Market manipulation

The Lawrence City Commission is getting into dangerous territory with a plan to engineer retail projects based on market analysis.

A proposal on Tuesday’s Lawrence City Commission agenda is an unnecessary effort to outguess and manipulate the retail marketplace in Lawrence.

Commissioners are scheduled to consider a measure that will require any development that would add 50,000 square feet or more retail space in the city to include a market analysis in its application for site plan, development plan or zoning approval.

The stated goal of requiring the retail analysis is to protect existing businesses in Lawrence, particularly downtown businesses. Developments of less than 50,000 square feet or in existing retail space (either vacant or occupied) would be exempt from the requirement. However, there are other, better, ways to encourage redevelopment of existing retail space than the arbitrary standards being proposed.

To add more than 50,000 square feet of retail space under the new requirement, a developer will have to accept a market impact analysis conducted by a city-approved consultant. If the consultant determines that the project cannot be absorbed within three years without driving the community-wide retail vacancy rate over 8 percent, the proposal on Tuesday’s agenda says, “the project shall not be approved.”

An amendment has been initiated by the Lawrence Douglas County Planning Commission to change the language to “may not be approved,” but the measure raises other troublesome issues.

For instance, the square footage of any new project would be counted in the analysis as vacant, even if an occupant already had been secured. That means that if the city’s vacancy rate was close to 8 percent, the square footage of a new project could put it over the limit even though that space would be filled immediately.

The measure lists four sectors of retail business: retail trade, food services and drinking places, repair and maintenance, and personal and laundry services. Part of the market analysis also would be to determine whether those retail sectors are overserved or underserved in Lawrence. Officials are quick to say they would only use that data to try to attract businesses in underserved sectors, but it could as easily be used to try to limit businesses in sectors that have been labeled as overserved.

There are many subtleties to the marketplace that could be skewed by such an approach. For instance, if the coffee shop market is saturated by businesses on the east, west and north sides of Lawrence, does that mean the city shouldn’t allow a new coffee shop in a new neighborhood to the south?

The policy also puts a lot of faith in a consultant’s ability to predict the local retail market for at least the next three years. Would the city be willing to accept the judgment of the same consultant who has determined Clinton Lake needs another 18-hole golf course?

Consultants and city officials are no more capable of assessing the retail marketplace than are the developers who are willing to take the financial risk to build retail projects in Lawrence. The City Commission and Planning Commission have a legitimate role in supervising the city’s overall retail health, but the proposed text amendment on Tuesday’s agenda injects a level of retail micromanagement that not only is beyond the expertise of any elected body but also is very likely to be harmful to the city’s future.