Capitalism, dollar stores, and the role of the Apopka City Council

By Reggie Connell, Managing Editor

Are you a proponent of big government or small government as it applies to capitalism and the economy?

Should elected officials stand aside and let business and the market choose winners and losers, or should they take an active approach to select and regulate the businesses and industries that come to its states, counties, and cities? Should they attempt to enhance the economy, or stand aside, letting it thrive or fail on its own?

These are questions that have been debated many times in the US Congress, state legislatures, and in city councils across the country.

Back in 2017, I asked the members of the Apopka City Commission to define their role. This was after Apopka City Commissioner Kyle Becker took on then-Mayor Joe Kilsheimer, Recreation Director David Burgoon, and City Attorney Cliff Shepard about a contract written for a tennis instructor using the courts at the Northwest Recreational Facility that he disagreed with.

Apopka City Commissioner Kyle Becker

It was an interesting, somewhat heated discussion about the role a commissioner plays (or does not play) in a contract with the City of Apopka and a private citizen, and it dovetails into another issue Becker brought up at last week's City Council meeting.

"It is my understanding that we have yet another dollar-type store coming in through the works of the DRC process," said Becker. "And location-wise it's going almost directly next to another existing dollar store we already have on Rock Springs Road."

Small-box discount retailers, or dollar stores as they are commonly called, is a subject Apopkans seem to hate, the market seems to love, and customers seem to patronize. Becker, however, sees a greater issue at play.

"I wanted to broach the topic again because there are certain cities across the country that are addressing this issue," he said. "And I do call it an issue because it is one."

In 2010, there were 20,000 dollar discount stores nationwide. Currently, it sits at over 34,000 according to a study done on statista.com. To put that into perspective, there are more dollar stores than McDonald's and Starbucks combined in the US. In 2019, Dollar General's net sales amounted to nearly $27.8 billion, while Dollar Tree generated about $23.6 billion.

They are a thriving industry, but it doesn't stop with those figures.

"They're very bullish on their growth model," Becker said. "Dollar General is aiming to put another thousand into the system alone."

There are currently 12 dollar stores in Apopka, and 16-20 in the immediate area, with no clear end to expansion in sight. But it's not just the volume of stores, but the location that concerns Becker.

"They go into low-income neighborhoods... that's how they make their money," he said. "People within these communities think they're satisfying a need, but the long-term impact, especially in the perspective of healthy food options, all weigh into the fact that it doesn't necessarily help these communities."

And the trend is doubtful to plateau any time soon, considering who the investors are.

"It's just going to get sharper because a lot of these, particularly Dollar General, have large Wall Street backing... they are a publicly-traded company. Their mission is to make sure their shareholders are happy - and they're going to want to grow, grow, grow... that's their model."

It would be easy to brush this type of growth aside, or even applaud it. This is what capitalism is all about, and it's good for the economy. If the consumer does not like what they offer, then a lack of demand drives them out of business without the government interfering with the rights of law-abiding businesses to prosper or fail based on their own merits. But what is the line for lawmakers regulating industries and establishments coming to their municipalities? For Becker, it starts with what's good for the community.

"You'd think that 12 in the city of Apopka - we've got 30-something square miles... might not be that big of an issue, but what typically is happening is that you have a high concentration of these type of stores - which deters other small grocers, other big-box retailers that people want because they have more options, more fresh food options - it causes them not to go into these areas where you have a high concentration of small box discounters."

It's one of the reasons Becker has been calling for a more planned approach to business in Apopka.

“During both of my terms, I have repeatedly advocated for a city-led Economic Development program. Unfortunately, we still do not have one, and this continued proliferation of discount stores is precisely the reason we need to do something now. We need to play offense and stop settling for what just comes our way. Dollar General or Dollar Tree should not dictate the retail and grocery landscape of our city for years to come.”

And with large businesses amassing huge profits for their shareholders, some believe a certain amount of job creation, community service, and involvement in the Apopka's betterment is appropriate. Becker does not see that sort of giving-back with the dollar discount stores.

"You could say these companies offer an economic impact. These companies would like you to think that's the case. But in actuality, it's few jobs that come and are meaningful in the communities they serve. I see minimal or no re-investment at all. I don't see from the Chamber website where they have chamber representation. So I don't see that they would give back to the community as Publix does, or other corporate sponsors like AdventHealth. I don't see an overwhelming economic impact that these stores bring."

He does, however, see the disadvantages they have in a low-income community.

"They target depressed areas. And I think that causes to be in a constant state of depression because people go to these stores with the mindset that they are going to get a better deal on household goods or food, but if you look at the price-per-unit, you can buy a 20-ounce bottle of ketchup at the Dollar General for a buck, but the cost per unit is less at a grocery store."

And then there are health concerns when the dollar discount stores dominate a community's buying options.

"A lot of stores go to places considered food deserts, which means accessibility to fresh foods are greater than a mile away from your residence. Either they perpetuate it, or they cause it to happen. For the most part, only 5% of Dollar Generals even offer fresh produce. In the state of Florida, we have 938 Dollar Generals. They sell, for the most part, high-calorie and highly processed food, and it discourages normal grocers from providing healthier food options in nearby areas."

At the end of his presentation, Becker asked the City staff to explore ideas to limit the acceleration of dollar discount stores in Apopka as other cities have done.

"I don't think I'm saying we put a total ban on those types of establishments," Becker said. "But I think there are smart ways to plan for their growth in this region if it's planned - and nothing would suggest it's not."

Becker referenced two ideas to limit their growth - grocery classification distinctions and buffer zones.

"We can further define our grocer-classifications by their square footage and the food offering percentage to say how much fresh food do they have accessible to their customers, and then create some level of buffer requirements. Birmingham has a one-mile buffer."

For the most part, the city commissioners agreed with Becker's ask of City staff.

"I support it because I think we have enough dollar stores," said Commissioner Alexander H. Smith. "And as Commissioner Becker said, they do not reinvest in the community. When we had the debate about the family-owned business that had been approved to open here, but Dollar General came in and overpowered them. They made a commitment that they were going to reinvest in the community, and none of that has happened. Not one iota."

"The question too, is the legal side of this," said Commissioner Doug Bankson, "Are we allowed to have buffers? Typically we'll have grocery stores like Publix or Albertsons that will compete, but I think this is a great approach and obviously, other cities have been doing that."

Apopka City Attorney Michael Rodriquez believes there are pathways to regulating dollar stores through both buffer zones and justified restrictions.

"There are numerous cities around the country that have imposed distance requirements," said Rodriguez. "As long as there is a rational basis, it's something that can be defensible under zoning."

"How is it we have cities like Windermere that don't allow stores like this in their community?" Commissioner Diane Velazquez asked. "And what do they have in their codes to not allow stores like this to come into their community?"

"It depends on how their codes are written and when they are written," said Rodriguez. "Local governments can make justifications to prohibit certain uses. The City of Boca Raton does not allow car dealerships."

"I do support what Commissioner Becker is asking for... that our staff looks into this," said Velazquez. "We can certainly have something in place that says dollar stores can't be side-by-side."

"We'll have staff do a thorough study and see what would be the proper mechanisms to properly regulate this and not run afoul of property rights that these uses do possess," said Rodriguez.

So what is the appropriate measure for a municipal government to take when it comes to business? Becker believes there is a formula that lands somewhere between over and under regulation - that sweet spot called effective governing.

“I am pro-business and want to see our local small business community thrive, as well as corporate brands that reinvest in Apopka," said Becker. "When it comes to exploring regulations, there is no perfect formula for knowing when or how much; however, I firmly believe in leveraging long-standing and generally accepted planning practices for establishing permitted use classifications, creating overlay districts, or other development requirements to promote a healthy mixture of business types in our city.”