University of Maine School of Law University of Maine School of Law Digital Commons Faculty Publications Faculty Scholarship 4-2012 The Future of Abandoned Big Box Stores : Legal Solutions to the Legacies of Poor Planning Decisions Sarah B. Schindler University of Maine School of Law, [email protected] Follow this and additional works at:http://digitalcommons.mainelaw.maine.edu/faculty- publications Part of theLand Use Law Commons Suggested Bluebook Citation Sarah B. Schindler,The Future of Abandoned Big Box Stores : Legal Solutions to the Legacies of Poor Planning Decisions, 83U. COLO. L. REV.471 (2012). Available at:http://digitalcommons.mainelaw.maine.edu/faculty-publications/30 This Article is brought to you for free and open access by the Faculty Scholarship at University of Maine School of Law Digital Commons. It has been accepted for inclusion in Faculty Publications by an authorized administrator of University of Maine School of Law Digital Commons. For more information, please [email protected]. THEFUTUREOFABANDONEDBIGBOX STORES: LEGAL SOLUTIONS TO THE LEGACIES OF POOR PLANNING DECISIONS SARAH S CHINDLER* Big box stores, the defining retail shopping location for the majority of American suburbs, are being abandoned at alarming rates, due in part to the economic downturn. These empty stores impose numerous negative externalities on the communities in which they are located, including blight, reduced property values, loss of tax revenue, environmental problems, and a decrease in social capital. While scholars have generated and critiqued prospective solutions to prevent abandonment of big box stores, this Article asserts that local zoning ordinances can alleviate the harms imposed by the thousands of existing, vacant big boxes. Because local governments control land use decisions and thus made deliberate determinations allowing big box development, this Article argues that those same local governments now have both an economic incentive and a civic responsibility to find alternative uses for these "ghostboxes." With an eye toward sustainable development, the Article proposes and evaluates four possible alternative uses: retail reuse, adaptive reuse, demolition and redevelopment, and demolition and regreening. It then devises a framework and a series of metrics that local governments can use in deciding which of the possible solutions would be best suited for their communities. The Article concludes by considering issues of property acquisition and management. INTRODUCTION .........................................................................473 I. BACKGROUND .................................................................478 A. The Rise of Suburban Development ........................478 B. The Rise of the Big Box.......................... ............ ......480 * Associate Professor ofLaw, University ofMaine School of Law. I am grateful to Patty Salkin, Frank Alexander, Tanya Marsh, Keith Hirakawa, Dave Owen, Michael Lewyn, Peter Appel, Jessica Owley, Dmitry Bam, Orlando Delogu, Jennifer Wriggins, Harlan Cohen, and the participants of the 2011 Northeast Regional Scholarship Development Workshop for their helpful comments. Thanks also to Brieanna Dietrich for excellent research assistance. 472 UNIVERSITY OF COLORADO LAW REVIEW [Vol. 83 II. THE PROBLEM: VACANT AND ABANDONED BIG BOX STORES ...........................................................................484 A. Building Vacancy andAbandonment Generally.... .484 B. The Severity of the Empty Big Box Problem ...........487 C. Reasons for Big Box Vacancy and Abandonment .. .489 1. Over-Retailing and Market Demand .................489 2. Upsizing..............................................................490 D. What Is the Harm in a Ghostbox? Reasons That Empty Big Boxes Are Problematic ...........................491 1. Blight and Symbolic Decline ..............................492 2. Economic Harm to the Surrounding Community.........................................................494 3. Community Health, Social Capital, and Public Space...................................................................497 III. SOLUTIONS .....................................................................498 A. Prospective Solutions ...............................................499 B. The Possible Second Lives of Existing Empty Big Box Stores ................................................................502 1. Reuse ..................................................................502 a. Benefits ofAdaptive R euse............................503 b. Problems with Adaptive Reuse .....................506 2. Demolition and Redevelopment or Regreening..........................................................510 a. Benefits ofDemolition...................................512 b. An Evaluation of Demolition and Rebuilding ....................................................514 c. An Evaluation of Demolition and Regreening ....................................................517 IV. IMPLEMENTATI ON OF THE SOLUTIONS ............................520 A. Who Should Take Responsibility for Implementing Solutions? .........................................520 1. Authority, Federalism, and the Scale of Governance .........................................................521 2. Drivers ................................................................523 a. Pragmatic Claim: Economic Incentive .........524 b. Normative Claim: Civic Responsibility ........524 B. How Can/Should Municipalities Implement the Solutions? ................................................................525 1. Create and/or Revise Existing Ordinances ........526 a. Setting the Stage: Creating a General Abandoned Property Ordinance ............ .......526 2012] ABANDONED BIG BOX STORES 473 b. Market-Tweaking Mechanisms: Modifying Existing Zoning Ordinances to Minimize Disincentives to Reuse or Redevelopment .....529 i. Incentivizing Reuse ................................530 ii. Incentivizing Redevelopment .................533 c. Direct Intervention: Acquiring Title .............537 2. Metrics: Which Solution for Which Community? .......................................................539 a. Economic State .............................................542 b. Ecological Goals ............................................ 543 c. Existing Retail Landscape ............................543 d. Existing Land Development Patterns ...........544 3. Mechanics and Financing ..................................546 CONCLUSION ............................................................................548 INTRODUCTION Living in the sprawl Dead shopping malls rise like mountains beyond mountains And there's no end in sight -Arcade Fire, Sprawl II (Mountains Beyond Mountains)! Once there were parking lots Now it's a peaceful oasis ... This was a Pizza Hut Now it's all covered with daisies -Talking Heads, (Nothing But) Flowers2 Borders revealed in July 2011 that it would close its 399 remaining bookstores, after having closed approximately 200 earlier in the year3 In 2009, Linens 'n Things and Circuit City closed all of their retail locations, vacating approximately 1400 1. ARCADE FIRE, Sprawl II (Mountains Beyond Mountains), on THE SUBURBS (J\!Ierge Records 2010). 2. TALKING HEADS, (Nothing But) Flowers, on NAKED (Sire Records 1988). 3. Stephen Ceasar, Borders Group Files for Bankruptcy Reorganization, L.A. TilVIES (Feb. 17, 2011), http:!/articles.latimes.com/2011/feb/17/business/la-fi-0217­ borders-bankruptcy-20110217; Michael J. De La Merced & Julie Bosman, Calling Off Auction, Borders to Liquidate, DEALBOOK (July 18, 2011, 8:31 PM), http:1Idealbook. nytimes.com/201110 7I 18/borders-calls-off-a uction-plans-to­ liquidate/ 474 UNIVERSITY OF COLORADO LAW REVIEW [Vol. 83 big box stores4 In addition to the loss of tax revenues and jobs, these departing retailers left behind something else: the structures that housed their products. "Big box" stores5 are a defining image of suburban commercial development. With their plentiful parking and loss­ leader6 item pricing, these massive chain stores originally stood as triumphant symbols of American capitalism. However, many have begun to "go dark"; big boxes are being vacated at alarming rates. Of 870.7 million square feet of currently vacant retail space in the United States, almost 300 million square feet-nearly 35%-is empty big box space7 The reasons for big box vacancy are numerous. The general economic downturn and the rise of online shopping contributed to the bankruptcy of many large brick-and-mortar chain stores, including Borders8 Other retailers, such as Wal-Mart, upsize: They close older facilities and build new, larger structures on different sites in the same city9 Wal-Mart alone currently has 103 4. J.L. Cherwin, Jr. & Virginia M. Harding, New Tenants for Big Boxes, FROB. & PROP., Jan.-Feb. 2010, at 37, 37; see also Laura D. Steele, Actual or Hypothetical: Determining the Proper Test for Trademark Licensee Rights in Bankruptcy, 14 MARQ. INTELL. PROP. L. REV. 411, 412 (2010). 5. It is hard to set forth a precise definition for big box stores; like obscenities, you know them when you see them. See Jacobellis v. Ohio, 378 U.S. 184, 197 (1964) (Stewart, J., concurring). Much depends on surroundings and context, and what constitutes a big box for purposes of one city's zoning ordinance might not for another's; definitions range from 20,000 square feet (often called "junior boxes") to nearly 300,000 square feet. See, e.g., AUSTIN, TEX., ORDINANCE No. 20070215-072, § 25·2·813 (2007), available at http://www.ci.austin.tx.us/ edims/document.cfm?id=100656 (defining "large retail use" as "100,000 square feet or more of gross floor area"). For purposes of this Article, a big box store is a predominantly one-room, single-story building of at least 35,000 square feet that housed a single retailer or grocer and that is surrounded by a large parking lot. Big boxes are typically stand-alone structures, but much of the discussion in this Article is also relevant to empty big boxes that are located in vacant strip malls and shopping centers as well. See JULIA CHRISTENSEN, BIG BOX REUSE 4-5 (2008) (addressing possible definitions and settling on one similar to that presented here). Examples that meet this definition include Wal-Mart, Target, Costco, Best Buy, Home Depot, Lowe's, Babies "R'' Us, Kmart, Kroger, and Safeway. 6. Loss-leader pricing involves selling certain discounted products at a loss to bring in customers while selling other items for a profit. See Ellis v. Dallas, 248 P.2d 63, 64 (Cal. Dist. Ct. App. 1952). 7. GARRICK H.S. BROWN, COLLIERS lNT'L, THE BIG BOX DILEMl\IIA PART 1: SECOND GENERATION BIG BOX RETAIL 2 (Christine Schultz et al. eds., 2010), available at http:1/www. colliers.comiJ\!Iar kets/Retail_Services/ content/Colliers_whitepaper_BigBoxDilemma_Summer2010.pdf. 8. See, e.g., Borders Files for Bankruptcy, To Close Stores, NPR (Feb. 16, 2011), http://www.npr.org/20 11102/16/ 133802386/borders-files-for-bankruptcy-to­ close-stores. 9. Wal-Mart closed 107 stores in Texas between 1987 and 2004. In 92 out of the 107 closures, a new Wal-Mart supercenter (supercenters are larger than 2012] ABANDONED BIG BOX STORES 475 formerly occupied properties available for lease and 48 for sale throughout the countrylO Although changes in retail and retail structures are not in themselves novel, 11 the rate at which retailers are vacating big box stores, and the number remaining vacant and becoming abandoned, is problematic. Large, empty big box buildings contribute to blight as the structures deteriorate and the parking lots sprout weeds and lure squatters. l\!linor signals of disorder such as these symbolize and possibly accelerate an area's decline. Empty buildings also repel shoppers from other retail stores in the vicinity and lower nearby property values. While big boxes previously served as a source of sales and property tax revenue for a community, once abandoned, they often contribute neither. Scholars acknowledge the problems caused by construction and operation of big box stores12 Those articles discuss ways to limit their construction and prospectively address the problem of big box abandonment13 However, this Article is concerned with legal strategies for confronting the problem of big box stores that have already gone dark: those that were traditional Wal-Marts and include a grocery store) opened in the same city as the store that closed. Harold D. Hunt & John Ginder, Lights Out: When Wal-Marts Go Dark, TIERRA GRANDE, Apr. 2005, reprinted in TEX. A&M U. REAL EST. CENTER, http:1/recenter.tamu. edulpd£11720. pdf. 10. WALl\IIART REALTY, http://walmartrealty.com/Default.aspx (under "Building Disposition," follow "Buildings For Lease" and "Buildings for Sale") (last visited Sept. 10, 2011). It is impossible to talk about big boxes without addressing Wal-Mart because of its sheer size; as of 2007, it had over 4000 stores in the United States alone. How Big Box Stores Like Wal-Mart Effect [sic] the Environment and Communities, SIERRA CLUB, http://www.sierraclub.org/ sprawVreports/big_box.asp (last visited Sept. 3, 2011). One commentator put Wal­ Mart's size in relative terms: "Wal-Mart is five times the size of the nation's second largest retailer, Home Depot. It's bigger than Target, Sears, Costco, JC Penney, Walgreens, Best Buy, The Gap, Staples, Toys "R" Us, Nordstrom, Blockbuster, and Barnes & Noble combined." STACY MITCHELL, BIG-BOX SWINDLE: THE TRUE COST OF MEGA-RETAILERS AND THE FIGHT FOR AlVIERICA'S INDEPENDENT BUSINESSES 13 (2006). 11. See Dwight H. Merriam, Breaking Big Boxes: Learning from the Horse Whisperers, 6 VT. J. ENVTL. L., no. 3, 2005, at 7, 14 ("Changes in retailing have been with us for as long as trade has existed."). 12. See, e.g., id, at 29; Patricia E. Salkin, Municipal Regulation of Formula Businesses: Creating and Protecting Communities, 58 CASE W. RES. L. REV. 1251, 1251-D2 (2008); Betsy H. Sochar, Note, Shining the Light on Greyfields: A Wal· Mart Case Study on Preventing Abandonment of Big Box Stores Through Land Use Regulations, 71 ALB. L. REV. 697, 699 (2008). 13. These techniques limit construction style and provide for disposal if the structures are abandoned. See, e.g., Salkin, supra note 12, at 1261--80; Sochar, supra note 12, at 710-13, 715-16. 476 UNIVERSITY OF COLORADO LAW REVIEW [Vol. 83 constructed without, or before the adoption of, prospective solutions14 The majority of existing abandoned big box stores in the United States fall into this category, yet the scholarly literature is bereft of a thorough discussion of abandonment 15 and how to alleviate it The specific question of what to do with empty big box stores has received even less attention than abandonment of commercial and residential properties generally16 This Article aims to fill those gaps in the literature and to assist municipalitiesl7 in confronting what has become a common concern. Local governments cannot simply sit back and rely on the market to fill these empty spaces. Indeed, such an approach 14. When discussing the trend of big box retailers, commentator F. Kaid Benfield states that this format of store can continue to be successful in the future; however, that success will involve placing these stores in traditional downtowns. F. KAID BENFIELD ET AL., ONCE THERE WERE GREENFIELDS: HOW URBAN SPRAWL Is UNDERMINING AlVIERICA'S ENVIRONl\IIENT, ECONOMY, AND SOCIAL FABRIC 149-51 (1999). This ignores the question of what cities should do with existing, suburban big box stores. This is the more difficult issue: to look at our existing suburban sprawl-based landscape and apply smart growth principles to its existing form. See id. at 151. 15. Two commentators believe that this is the case because scholars view property abandonment as a symptom of deeper community problems rather than a cause of those problems. John Accordino & Gary T. Johnson, Addressing the Vacant and Abandoned Property Problem, 22 J. URB. AFF. 301, 303 (2000) (discussing the lack of scholarship). Some of the issues raised in this Article have been addressed in the related yet distinct context of brownfields reuse and redevelopment. See infra note 53 and accompanying text; see, e.g., Julianne Kurdila & Elise Rindfleisch, Funding Opportunities for Brownfield Redevelopment, 34 B.C. ENVTL. AFF. L. REV. 479 (2007) (discussing financing mechanisms available for brownfield redevelopment projects); Barry J. Trilling & Sharon R. Siegel, Brownfield Development in Connecticut: Overcoming the Legal and Financial Obstacles, 26 QUINNIPIAC L. REV. 919, 986-1009 (2008); Michael J. Minkus, Comment, Fighting Uncertainty: Municipal Partnerships with Redevelopment Agencies Can Mitigate Uncertainty to Encourage Brownfield Redevelopment, 1 GOLDEN GATE U. ENVTL. L.J. 267, 298-307 (2007). 16. See Merriam, supra note 11, at 29. There is a growing literature addressing the foreclosure crisis, but this tends to focus on mortgages and residential vacancies. See, e.g., JULIE A. TAPPENDORF & BRIEN J. SHEAHAN, AM. LAW lNST., DEALING WITH DISTRESSED PROPERTIES: LOCAL GOVERNl\IIENT STRATEGIES TO MITIGATE THE IMPACT OF FORECLOSURES ON COMMUNITIES 1303 (2008); Joseph Schilling, Code Enforcement and Community Stabilization: The Forgotten First Responders to Vacant and Foreclosed Homes, 2 ALB. Gov'T L. REV. 101, 103 (2009) [hereinafter Schilling, Code Enforcement]; Scott Horsley, Town Compels Lenders to Care for Vacant Homes, NPR (Aug. 9, 2007), http://www.npr.org/templates/story/story.php?storyld=12623065. 17. There are various forms of local governments, including counties, cities, municipalities, towns, townships, villages, and special districts. Although each form is distinct, for ease of readability, the terms will be used interchangeably throughout this Article. Thus, "city'' does not necessarily imply an urban city center. 2012] ABANDONED BIG BOX STORES 477 has not worked thus farlS Instead, a municipality should view an empty big box as an opportunity to create a new vision for its suburbs. To do this, it must first craft a strategy and a set of ordinances to address the problem of vacant and abandoned big box stores. Such a strategy should guide cities in: (1) tracking vacant property in the community; (2) requiring solvent building owners to maintain their vacant properties; (3) determining whether building reuse or redevelopment is most appropriate in a given community; (4) modifYing existing zoning and building codes to incentivize market-based reuse or redevelopment of these properties; and, finally, (5) providing for direct intervention by the municipality. Part I of this Article provides background on the history of suburban development and, specifically, big box development. It explains why municipalities invited big box stores into their communities and why these buildings are constructed as they are. Part II addresses the problem of big box vacancy and abandonment. While some authors starkly distinguish between the terms "abandonment" and "vacancy,"19 this Article uses both, as well as the term "empty," to describe properties of concern. While the terms are used interchangeably herein, generally, abandoned property is in poorer condition than vacant property20 Mter defining these terms in more detail, the Part reviews the academic literature concerning property vacancy and abandonment and its impact on local communities. It then focuses on the severity of the empty big box epidemic, the reasons for that problem, and the harms that have resulted therefrom. Part III posits that, in addition to the harms they inflict on communities, abandoned big boxes also present an opportunity to re-imagine the suburbs. To that end, it considers and evaluates a variety of solutions to the problem of existing big box abandonment. These solutions include straight retail 18. See BROWN, supra note 7 and accompanying text; infra Part III.B.l. 19. See, e.g., David T. Kraut, Note, Hanging Out the No Vacancy Sign: Eliminating the Blight of Vacant Buildings from Urban Areas, 74 N.Y.U. L. REV. 1139, 1140 n.4 (1999) (distinguishing "between vacant and abandoned buildings, defining the latter as vacant properties that are also tax delinquent and for which services are not paid or provided"). This Article presents abandonment and vacancy as two end points on a continuum, where abandonment is more severe than vacancy. See infra Part II.A. 20. See infra notes 54-55 and accompanying text. 478 UNIVERSITY OF COLORADO LAW REVIEW [Vol. 83 reuse, adaptive reuse, demolition and redevelopment, and demolition andre-greening. Part IV addresses implementation of the solutions. It first considers issues of federalism and the proper scale of government to address the empty big box epidemic. It concludes that local governments are well suited to address this issue and focuses on drivers that should motivate them to take action. This Part then lays out ways that municipalities can use their police powers to solve the existing empty big box problem. It proposes specific zoning changes that local governments can make to incentivize market reuse and redevelopment of vacant big box stores and thus alleviate the problems caused by those structures in their communities. It then discusses the need for direct intervention by municipalities and methods of abandoned property acquisition. This Part also proposes a series of metrics-economic state, ecological goals, existing retail landscape, and existing land development patterns-that a local government can use in deciding which of the possible solutions would make the most sense in its community. The Article concludes by briefly addressing issues of financing to show that these solutions are not merely academic but that actual funding exists to promote sustainable development and smart growth projects across the country. I. BACKGROUND A. The Rise of Suburban Development To understand big box stores, one must first understand the culture that allowed for, and welcomed, a retail landscape saturated by big box chain retailers: the suburbs. Big boxes were not always a distinctive feature of American development. Before most people owned automobiles, when streetcars and walking were the primary methods of transportation, "traditional neighborhoods" evolved to address people's needs21 These neighborhoods contained a mix of uses-housing, shopping, and offices-within walking distance of one another22 Most traditional neighborhoods had a "Main Street" 21. ANDRES DUANYET AL., SUBURBAN NATION: THE RISE OF SPRAWL AND THE DECLINE OF THE AlVIERICAN DREAM 3-4 (2000) (contrasting "traditional neighborhood" development with suburban sprawl). 22. See id. 2012] ABANDONED BIG BOX STORES 479 not far from houses, where local businesses such as hardware stores, bookstores, and produce markets sold their goods to 23 people in the neighborhood These small stores, and perhaps even the lively sidewalks that connected them, served as what planners and architects call a "third place."24 The third place provides a sense of community engagement and involvement, which is separate from those found at the first place (home) and the second place (work)25 The transition to suburbs began after World War II as young men returned home from war, started families, and wanted more space26 Although stores initially remained in city centers, their proprietors eventually realized that they needed to follow their customer base, and thus many moved their 27 shops out of traditional downtowns and to the suburbs At the same time, national retailers began opening outlets near the new suburban houses28 However, because suburban neighborhoods exclusively contained housing, shops had to locate in separate areas, typically along the major roads that led to the suburban housing developments29 Euclidean zoning, under which different land uses are kept separate from one 23. See generally Keith Aoki, Race, Space, and Place: The Relation Between Architectural Modernism, Post-Modernism, Urban Planning, and Gentrification, 20 FORDHAM URB. L.J. 699, 742 (1993) (describing "traditional main street ... as the place to locate necessities in close proximity''). 24. See ELLEN DUNHAM-JONES & JUNE WILLIAl\IISON, RETROFITTING SUBURBIA: URBAN DESIGN SOLUTIONS FOR REDESIGNING SUBURBS 59-BO (2009); see generally RAY OLDENBURG, THE GREAT GOOD PLACE: CAFES, COFFEE SHOPS, BOOKSTORES, BARS, HAIR SALONS, AND OTHER HANGOUTS AT THE HEART OF A COMMUNITY (Marlowe & Co. 1999) (1989). 25. See sources cited supra note 24. 26. See Robert W. Burchell & Naveed A. Shad, The Evolution of the Sprawl Debate in the United States, 5 HASTINGS W.-NW. J. ENVTL. L. & POL'Y 137, 138--42 (1999) (summarizing literature addressing urban sprawl); Michael E. Lewyn, Suburban Sprawl: Not Just an Environmental Issue, 84 l\.1A.RQ. L. REV. 301, 331 (2000) (describing how population congestion was remedied through suburban sprawl); Christopher B. Leinberger, The Next Slum?, THE ATLANTIC, Mar. 2008, at 70, 72, available at http://www.theatlantic.com/magazine/archive/2008/03/the­ next-slum/6653/. 27. See DUANY ET AL., supra note 21, at 8-9; Lewyn, supra note 26, at 318-19 (describing how businesses moved to the suburbs to follow "highway-driven residential development"). 28. See, e.g., Our History: Through the Years, TARGET.COM, http://sites.target.com/site/en/company/page.jsp?contentld=WC:IVIP04-031697 (follow "Start Exploring" hyperlink; then follow "1950" on the timeline; then go to "1956") (last visited Oct. 22, 2011) (describing the expansion of Target's predecessor store to the suburbs in 1956 "[t]o meet the needs of busy suburban families"). 29. See sources cited supra note 27.