Category Archives: Uncategorized

The End of an Era

With the exception of a seven-year period beginning in 1979, the inflation-adjusted price of a gallon of gas was never higher than $1.60 from 1950 to 2003. As recently as 1998, a gallon of gas cost $1.10, the lowest inflation adjusted price recorded at least since World War II, perhaps ever. In 2004, gas went to $1.94 a gallon, then to $2.34, $2.65, and $2.79, in successive years. This year’s average price will certainly end over $3.00, marking a near doubling in five years and a nearly 300% increase in ten years.

With gas prices averaging a bit less than $1.50 during most of the “automobile era,” a family of four consuming 2,000 gallons of gas would spend $3,000 a year. This means that for much of the automobile era, gas prices have pretty much represented a fixed cost of approximately 7% of average family income. Consumers could happily motor certain in the knowledge that the cost of gas would be mostly incidental to the cost of driving and the cost of living.

Under these circumstances, people made certain decisions – such as the type of car to drive, how far to live from work, where and how often to go shopping, how many cars to own, and whether or not to use public transportation – based on certain expectations about the cost of gas, expectations that have been reasonable throughout much of the automobile era.

Likewise for businesses. The proximity of businesses to employees and customers and to public transportation lines is shaped by fuel costs. So are decisions about how and how far to ship goods. So, I would submit, are decisions about the scale or size of the business.

And these are just direct, at the pump fuel costs. Since energy is involved in almost everything we do, increased energy costs are a major source of inflation, showing up in increased shipping, heating, and cooling costs. In our petrochemical economy, oil also represents a major input in paints, plastics, food, and fertilizers.

My point is that our landscape of lawned suburbs, retail sprawl, and campus-like office complexes connected by a dense thicket of roads is the product of an era of cheap fuel, an era that has just ended. With oil production declining in Mexico, the North Sea, Russia, and Norway, with demand growing far faster than supply, and with even Saudi Arabia showing signs of fatigue, there is little evidence to support the hope that recent price increases are temporary.

In its last phase, fueled by well below average gas prices and well below average interest rates from the mid-1990s to 2003, we experienced a historic surge in residential and commercial sprawl. Retail square footage per capita more than doubled in what was already the world’s leader in retail space. Wal-Mart became the world’s largest company. Lowe’s quadrupled its number of stores. Now we are left with a huge hangover and a doozie of a recession to get over it.

Returning to our average family of four, fuel costs are now approximately $7,000 a year, or 16% of income. That’s equivalent to $585 a month, comparable to the mortgage on a modest home. This doesn’t include the inflationary effects of higher fuel prices on food, heating, cooling, and everything else. Using the methods used to measure inflation back in the 1970s, before the federal government changed the formula to show less inflation, today’s inflation rate is almost 12%. (See article here for details).

It will take a while for the new reality of gas prices to be felt. Many households and businesses will carry out plans made in a previous era, believing that era isn’t really over. Schemes to suspend gas taxes, send checks to taxpayers, and draw fuel from the Strategic Petroleum Reserve will be tried.

In the end, though, we will need to accommodate to an era of permanently higher fuel costs. Even as a dedicated opponent of sprawl, I enter this new era with real concern.

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Once More, From the Beginning

Please bear with me for one more journey through the dusty records of the Town of Geneseo.

Having read Newman Development Group’s recently-submitted draft Final Environmental Impact Statement (FEIS), in which they try gamely to make the case that their project really is consistent with the planning for the Gateway District, I thought I ought to take a closer look at the history of the Town’s current Master Plan, completed in 1992.

Recall from previous columns that there is no credible argument to be made that Newman’s proposal is consistent with, or even bears a resemblance to, the zoning for the Gateway (though that doesn’t stop Newman from trying). A Big Box facing and taking direct access from 20A on a parcel zoned for small businesses facing and taking access from Volunteer Road isn’t close.

However, the relationship between the master plan that preceded that zoning and Newman’s proposal is a different question. It is at least conceivable that the Master Plan, which is by definition a broader and more abstract vision of the community than is zoning, is less hostile to Newman’s plans.

That’s Newman’s story, certainly. As they write in their recent submission, their proposal “is consistent in all regards with the planned growth for the Gateway area.” Elsewhere, Newman writes that their project is “compliant with the objectives, goals, and land uses” of the master plan, that their proposal is intended “to further the development goals of the Town,” and that a development of the scale they propose is “entirely logical” in the eyes of the master plan.

Definitive statements, each suggesting that the Town has long unrealized plans for Big Boxes studding the Gateway that are finally coming to fruition. Is this what the record shows?

Not so much, it turns out. In fact, I can’t find any record that the Town Board actually enacted the master plan that was recommended to it by the Town Planning Board in 1992: no public hearing, no SEQR findings, no Town Board vote, or even Town Board discussion. Neither is there any record of any support for additional Big Box development subsequent to the Wegman’s/Wal-Mart plaza.

Rather, the record reflects that the Town Board “accepted” the draft master plan from the Planning Board and took no further action. The document they accepted is light on details on what is now known as the Gateway District, favoring commercial and industrial development in this area and emphasizing the need to limit strip development. There is no record of the Town Board ever discussing these issues.

I don’t know what it might mean that the Town did not formally enact the master plan, though I don’t think it can be good news for those claiming authorization to build a Big Box explicitly prohibited by the zoning.

The 1992 master plan was conceived in 1985, at a joint meeting of the Town and Village Boards, in response to concerns about the growth of the college, the opening of 390, and sprawling residential and commercial strip development. The new plan was intended to replace the Town’s 1966 plan and the Village’s 1976 plan.

The Town and Village Planning Boards, working together as the Comprehensive Plan Action Committee (CPAC), took responsibility for drafting the new plan. They began work in early 1985 by distributing a community survey, the results of which found traffic, particularly on 20A, to be the community’s foremost concern, followed by sprawl and rental housing.

Over the course of the next several years, meeting regularly, CPAC produced a draft that focused on reducing strip development (by limiting the number of curb cuts into new developments) and identifying appropriate locations for different types of development. For reasons that are not entirely clear, this 1988 draft plan then sat idle for a few years.

In 1991, probably as a result of the planning and zoning urgency created by the Wegman’s/Wal-Mart proposal (which was proposed in December 1990), CPAC retained Phoenix Associates to deliver a final master plan. Phoenix drafted papers discussing the major issues and organized a public meeting on December 10, 1991.

The Gateway District received little attention in this master plan. Commercial development was planned for that area, though the accompanying record suggests that little actual development was foreseen for the time being as in-fill development occurred in the Village and new development was focused south of 20A.

Beyond the vague language of the master plan, the only specific reference to potential development in the Gateway comes in the committee’s issue paper on commercial development, which states that “requests for commercial development in this area are likely to be for small to moderately sized individual commercial uses.”

With events outpacing planning, the Town Planning Board voted unanimously to accept the draft master plan at its May 11, 1992, meeting, and forward it to the Town Board. It then moved on to reviewing the Wegman’s/Wal-Mart proposal and writing new zoning for the Gateway. And there the story ends.

Vague language in a draft plan; that seems an awfully rickety foundation on which to build a Big Box!

Cheap gas

Among the reasons given in support of Big Boxes and in support of Geneseo’s role in hosting Big Boxes is that gas prices are getting too expensive for people to drive long distances to shop. This point was made again at last night’s County Planning Board discussion of the Village of Geneseo’s master plan.

While I have no doubt that rising gas prices are putting the squeeze on consumers, I am skeptical that Big Boxes provide a solution to this problem. The flaw in the argument is that it focuses only on the effects of rising energy prices on consumers, failing to consider their effects on manufacturers, distributors, and retailers.

My understanding of the logic of Big Boxes leads me to the conclusion that the business model on which they are based is particularly dependent on cheap energy. As a result, consistently and significantly higher gas prices will hit them worst, narrowing the margins that provides them a competitive advantage against smaller retailers.

Big Boxes “work,” meaning that they are able to offer low prices and a large selection, by taking advantage of the very low wages of factory workers in Asia and the very low cost of transporting the goods they produce to the United States. Add to this that the core consumers at Big Box stores are lower income Americans and you see that two of the three legs on which Big Boxes stand are weakened by rising gas prices.

Rising energy prices will add significantly to the cost of transporting goods halfway around the world, making the low wages of Chinese factory workers too expensive to reach. Rising gas prices will also add significantly to the already squeezed consumer, reducing their spending.

As manufacturing and distribution costs, heating and cooling costs, and the transportation costs of goods, workers and consumers rise, Big Box retailers will lose some of their competitive advantage. At some point in this process, it will no longer make sense for these retailers to build and maintain four and five acre stores twenty miles apart.

Maybe the most recent run-up in gas prices won’t last. But if it does, look for the Big Box retailers to be hit hard. They’re the ones whose business model depends on transporting large volumes of cheaply made goods long distances and selling them through a vast network of huge stores at narrow profit margins to cost conscious consumers.

Remove any one of those variables, and higher gas prices will change the whole equation. Big Box retailers will pull back, focusing on their core markets and forcing consumers to travel longer distances to find them.

Geneseo is not likely to be one of those core markets. Henrietta will thus return to its role as the regional retail destination for much of Livingston County, smaller retailers – at least those that remain – will regain some of their business, and the Big Box and small box chains of 20A will close.

Indeed, as an Applebee’s executive told the Geneseo Town Planning Board on Monday night, Geneseo is a “C” market, barely eligible for consideration by the likes of Applebee’s. Henrietta is an “A” market and Canandaigua a “B.”

Because of its small size,  Applebee’s is not convinced of our ability to deliver them the profit margins they demand. Because dining out is one of the first expenses to fall to rising gas prices, Geneseo’s C might turn out to be a failing grade.