafts, tricycles Stamp and coin collecting Playground equipment Athletic gear, game tables, exercise equipment Bicycles Camping equipment Hunting + fishing equipment Winter sports equipment Water sports equipment Other sports, recreation and exercise equipment Photographic equipment, supplies, services Live entertainment + supply rental for catered events 133,000 157,000 249,000 103,000 91,000 57,000 894,000 1,803,000 688,000 1,108,000 254,000 7,000 7,000 96,000 32,000 24,000 47,000 6,000 8,000 52,000 79,000 18,000 4,371,000 624,000 332,000 2,843,000 325,000 85,000 267,000 67,000 350,000 412,000 661,000 263,000 240,000 155,000 2,359,000 4,814,000 1,823,000 2,959,000 653,000 20,000 20,000 258,000 84,000 61,000 138,000 18,000 20,000 129,000 208,000 46,000 Downtown Middlesboro Retail Market Analysis -­‐ 55 Personal care Hair care products Wigs + hairpieces Shaving needs Oral hygiene products Cosmetics, perfume, bath preparations Other personal care products Personal care services Reading Newspapers + magazines Newsletters Books Education College tuition High school and elementary school tuition Vocational and technical school tuition School supplies Other education-­‐related expenses Tobacco products/smoking supplies Tobacco products/smoking supplies Miscellaneous Miscellaneous (funeral expenses, bank fees, legal fees, etc.) Cash contributions (alimony, child support, charity, etc.) 160,000 15,000 34,000 87,000 348,000 123,000 567,000 130,000 18,000 87,000 1,898,000 104,000 13,000 465,000 117,000 45,000 1,898,000 3,238,000 428,000 39,000 92,000 235,000 911,000 326,000 1,516,000 350,000 42,000 231,000 4,694,000 268,000 37,000 1,175,000 302,000 121,000 5,063,000 8,662,000 Downtown Middlesboro Retail Market Analysis -­‐ 56 A P P E N D I X 2 Sales void analysis for Middlesboro NAICS Industry group 441 Motor vehicle + parts dealers 4411 Automobile dealers 4412 Other motor vehicle dealers 4413 Auto parts, accessories + tire stores 442 Furniture + home furnishings stores 4421 Furniture stores 4422 Home furnishings stores 4431 Electronics + appliance stores 444 Bldg. materials, garden equip. + supply stores 4441 Bldg. material + supplies dealers 4442 Lawn + garden equip. + supply stores 445 Food + beverage stores 4451 Grocery stores 4452 Specialty food stores 4453 Beer, wine + liquor stores 446 Health + personal care stores 447 Gasoline stations 448 Clothing + clothing accessories stores 4481 Clothing stores 4482 Shoe stores 4483 Jewelry, luggage + leather goods stores Supply 17,555,000 13,219,000 1,582,000 2,754,000 2,559,000 1,374,000 1,185,000 888,000 616,000 616,000 -­‐ 31,086,000 31,086,000 -­‐ -­‐ 14,901,000 28,936,000 16,920,000 15,420,000 379,000 1,121,000 Demand 14,231,000 12,345,000 859,000 1,027,000 1,402,000 863,000 539,000 2,013,000 2,828,000 2,078,000 750,000 12,660,000 11,539,000 183,000 938,000 6,620,000 9,352,000 3,695,000 2,662,000 593,000 440,000 Void 3,324,000 874,000 723,000 1,727,000 1,157,000 511,000 646,000 (1,125,000) (2,212,000) (1,462,000) (750,000) 18,426,000 19,547,000 (183,000) (983,000) 8,281,000 19,584,000 13,225,000 12,758,000 (214,000) 681,000 Downtown Middlesboro Retail Market Analysis -­‐ 57 451 4511 4512 452 4521 4529 453 4531 4532 4533 4539 454 4541 4542 4543 722 7221 7222 7223 7224 Sporting goods, hobby, book + music stores Sporting goods, hobby, musical instr. stores Book, periodical + music stores General merchandise stores Department stores excluding leased depts. Other general merchandise stores Miscellaneous store retailers Florists Office supplies, stationery + gift stores Used merchandise stores Other miscellaneous store retailers Nonstore retailers Electronic shopping + mail order houses Vending machine operators Direct selling establishments Food services + drinking places Full-­‐service restaurants Limited-­‐service eating places Special food services Drinking places – alcoholic beverages Total retail trade Total food + drink Total retail trade and food + drink 2,548,000 1,563,000 985,000 83,849,000 3,484,000 80,365,000 1,641,000 158,000 114,000 479,000 891,000 2,900,000 -­‐ 114,414 2,785,000 17,169,000 10,788,000 6,189,000 192,000 -­‐ 204,400,000 17,169,000 221,570,000 1,419,000 1,129,000 1,048,000 515,000 371,000 614,000 15,495,000 68,354,000 4,530,000 (1,046,000) 10,965,000 69,400,000 2,469,000 (828,000) 100,000 58,000 695,000 (581,000) 234,000 245,000 1,440,000 (549,000) 2,920,000 (20,000) 1,832,000 (1,832,000) 233,000 (118,586) 855,000 1,930,000 7,013,000 10,156,000 2,572,000 8,216,000 3,754,000 2,435,000 277,000 (85,000) 410,000 (410,000) 75,105,000 129,295,000 7,013,000 10,156,000 82,118,000 139,452,000 Downtown Middlesboro Retail Market Analysis -­‐ 58 A P P E N D I X 3 Sales void analysis for 5-­‐ and 10-­‐mile radii from downtown Middlesboro 5-­‐mile radius 10-­‐mile radius NAICS Industry group Supply Demand Void Supply Demand Void 441 Motor vehicle + parts dealers 20,065,000 23,779,000 (3,714,000) 21,839,000 40,945,000 (19,106,000) 4411 Automobile dealers 15,271,000 20,588,000 (5,317,000) 16,293,000 35,435,000 (19,142,000) 4412 Other motor vehicle dealers 1,783,000 1,470,000 313,000 2,214,000 2,579,000 (365,000) 4413 Auto parts, accessories + tire stores 3,011,000 1,721,000 1,290,000 3,333,000 2,930,000 403,000 442 Furniture + home furnishings stores 2,796,000 2,367,000 429,000 4,904,000 4,051,000 853,000 4421 Furniture stores 1,456,000 1,441,000 15,000 3,489,000 2,456,000 1,033,000 4422 Home furnishings stores 1,340,000 925,000 415,000 1,415,000 1,595,000 (180,000) 4431 Electronics + appliance stores 931,000 3,222,000 (2,291,000) 1,290,000 5,325,000 (4,035,000) 444 Bldg. materials, garden equip. + supply stores 826,000 4,715,000 (3,889,000) 1,110,000 8,179,000 (7,069,000) 4441 Bldg. material + supplies dealers 731,000 3,476,000 (2,745,000) 731,000 6,044,000 (5,313,000) 4442 Lawn + garden equip. + supply stores 95,000 1,240,000 (1,145,000) 379,000 2,135,000 (1,756,000) 445 Food + beverage stores 32,302,000 21,031,000 11,271,000 33,845,000 35,941,000 (2,096,000) 4451 Grocery stores 32,302,000 19,329,000 12,973,000 33,810,000 33,210,000 600,000 4452 Specialty food stores 0 293,000 (293,000) 35,000 491,000 (456,000) 4453 Beer, wine + liquor stores 0 1,409,000 (1,409,000) 0 2,240,000 (2,240,000) 446 Health + personal care stores 15,777,000 10,988,000 4,789,000 15,928,000 19,030,000 (3,102,000) 447 Gasoline stations 43,207,000 15,770,000 27,437,000 46,720,000 27,378,000 19,342,000 448 Clothing + clothing accessories stores 17,074,000 6,130,000 10,944,000 17,183,000 10,332,000 6,851,000 4481 Clothing stores 15,449,000 4,478,000 10,971,000 15,504,000 7,587,000 7,917,000 4482 Shoe stores 503,000 993,000 (490,000) 557,000 1,684,000 (1,127,000) Downtown Middlesboro Retail Market Analysis -­‐ 59 4483 451 4511 4512 452 4521 4529 453 4531 4532 4533 4539 454 4541 4542 4543 722 7221 7222 7223 7224 Jewelry, luggage + leather goods stores Sporting goods, hobby, book + music stores Sporting goods, hobby, musical instr. stores Book, periodical + music stores General merchandise stores Department stores excluding leased depts. Other general merchandise stores Miscellaneous store retailers Florists Office supplies, stationery + gift stores Used merchandise stores Other miscellaneous store retailers Nonstore retailers Electronic shopping + mail order houses Vending machine operators Direct selling establishments Food services + drinking places Full-­‐service restaurants Limited-­‐service eating places Special food services Drinking places – alcoholic beverages Total retail trade Total food + drink Total retail trade and food + drink 1,121,000 659,000 462,000 1,121,000 1,061,000 2,800,000 2,416,000 384,000 3,063,000 4,161,000 1,816,000 1,844,000 (28,000) 2,078,000 3,249,000 985,000 571,000 414,000 985,000 912,000 85,725,000 25,183,000 60,542,000 88,023,000 42,480,000 4,558,000 7,534,000 (2,976,000) 6,821,000 12,820,000 81,167,000 17,649,000 63,518,000 81,202,000 29,659,000 2,116,000 3,929,000 (1,813,000) 2,308,000 6,608,000 218,000 164,000 54,000 218,000 286,000 116,000 1,129,000 (1,013,000) 136,000 1,913,000 567,000 359,000 208,000 645,000 575,000 1,215,000 2,277,000 (1,062,000) 1,311,000 3,835,000 2,911,000 6,308,000 (3,397,000) 3,434,000 12,138,000 0 4,521,000 (4,521,000) 0 9,033,000 126,000 380,000 (254,000) 126,000 633,000 2,785,000 1,407,000 1,378,000 3,308,000 2,472,000 24,812,000 11,883,000 12,929,000 26,296,000 20,237,000 13,522,000 4,492,000 9,030,000 13,835,000 7,771,000 11,099,000 6,241,000 4,858,000 11,175,000 10,545,000 192,000 436,000 (244,000) 991,000 714,000 0 714,000 (714,000) 295,000 1,208,000 226,531,000 125,838,000 100,693,000 239,649,000 216,567,000 24,812,000 11,883,000 12,929,000 26,296,000 20,237,000 251,343,000 137,721,000 113,622,000 265,945,000 236,804,000 60,000 (1,098,000) (1,171,000) 73,000 45,543,000 (5,999,000) 51,543,000 (4,300,000) (68,000) (1,777,000) 70,000 (2,524,000) (8,704,000) (9,033,000) (507,000) 836,000 6,059,000 6,064,000 630,000 277,000 (913,000) 23,082,000 6,059,000 29,141,000 Downtown Middlesboro Retail Market Analysis -­‐ 60 A P P E N D I X 4 Sales void analysis for a 15-­‐mile radius from downtown Middlesboro 15-­‐mile radius NAICS Industry group Supply Demand Void 441 Motor vehicle + parts dealers 33,489,000 73,458,000 (39,969,000) 4411 Automobile dealers 24,862,000 63,584,000 (38,722,000) 4412 Other motor vehicle dealers 3,241,000 4,669,000 (1,428,000) 4413 Auto parts, accessories + tire stores 5,385,000 5,206,000 179,000 442 Furniture + home furnishings stores 6,976,000 7,230,000 (254,000) 4421 Furniture stores 5,464,000 4,385,000 1,079,000 4422 Home furnishings stores 1,512,000 2,845,000 (1,333,000) 4431 Electronics + appliance stores 4,910,000 9,303,000 (4,393,000) 444 Bldg. materials, garden equip. + supply stores 7,638,000 14,677,000 (7,039,000) 4441 Bldg. material + supplies dealers 6,344,000 10,839,000 (4,495,000) 4442 Lawn + garden equip. + supply stores 1,293,000 3,838,000 (2,545,000) 445 Food + beverage stores 56,502,000 64,422,000 (7,920,000) 4451 Grocery stores 56,237,000 59,749,000 (3,512,000) 4452 Specialty food stores 266,000 869,000 (603,000) 4453 Beer, wine + liquor stores 0 3,805,000 (3,805,000) 446 Health + personal care stores 48,536,000 34,292,000 14,244,000 447 Gasoline stations 51,148,000 49,665,000 1,483,000 448 Clothing + clothing accessories stores 18,743,000 18,277,000 466,000 4481 Clothing stores 15,817,000 13,478,000 2,339,000 4482 Shoe stores 999,000 3,001,000 (2,002,000) Downtown Middlesboro Retail Market Analysis -­‐ 61 4483 451 4511 4512 452 4521 4529 453 4531 4532 4533 4539 454 4541 4542 4543 722 7221 7222 7223 7224 Jewelry, luggage + leather goods stores Sporting goods, hobby, book + music stores Sporting goods, hobby, musical instr. stores Book, periodical + music stores General merchandise stores Department stores excluding leased depts. Other general merchandise stores Miscellaneous store retailers Florists Office supplies, stationery + gift stores Used merchandise stores Other miscellaneous store retailers Nonstore retailers Electronic shopping + mail order houses Vending machine operators Direct selling establishments Food services + drinking places Full-­‐service restaurants Limited-­‐service eating places Special food services Drinking places – alcoholic beverages Total retail trade Total food + drink Total retail trade and food + drink 1,927,000 1,798,000 129,000 3,574,000 7,460,000 (3,886,000) 2,589,000 5,903,000 (3,314,000) 985,000 1,557,000 (572,000) 123,394,000 75,483,000 47,911,000 40,898,000 22,864,000 18,034,000 82,496,000 52,618,000 29,878,000 3,722,000 11,744,000 (8,022,000) 455,000 508,000 (53,000) 609,000 3,395,000 (2,786,000) 1,055,000 985,000 70,000 1,603,000 6,855,000 (5,252,000) 5,781,000 23,117,000 (17,336,000) 0 17,573,000 (17,573,000) 126,000 1,122,000 (996,000) 5,655,000 4,422,000 1,233,000 38,333,000 36,075,000 2,258,000 14,018,000 13,984,000 34,000 22,400,000 18,724,000 3,676,000 1,508,000 1,241,000 267,000 407,000 2,125,000 (1,718,000) 364,413,000 389,129,000 (24,716,000) 38,333,000 36,075,000 2,258,000 402,746,000 425,204,000 (22,458,000) Downtown Middlesboro Retail Market Analysis -­‐ 62 A P P E N D I X 5 Shopping centers over 60,000 square feet and within 50 miles of downtown Middlesboro Sources: International Council of Shopping Centers, CLUE Group Distance Name SF Representative tenants 0.6 Middlesboro Mall 319,483 Belk, JCPenney Middlesboro KY 13.0 Cumberland Gallery 98,155 Walmart, A&W Family Restaurants, GNC New Tazewell TN 26.8 Woodland Plaza 91,981 Cato Fashions, Food City, Cardinal Financial Svcs Harlan KY 31.1 Woodson’s Mall 217,970 Clark Shoes, Sears, AT&T, Food City La Follette TN 31.2 Trademart Shopping Center 330,237 JCPenney, Belks, Big Lots, Save-­‐A-­‐Lot Corbin KY 31.2 Cumberland Crossing 144,734 Regions Bank, Burger King La Follette TN 31.5 Tri-­‐County Square 141,315 Family Dollar, Taco Tico, Taco Bell, Sears Hometown Corbin KY Store 32.5 305 W Cumberland Gap Pk 90,000 McDonalds, Huddle House, Subway, O’Reilly Auto Corbin KY Parts 34.5 Alpha Center 60,348 Sunshine Cafe Talbott TN Downtown Middlesboro Retail Market Analysis -­‐ 63 35.0 36.2 36.5 36.6 36.8 37.1 38.2 38.6 38.9 40.5 40.6 Greene Crossing Morristown TN Meeting Square Jefferson City TN Crossroads Square Morristown TN College Square Morristown TN Manchester Square Manchester KY Crockett Square Morristown TN Crossroads Center Knoxville TN Powell Place Center Knoxville TN Black Oak Plaza Knoxville TN Harvest Park Centre Knoxville TN London Marketplace London KY 71,800 Pro Air LLC 92,968 Subway, Goodys, Goodwill 95,000 TJ Maxx, Planet Beach, Lifeway, Rack Room Shoes, HomeGoods 459,705 Belk, Sears 178,859 Walmart 107,122 Hobby Lobby, Ross Dress for Less, Dollar Tree 242,118 Walmart, Kmart, Ingles Markets, Goodys Family Clothing 87,989 Food City, Powell Cinemas, Dollar General 68,976 Mr Gattis, GNC, Kmart, Cato, Olan Mills 293,000 Bed Bath and Beyond, Marshalls, Ross Dress for Less, Target 169,032 Kmart, Olan Mills Downtown Middlesboro Retail Market Analysis -­‐ 64 40.6 41.0 44.1 44.3 44.5 44.8 44.8 47.4 47.8 48.0 48.4 Knoxville Commons Knoxville TN East Towne Crossing Knoxville TN 5094 Clinton Hwy Knoxville TN Clinton Plaza Knoxville TN Oneida Plaza Oneida TN Northwest Crossing I Knoxville TN Crown Point Plaza Knoxville TN Knoxville Center Knoxville TN Chapman Commons Knoxville TN Chapman-­‐Ford Crossing Knoxville TN Shops at Western Plaza Knoxville TN 180,501 Southeastern Salvage, Office Max, Ollie’s Bargain Outlet 159,000 Home Depot, Food Lion 84,000 Heirloom Furniture 132,565 Arby’s, Advance Auto Parts, Food City 151,980 Boost Mobile, Walmart Supercenter 304,224 Kroger, Burger King, Shell, Wendys, Suntrust Bank 137,676 Chick-­‐Fil-­‐A, Hobby Lobby, Lowes 982,000 Sears, Belk, JCPenney, Dillards 77,606 Bi-­‐Lo Supermarket 224,270 Church of God, First Tennessee Bank 205,000 Curves for Women, Robert Marc, Ben and Jerry’s, Tuesday Morning, Jos A Bank Clothiers Downtown Middlesboro Retail Market Analysis -­‐ 65 48.8 49.6 Chapman Plaza Knoxville TN Papermill Plaza Knoxville TN Total SF within 30 miles: Total SF within 50 miles 147,107 Suntrust Bank, Radio Shack, T-­‐Mobile, H&R Block, Little Caesars 112,471 Comcast Corp 509,619 6,259,192 Downtown Middlesboro Retail Market Analysis -­‐ 66 A P P E N D I X 6 Resources JOB TRAINING Pine Knot Job Corps: Located in McCreary County, Pine Knot Job Corps offers a no-­‐cost education and career training program through the U.S. Department of Labor. This organization targets young people ages 16-­‐24 aiming to improve their quality of life through proper career training and academics. The program is authorized by the Title I-­‐C of the Workforce Investment Act of 1998. http://pineknot.jobcorps.gov/home.aspx ECONOMIC DEVELOPMENT Kentucky Highlands Investment Corporation: KHIC is a program targeting Southeastern Kentucky and stimulating growth and creating employment opportunities23. This non-­‐profit organization aims to provide and retain employment opportunities through investments and management assistance24. http://www.khic.org/ Mountain Association for Community Economic Development: MACED partners with locals to build upon the strengths of Kentucky and Central Appalachia25. This organization believes high expectations, vision and hard work are essential to accomplish results. MACED focuses on three core strategies: Community Involvement, Demonstration Invitations, and Research and Communications for Policy Change26. Through 23
Kentucky Highlands Investment Corporation: http://www.khic.org/
Kentucky Highlands Investment Corporation: http://www.khic.org/
25
Mountain Association for Community Economic Development: http://www.maced.org/overview.htm
26
Mountain Association for Community Economic Development: http://www.maced.org/overview.htm
24
Downtown Middlesboro Retail Market Analysis -­‐ 67 these strategies they are achieving entrepreneurship and homegrown development and influencing economic policy and advancing an Appalachian transition27. § How$mart is only available through three rural cooperative utility’s customers. How$mart § Commercial Programs(E3) offers free lighting assessments and low cost building envelope, HVAC and more extensive energy audits. commercial programs http://www.maced.org/ Community Development Block Grants: The federal Community Development Block Grant (CDBG) program, administered by state government agencies in partnership with the US Department of Housing and Urban Development, is a flexible program that provides communities with resources to address a wide range of community development needs. Communities with populations over 50,000 receive annual CDBG allocations; those under 50,000 must compete for Block Grants within their state (in Kentucky, the small cities CDBG program is administered by the Department for Local Government). Block Grants can be used to create affordable/workforce housing, to eliminate blight, to improve public infrastructure, and to create jobs for low and moderate income people. HUD has published a guidebook on using Block Grants for historic preservation activities, available online: portal.hud.gov/hudportal/documents/huddoc?id=DOC_14211.pdf General program information: http://portal.hud.gov/hudportal/HUD?src=/program_offices/comm_planning/communitydevelopment/progr
ams https://kydlgweb.ky.gov/Administrative/grantsHome.cfm Land and Water Conservation Fund: LWCF Program provides grants to States and local governments. The grants are presented to help the development of public outdoor recreation areas and facilities. LCWF has the intention to create and maintain a nationwide legacy for high quality recreation areas and facilities28. http://www.nps.gov/lwcf/ 27
28
Mountain Association for Community Economic Development: http://www.maced.org/overview.htm
National Park Service: http://www.nps.gov/lwcf/
Downtown Middlesboro Retail Market Analysis -­‐ 68 Preserve America: In order to be considered for Preserve America grants, a community must be designated as a Preserve America Community through a short application process. The Preserve America matching-­‐grant program provides planning funding to support preservation efforts through heritage tourism, education, and historic preservation planning. Brownfields Economic Development Initiative: The US Department of Housing and Urban Development provides Brownfields Economic Development Initiative (BEDI) grants to communities to help remove pollutants and hazardous materials from redevelopment sites. BEDI grants have been used in downtowns for such things as encapsulating or removing asbestos and removing underground tanks from former gas station sites. http://portal.hud.gov/hudportal/HUD?src=/program_offices/comm_planning/BEDI HOPE VI Main Street grants: For the past decade, the US Department of Housing and Urban Development has offered a grant program to help small towns with Main Street programs develop affordable/workforce housing downtown (particularly in upper floor spaces). Although the overall program is small, issuing only 4-­‐8 grants annually, individual grants have ranged between $500,000-­‐$1 million. Because of the federal government sequester, the HOPE VI Main Street program was not funded by Congress in FY2014 but, should Congress decide to do so, the program might be renewed in FY2015 or FY2016. http://portal.hud.gov/hudportal/HUD?src=/program_offices/public_indian_housing/programs/ph/hope6/gra
nts/mainstreet U.S. Small Business Administration: Federal agency that provides a number of guaranteed loan and other financial assistance programs to small businesses. The administration, also, provides face-­‐to-­‐face and even internet counseling. “This office also provides small businesses with subcontracting procurement opportunities, outreach programs, and training29.” U.S. Small Business Administration 29
SBA.gov: http://www.sba.gov/about-­‐sba-­‐services/what-­‐we-­‐do Downtown Middlesboro Retail Market Analysis -­‐ 69 Federal Home Loan Bank of Cincinnati: The FHLBC provides financial services to member institutions in support of housing and economic development. It offers a 0% interest rate loan for a period of 24 months to help cover pre-­‐development costs. FHLB partners with a local bank to enhance the local bank’s lending, rather than providing loans directly to businesses. https://www.fhlbcin.com/ Kentucky Cabinet for Economic Development: The Kentucky Cabinet for Economic Development is the state’s primary agency holding the responsibility for encouraging job creation and retention and new investment. All programs supported by the Cabinet promote economic development, attract new industries, expand industries and to provide support for entrepreneurs and small businesses. The Cabinet consists of several different offices. The Department for Business Development, one of the offices, encourages job creation, retention, and new investments in the state. This office is the most valuable to Middlesboro. Other offices that would aid Middlesboro and Bell County are the Office of Compliance, Financial and Administrative Services and the Office of Commercialization and Innovation. http://www.thinkkentucky.com/kyedc/pdfs/EcoDevOverview.pdf Kentucky Agricultural Development Fund: The Kentucky Agricultural Development Fund was established in 2000 by the General Assembly. The fund is composed of fifty percent of the state monies received from the Tobacco Master Settlement Agreement30. The general purpose: agricultural development in the Commonwealth. The fund is overseen and distributed by the Kentucky Agricultural Development Board. The board will invest the funds in innovative proposals to increase net farm income and to “effect tobacco farmers, tobacco-­‐impacted communities, and agriculture across the state by stimulating markets for Kentucky agricultural products, finding new ways to add value to Kentucky agricultural products, and exploring new opportunities for Kentucky farms”31. 30
Freedom Kentucky:
http://www.freedomkentucky.org/index.php?title=Kentucky_Agricultural_Development_Fund
31
Freedom Kentucky:
http://www.freedomkentucky.org/index.php?title=Kentucky_Agricultural_Development_Fund
Downtown Middlesboro Retail Market Analysis -­‐ 70 http://agpolicy.ky.gov/Pages/default.aspx Kentucky Business Investment Program: The KBI program targets companies who are working in the manufacturing, agribusiness, if they are regional or national headquarters, and specific non-­‐retail and technology activities. This program is aimed at helping establish jobs within eligible counties and ensure the proper payment and benefits for the new jobs. To become eligible, the counties must fall into one of the categories listed above.32 http://thinkkentucky.com/kyedc/pdfs/KBIFactSheet.pdf KEDFA Direct Loan Program: “Kentucky Economic Development Finance Authority offers a mortgage loan program to work in conjunction with private financing. The program is designed to allow businesses to obtain the long term financing needed to encourage growth33”. Businesses granted the loan must follow specific proposed guidelines. They must, also, cover interest rates and fees on the loan. http://www.thinkkentucky.com/kyedc/pdfs/kedfadcp.pdf Kentucky Enterprise Initiative Act: “KEIA allows approved companies to recoup Kentucky sales and use tax paid for construction materials and building fixtures and research and development equipment. This incentive applies only to the business located in the facility and conducting business in that facility. The incentive is not eligible to developers or landlords.34” http://www.thinkkentucky.com/kyedc/pdfs/keia.pdf Kentucky Small Business Credit Initiative: The Kentucky Small Business Credit Initiative is supported by the Kentucky Cabinet of Economic development and the Commonwealth of Kentucky. KSBCI “includes three distinct credit enhancement programs designed to generate jobs and increase the availability of credit to small businesses by reducing the risk participating lenders, credit unions, and community development 32
Think Kentucky: http://thinkkentucky.com/kyedc/pdfs/KBIFactSheet.pdf
Think Kentucky.com: http://www.thinkkentucky.com/kyedc/pdfs/kedfadcp.pdf
34
ftp://ftp.ced.ky.gov/Download/EDIS/SorterAttachments/KEIA%20Process.doc
33
Downtown Middlesboro Retail Market Analysis -­‐ 71 financial institutions assume35”. This initiative helps the small business who are usually just outside the boundaries of normal financial lenders’ standards. Three programs make-­‐up the initiative and they are as follows: Kentucky Capital Access Program (KYCAP), Kentucky Loan Participation Program (KYLPP), Kentucky Collateral Support Program (KYCSP). http://www.thinkkentucky.com/smallbizlending/ Kentucky Small Business Investment Credit: KSBIC program targets small businesses who pay taxes, such as, “income tax on individuals,corporation income tax, limited liability entity tax to apply for a Kentucky state income tax credit36.” Businesses who fall into the category are “for-­‐profit entities that have fifty or fewer full-­‐
time employees at the time of application, excluding newly created eligible positions37.” http://www.thinkkentucky.com/kyedc/pdfs/KSBICFactSheet.pdf The Kentucky Small Business Tax Credit: The KSBTC program is designed to encourage small business growth and job creation by providing a nonrefundable tax credit to eligible businesses hiring one or more eligible individuals and investing at least $5,000 in qualifying equipment or technology. With certain exceptions, most for-­‐profit businesses with 50 or fewer full-­‐time employees are considered eligible for this program. The KSBTC program is limited to allocating a total of $3 million in tax credits per state fiscal year. The Kentucky Small Business Tax Credit (KSBTC) Kentucky Tourism Development Act: The Kentucky Tourism Development Act “provides a state sales tax incentive program for tourism development projects38”. This incentive is aimed toward those developing and expanding tourism projects. They can regain up to a maximum of twenty-­‐five percent of the projects development costs over a ten year span. Facilities constructed on state park, federal parks, or national parks may be compensated for development cost up to fifty percent over a twenty year term. “Expanding 35
Think Kentucky.com: http://www.thinkkentucky.com/smallbizlending/
Think Kentucky.com: http://www.thinkkentucky.com/kyedc/pdfs/KSBICFactSheet.pdf
37
Think Kentucky.com: http://www.thinkkentucky.com/kyedc/pdfs/KSBICFactSheet.pdf
38
Kentucky Tourism.com: http://www.kentuckytourism.com/industry/development_incentitives.aspx
36
Downtown Middlesboro Retail Market Analysis -­‐ 72 attractions receive the incentive on increased sales tax due to the expansion39”. Eligible developers will receive sales tax paid by visitors visiting approved attractions on an annual basis by the Kentucky Department of Revenue. http://www.kentuckytourism.com/industry/development_incentitives.aspx Kentucky Small Business Loan Program: The Kentucky Small Business Loan Program is designed to help small businesses acquire funding needed to start or grow their small business. A small business must be engaged in manufacturing, agribusiness, or service and technology. Loan funds may be used to acquire land and buildings, purchase and install equipment, or for working capital. The minimum loan amount is $15,000 and the maximum is $100,000. The approved company must create one new full-­‐time job within one year of the loan closing. KEDFA can fund up to 100% of the project costs and the loan can be used in conjunction with other lenders. The term of the loan can range from 3-­‐10 years. Small Business Loan Program (PDF) Pine Mountain Community Development Corporation: PMCDC is a collaboration of Southeast Kentucky Community and Technical College and six local banks. This organization’s efforts go toward providing “start-­‐
up or expansion capital to microenterprises and small businesses in the Kentucky Appalachian Counties” 40
. PMCDC basically provides microloans to eligible businesses in amounts that range from $500 to $25,000, and with board approval they amount may increase to $50,000 due to special circumstances. http://www.southeast.kctcs.edu/en/Workforce_Solutions/Pine_Mountain_Community_Development_Corpo
ration.aspx Southeast Kentucky Economic Development Corporation: SKED is a non-­‐profit organization that serves 45 counties in Southeastern Kentucky. Their services consist of site service assistance, business financing, 39
Kentucky Tourism.com: http://www.kentuckytourism.com/industry/development_incentitives.aspx Southeast Kentucky Community & Technical College: http://www.southeast.kctcs.edu/en/Workforce_Solutions/Pine_Mountain_Community_Development_Corporatio
n.aspx
40
Downtown Middlesboro Retail Market Analysis -­‐ 73 business advice and training, etc41. SKED is a Certified Development Corporation by the U.S. Business Administration42. Their focus is on companies in the manufacturing sector, or growth business sectors43. http://www.southeastkentucky.com/index.asp Southeast Small Business Development Center: The Southeast SBDC provides one-­‐on-­‐one consultations at no cost to existing and potential entrepreneurs in Southeastern Kentucky. The Southeast SBDC also meets the educational needs of the local small business community by offering a variety of low cost training programs taught by industry experts and qualified SBDC Consultants. http://ksbdc.org/middlesboro/ http://ksbdc.org/middlesboro/ 41
Southeast Kentucky Economic Development Corporation: http://www.southeastkentucky.com/about.asp ibid. 43
ibid.
42
Downtown Middlesboro Retail Market Analysis -­‐ 74