Wednesday, October 7, 2015

Exit Real World's Closure Could Point to our Underinvestment in Transit

In a comment the other day, a reader pointed out that Exit Real World, which was located adjacent to the transit mall at the corner of High and Chemeketa, a year ago closed in Salem but stayed open in Portland.

The correlation with payroll taxes and transit is interesting: They paid zero in payroll tax for transit in Salem, and continue to pay a much higher rate on payroll in Portland.

And, again, the Portland store (206 NW 23rd) remained open when they closed the Salem store.

Back in 2012, Holiday Retirement also moved corporate offices from Salem to Lake Oswego, which collects the payroll tax for transit as well.

So that is evidence, n=2 anecdotal evidence anyway, that paying more payroll tax for better transit could be related to business prosperity. And that "free" payroll tax in Salem for not-very-good transit could be a factor in business struggle and even failure.

That old bromide of "you get what you pay for" and all?

Back to Exit Real World, this is speculation, but it seems like the customer demographics would include a large proportion of youth, many of whom would be transit dependent. Because we don't have evening or weekend service, they would lack transportation here when they are not in school.

The story in the paper a year ago in August seems to support this hypothesis:
Exit Real World, a staple of downtown for 21 years that at one point had five stores in Oregon, will close the store that started it all on Saturday to focus on its remaining location in Portland.

Owners Jake Hauswirth and Missy Samiee said the business has struggled in recent years through the recession and with competition from online retailers and chain stores. While focusing on their more successful Portland location makes sense for the married couple, they said they're disappointed to leave a community that has supported them for the past two decades.

"Thanks to parents for driving their kids down here at 5:30 after work — we know that's not easy," said Samiee, who has three kids of her own. "As much as we love it here — Jake and I are both from Salem and have lived here our whole lives — it's just a bit easier on the day-to-day." [italics added]
From Existing Conditions Report,
Jarrett Walker + Associates
(Additional notes in red added;
when employment stabilized, transit still declined)
There are other factors too, of course, to which the bit quoted here alludes. But it sure looks like the lack of easy transportation for youth was also an important ingredient in the business problems that led to the closure. If the recession and changing retail patterns already made things challenging, reductions in transit likely compounded the difficulties.

And this looks like it could be evidence from one business that investing in transit is just that, an investment in customers and in increased transactions, and not a jobs-killing drain on business enterprise.

And it seems like there is an opportunity to collect stories from businesses that have been harmed by the reduction in service from 2009 and whose businesses may not have rebounded in tandem with the general rebound in the business economy or stock market. Is it really that difficult to document the impact of disinvestment in transit on business? The business case for transit isn't that difficult to make, is it?

Two examples aren't proof, of course, but they might point towards a hypothesis that Cherriots would do well to investigate.


Anonymous said...

Good post. Is there one example going the other direction? Where a business left Portland (or Corvallis, Eugene) because of the payroll tax? Seems that if the Chamber's priorities were working we would see at least one example.

I didn't even know Exit Real World was on NW 23rd. That is a perfect example of a quality urban environment that supports healthy transit. It has exploded since the street car came in. Critics of the area will say that the street car has triggered gentrification. In other words (from a business point of view) it has been TOO successful in attracting wealthy shoppers! So successful that they are scrambling so cope with many of the consequences (which are real and serious issues).

Anonymous said...

Yeah no, they failed in a small town when the fad faded. Not that unheard of. Making up correlations just to push a tax agenda is bad. A lot of businesses in that area are doing just fine.

Anonymous said...

Transit agenda not tax agenda. If the anti tax agenda worked businesses would be flocking here from all the higher taxed areas around the state. That is not happening. Salem's .6% growth rate is second to last in the state.

Is 160,000 people a small town? It definitely doesn't have the charm of a small town nor does it have the services or amenities of a city. This just shows how hard people are fighting to keep it that way.

C Jones said...

Compare to LTD's ridership and the Eugene/Springfield economic situation and tax burden. Lots of details in the LTD financial report:

Good numbers starting on page 85.

Anonymous said...

Respectfully, this might be one of the worse attempts at correlation I have seen in my career.

Salem is a sprawl town. Public transportation will always be of low impact no matter how much money you throw at it. Sad but true.

Most people with any disposable income in this town have a car.

Most people that ride public transportation in Salem have very little disposable income. Have you seen the studies of the typical bus rider in Salem? Sure there are some state employees that ride the bus, but its small and they don't spend a lot of money.

I think that any new revenue should be very simple to implement. Have you ever filled out payroll tax forms for Portland? Why add new administrative burdens to small business. Maybe add $200 annual flat tax to all businesses? Bump property taxes? Why create a new tax?

Anonymous said...

The transit system in Salem is terrible and is probably the reason most people choose to drive instead of ride the bus, but Exit Real World's real downfall was poor customer service and being about two blocks from a store with friendly service and almost half the price.

Anonymous said...

There isn't a direct correlation. Good transit service enables a better quality built environment and a better quality of life that cayuses more people to want to live in a city which increases the number of customers businesses have to draw from.

And there is a significant population in Salem that don't have a choice.

I disagree that the business climate in this area is healthy. High St. is still mostly closed on Sat. afternoons and Sundays. These are normally the busiest times in healthy areas. There is no reason why these businesses should absorb fixed costs and not be open generating revenue unless the business environment is extremely poor.

C Jones said...

Re: the sprawling nature of Salem as compared to its southern neighbor. The metro areas are certainly different from one another, but Eugene/Springfield and Salem/Keizer are similar enough that it is worth comparing them. Data from Wikipedia, which usually right about this sort of stuff:

Eugene/Springfield area, population, and population density: 60 sq mi, 221,000 people, 3,683 people/sq mi

Salem/Keizer area, population, and population density: 55 sq mi, 198,000 people, 3,600 people/sq mi

That looks roughly the same to me. You could find minor differences, but Eugene/Springfield and Salem/Keizer have roughly the same population, area, and population density.

I wonder if the presence of 25,000+ UO students in Eugene/Springfield, all of whom have bus passes paid for with their student fees, makes a difference in the community's level of support for transit.

Food for thought, certainly.

Anonymous said...

Yes I think having an educated and enlightened population helps. Corvallis has free transit paid for by a fee on their water bill. Eugene also has innovative facilities like the EMX that have garnered them national awards. But we are just struggling for basic service in Salem and can't even think about doing anything innovative.