community;
2. Facilitate the development of warehouses and fulfillment centers in close proximity to the freeway interchange as a means to reduce the traffic impacts of such facilities; and
3. Assist in the City’s goals to diversify the economy by facilitating development of the warehouse/fulfillment center sector.
NOW, THEREFORE, THE PLANNING COMMISSION OF THE CITY OF
PALM SPRINGS DOES HEREBY RESOLVE AS FOLLOWS:
SECTION 1. That the findings and determinations reflected above are true and correct, and are incorporated by this reference herein as the cause and foundation for the action taken by the and through this Resolution.
SECTION 2. That based on the entire record befor e the Planning Commission, and the findings made in the staff report and this Resolution, the Planning Commission of the City of Palm Springs h ereby recommends that the City Council approve and adopt the following Ordinance entitled:
“AN ORDINANCE OF THE CITY OF PALM SPRINGS,
CALIFORNIA, AMENDING CHAPTERS 92 AND 93 OF THE PALM
SPRINGS ZONING CODE RELATIVE TO THE DEVELOPMENT
STANDARDS FOR THE M -2 (MANUFACTURING) AND E -I
(ENERGY INDUSTRIAL) ZONES.”
which is attached hereto as Attachment “A” and incorporated herein by reference.
SECTION 3: The Planning Commission finds that a pproval of this Zoning Text Amendment Ordinance is consistent with the City of Palm Springs General Plan because:
(i) The proposed amendment will attract hig h-quality commercial development in accordance with Goal LU4 of the General Plan;
(ii) The proposed amendment will promote opportunities for expansion of industrial uses within the City pursuant to Policy LU3.2 of the Land Use Element; and
(iii) The proposed amendment will facilitate the development of industrial uses that co-exist with wind energy facilities, in accordance with the Land Use Element of the General Plan.
Therefore, this Zoning Text Amendment Ordinance furthers the objectives and Item 2B - 43
Resolution No. _____
policies of ea ch element of the General Plan and does not obstruct their attainment.
SECTION 4. The Planning Commission further finds that approval of this Zoning Text Amendment O rdinance is consistent with the intent of the Zoning Code because:
(i) The proposed revisions continue to restrict the placement of large - scale warehouse and fulfillment center uses to the area adjacent to the I-10 and Indian Canyon Drive interchange, where such uses will not impact residential areas and the associated traffic ca n be accommodated by the existing street network;
(ii) The proposed amendment imposes additional setback and buffering measures as a means to mitigate the height of proposed
development; and
(iii) The proposed amendment adopts a parking standard that reflects actual use and minimizes impacts to stormwater runoff and the urban heat island effect.
SECTION 5. The proposed ordinance is not subject to the California Environmental Quality Act (Public Resources Code Section 21000 et. seq.) pursuant to Section 15060(c)(2) and 15060(c)(3) of the State Guidelines, because the ordinance will not result in a direct or reasonably foreseeable indirect physical change in the environment and is not a “project,” as that term is defined in Section 15378 of the State Gui delines. As projects are submitted and reviewed for compliance with this amendment, the City will conduct CEQA review as required by law.
SECTION 6. The Secretary of the Planning Commission shall certify to the adoption of this resolution and it shall become effective immediately upon adoption.
APPROVED AND ADOPTED BY THE PALM SPRINGS PLANNING
COMMISSION THIS 17TH DAY OF NOVEMBER, 2021.
AYES:
NOES:
ABSENT:
ABSTAIN:
Item 2B - 44
Resolution No. _____
_
Flinn Fagg, AICP
Development Services Director
Item 2B - 45
Resolution No. _____
CERTIFICATION
STATE OF CALIFORNIA )
COUNTY OF RIVERSIDE ) ss.
CITY OF PALM SPRINGS )
I, ________________, Secretary of the City of Palm Springs Planning Commission do hereby certify that Resolution No. ____ was approved by the Planning Commission on __________ by the following vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City of Palm Springs, California, this ______ day of ______________, _________.
__
PLANNING COMMISSION SECRETARY
Item 2B - 46
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Resolution No. _____
Attachment A
Case 5.1547 ZTA
M-2 (Manufacturing) Zone: Proposed Changes
92.17.1.00 “M-2” Manufacturing Zone.
The “M-2” manufacturing zone is intended to provide for the development of warehouse and distribution centers, and industrial uses which include fabrication, manufacturing, assembly or processing which do not in their maintenance, assembly, manufacture or plant operation create by -products to any degree which will adversely affect the resort - open space environment of the city.
92.17.1.01 Uses Permitted.
A. Uses Permitted. Buildings, structures and land shall be used and buildings and structures shall hereafter be erected, altered or enlarged only for the following uses. All uses shall be subject to the standards in Section 92.17.1.03.
1. All uses permitted in the “C -1,” “C -2,” “C -M,” “M -l-P” and “M -1” zones, Sections 92.12.01, 92.14.01, 92.15.01, 92.16.01 and 92.17.01, unless otherwise regulated herein.
2. Adult oriented business.
3. Animal day care;
4. Animal hospitals, including kennels;
5. Cannabis lounge or cannabis dispensary, subject to the property development standards contained in Section 93.23.15 of this Code;
6. Fabrication.
a. Manufactured housing and mobilehomes;
b. Cans and containers;
c. Cutlery, tableware, hand tools and hardware;
d. Wrought iron;
e. Fencing;
f. Metal buildings;
g. Ordinance and firearms, not including explosive; h. Vehicles, aircraft, boats and parts;
i. Railroad equipment;
j. Motorcycles, bicycles and parts;
k. Travel trailers and recreational vehicles.
7. Manufacturing.
a. Manufacturing, compounding, processing, packaging or treatment of such products as:
Item 2B - 47
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i. Meat and poultry products (if connected to an adequate sewer system),
ii. Nonalcoholic beverages,
iii. Leather, including tanning and finishing,
iv. Glassware,
v. Concrete, gypsum, plaster and mineral products; b. Knitting, floor covering, and yarn and thread mills; c. Saw and planing mills;
d. Paper and paperboard mills;
e. Agricultural chemicals, not including pesticides and fertilizers; f. Stone cutting and related activities;
g. Glass blowing, pressing and cutting;
h. Machinery and shop:
i. Engines, turbines and parts,
ii. Farm, garden construction and industrial machinery, iii. Lighting and wiring.
8. Cannabis transportation and distribution facility, subject to the development standards contained in Section 93.23.15 of this Code;
9. Services.
a. Equipment sales, rental and storage;
b. Trailer and boat storage;
c. Auction houses, subject to Municipal Code Chapter 5.04; d. Caretaker’s residence (one thousand (1,000) square feet maximum), as an accessory use.
10. Emergency Shelters. Emergency Shelters are defined as housing for homeless persons for interim occupancy intended for a period of less than 6 months whereby no person is denied occupancy because of an inability to pay rent.
11. Wholesale, warehouse, distribution, fulfillment, and import/export centers.
B. Similar Uses Permitted by Commission Determination. The commission may, by resolution, permit any other uses which it may determine to be similar to those listed above, in conformity with the intent and purpose of this zone, and not more obnoxious or detrimental to the public health, safety and welfare, or to other uses permitted in this zone, as provided in Section 94.01.00. All uses shall be subject to the property development standards in Section 92.17.1.03.
C. Uses Permitted by Land Use Permit.
1. Uses permitted by land use permit in the “M -l-P” and “M -l” zones, Sections 92.16.01(C), and 92.17.01(C), unless otherwise permitted;
2. Operations and facilities providing tours of alternative energy facilities.
D. Uses Permitted by Conditional Use Permit. The following uses may be permitted subject to approval of a conditional use permit, as provided in Section 94.02.00:
1. Uses permitted by conditional use permit in the “M -l-P” and “M -1” zones, Sections 92.16.01(D), and 92.17.01(D), unless otherwise permitted; Item 2B - 48
Draft: 17 November 2021
2. Acid and abrasives manufacturing;
3. Ambulance servi ces, and accessory uses customarily incident to the permitted use; provided that, the site is located at least five hundred (500) feet from any property zoned residential;
4. Bail bond offices;
5. Brewery, distillery or winery;
6. Check cashing facilities;
7. Concrete batch plants and asphalt plants;
8. Disposal service operations;
9. Energy Uses.
a. Solar energy facility,
b. Wind energy conversion systems (WECS), subject to the requirements and standards contained in Section 94.02.00(H)(8), c. Cogeneration facilities,
d. Natural gas powered electric generation plants that do no exceed two hundred (200) megawatts in size;
10. Fertilizer production, organic or inorganic;
11. Heavy equipment storage and rental;
12. Kennels;
13. Meat packing plants, not including slaughtering or rendering of animals;
14. Cannabis cultivation facility, subj ect to the development standards contained in Section 93.23.15 of this Code;
15. Cannabis manufacturing facility, subject to the development standards contained in Section 93.23.15 of this Code;
16. Cannabis testing facility, subject to the development standards contained in Section 93.23.15 of this Code;
17. Paints and varnishes manufacturing and incidental storage;
18. Paper storage and recycling, not within a building;
19. Pawn brokers;
20. Petroleum and bulk fuel storage, above ground;
21. Poultry and egg processing;
22. Natural gas storage, above ground;
23. Nightclubs/cocktail lounges as a primary use;
24. Recycling of wood, metal and construction wastes.
92.17.1.02 Uses Prohibited.
The following uses are expressly prohibited in the “M-2” zone, and shall not be permitted by Commission determination or by conditional use permit.
A. Residential uses, other than for a caretaker as specifically permitted.
B. The following manufacturing uses:
1. Bone black plant;
2. Carbon black and lamp black plant;
3. Charcoal manufacturing plant;
4. Chemical plant (except for agricultural products);
5. Coal and coke plant;
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6. Detergents, soaps and by-products using animal fat;
7. Gas manufacturing plant;
8. Glue manufacturing plant;
9. Graphite manufacturing plant;
10. Insulation manufacturing plant;
11. Insulation manufacturing plant (flammable types);
12. Metal extraction and smelting plant;
13. Metal ingots, pigs, casting or rolling mill;
14. Paraffin manufacturing plant;
15. Petroleum and petroleum products plant;
16. Serum, toxin and virus manufacturing laboratory;
17. Sugar and starch manufacturing plant;
18. Turpentine manufacturing plant;
19. Wax and wax products manufacturing plant;
20. Wool pulling or scouring plant.
C. The following processing uses:
1. Animal by-products processing;
2. Carbon black and lamp black refining;
3. Chemical (except agricultural);
4. Coal and coke processing;
5. Detergents and soap processing;
6. Dog and cat food processing;
7. Fish by-products;
8. Fruit by-products;
9. Grain milling and sacking;
10. Petroleum and petroleum products processing or refining;
11. Potash works;
12. Printing ink processing;
13. Radium or uranium extraction;
14. Rubber reclaiming or processing;
15. Salt works;
16. Smelting works;
17. Soap works;
18. Sulfuric acid processing or bottling;
19. Vinegar processing or refining;
20. Volatile or poisonous gas storage or processing;
21. Wood and lumber kilns for industrial kiln-drying;
22. Wood preserving by creosote or other pressure impregnation of wood by preservations.
92.17.1.03 Property Development Standards.
The following property development standards shall apply to all land and buildings in the M-2 zone, except that any lot created in compliance with applicable laws and ordinances in effect at the time of its creation may be used as a building site.
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These standards may be altered where a specific development plan is approved under a planned development or a conditional use permit or otherwise approved master plan of development where the development meets the intent of this Zoning Code.
A. Lot Area. Except where lot sizes are otherwise established by an approved master plan, each lot shall have a minimum area of twenty thousand (20,000) square feet, except that lots which abut a major or secondary thoroughfare shall have a minimum area of forty thousand (40,000) square feet.
B. Lot Dimensions.
1. Width. Each lot shall have a minimum width of one hundred fifty (150) feet, except that lots which abut a major or secondary thoroughfare shall have a minimum width of two hundred (200) feet.
2. Depth. Each lot shall have a minimum depth of one hundred (100) feet, except that lots which abut a major or secondary thoroughfare shall have a minimum depth of two hundred (200) feet.
C. Building Height.
1. Buildings and structures shall have a height not greater than thirty (30) feet.
Buildings taller t han thirty (30) feet may be permitted pursuant to Section C(2) below.
2. Exceptions.
a. Permitted Projections Above Building Height Limit. The provisions of Section 93.03.00 shall apply.
b. Buildings and structures shall have a height not greater than forty (40) feet, provided that any portion of buildings in excess of thirty (30) feet are: (1) located on a parcel of not less than one (1) acre in size; and (2) set back one (1) foot from any property line for every one (1) foot of vertical rise. Buildings which exceed forty (40) feet in height may be permitted pursuant to the provisions of
Sections 93.04.00 and 94.02.00. Buildings of up to sixty (60) feet in height may be permitted, provided that: (1) the building is located on a parcel of not les s than one (1) acre in size; (2) the building is located one thousand (1,000) feet or further from the Interstate 10 right-of-way; and (3) t he building is set back one (1) foot from any property line for every one (1) foot of vertical height. c. Buildings of up to ninety -five (95) feet in height may be permitted, provided that: (1) the building is located on a parcel of not less than five (5) acres in size; (2) the building is located one thousand (1,000) feet or further from the Interstate 10 right-of-way; and (3) the building is set back one (1) foot from any property line for every one (1) foot of vertical height.
d. The provisions of Section 93.04.00 shall not apply to buildings in the M-2 (Manufacturing) zone.
D. Yards.
Item 2B - 51
Draft: 17 November 2021
1. General Provisions.
a. The provisions of Section 93.01.00 shall apply. b. The following provisions shall apply to lots which front on private, as well as public, streets.
2. Front Yard. No building shall be erected closer than twenty -five (25) feet from the front property line. Parking bays, on local or collector streets only, shall be permitted within the front yard or street side yard; provided, the entire parking bay is located on private property. Not less than twenty-five (25) fifteen (15) percent of such yard shall be landscaped and maintained.
3. Yard—Transition. Where a nonresidential lot abuts the boundary line of a residential zone, the side or rear yard which is adjacent to the residential zone shall have a minimum width or depth of twenty (20) feet regardless of any other provisions of this Zoning Code.
a. Industrial establishments in the M -2 Zone, abutting a street which is a resident ial zone boundary, shall establish and maintain a landscaping screen not less than twenty-five (25) feet wide. b. Where M-2 industrial property abuts residential property there shall be a six (6) foot masonry wall on the property line with the ten (1 0) feet nearest the wall in a landscaping screen.
c. Where a six (6) foot masonry wall exists on the residential property line or within one (1) foot of such property line, the required six (6) foot masonry wall may be waived; however, the required ten (10) foot landscaping screen shall be installed and maintained.
d. Where the M-2 zone abuts an alley, no building shall be erected less than twenty -five (25) feet from the side of the alley opposite the subject property.
E. Walls, Fences and Landscaping. Walls, fences and landscaping shall be installed as required in Section 93.02.00 or as stated in Section 92.17.1.03(D). All walls shall be constructed of solid masonry materials.
1. Exception. Walls shall not exceed eight (8) feet in height in any interior side or rear yard. Walls not to exceed eight (8) feet in height may encroach into any front yard not more than five (5) feet.
F. Coverage. Lot area coverage by buildings or structures shall not exceed sixty (60) percent of the total lot area.
G. Access. The provisions of Section 93.05.00 shall apply.
H. Off-street Parking. The provisions of Section 93.06.00 shall apply.
I. Off-street Loading and Trash Areas.
1. The provisions of Section 93.07.00 shall apply.
2. Loading docks which are located within one hundred fifty (150) feet of a residential zone boundary shall be screened from view from the residential area.
Item 2B - 52
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J. Signs. The provisions of Section 93.20.00 shall apply.
K. Outdoor Storage and Waste Disposal.
1. Outdoor storage and activities associated with permitted uses shall be adequately screened from view from any public street or abutting residential property by a solid masonry wall. Such wall shall return along any interior side property line which is perpendicular to such public street or residential property for a distance of not less tha n twenty-five (25) feet. Other fencing may be of chain link, or other open style, if the entire length of such fence is landscaped so to screen the storage area from view. Such landscaping shall be allowed to grow to eight (8) feet in height and shall be a dequately maintained and irrigated. Items shall not be stacked or stored higher than the wall if located within twenty -five (25) feet from any public street or residential property. All enclosures and stored materials must comply with fire department regulations for access and fire protection.
2. No materials or wastes shall be deposited or stored in such form or manner that they may be transferred off the lot by normally-occurring natural causes or forces. Wastes which might cause fumes or dust or wh ich constitute a fire hazard or which may be edible by or otherwise be attractive to rodents or insects shall be stored only in closed containers in required enclosures.
L. Antennas. The provisions of Section 93.08.00 shall apply.
M. Public Art. The provisions of Section 93.11.00 shall apply.
92.17.1.04 Performance Standards.
A. Fire and Explosion Hazards.
1. All storage of and activities involving inflammable and explosive materials shall be provided with adequate safety devices a gainst the hazard of fire and explosion and adequate firefighting and fire -suppression equipment and devices standard in the industry. All incineration is prohibited; or
2. The storage and handling of flammable liquids, liquefied petroleum, gases and explosives shall comply with the state rules and regulations. Bulk storage of flammable liquids, liquid petroleum, gases and explosives above ground shall be unlawful, except gasoline and lubricating fuel oil. Storage below ground shall be permitted; prov ided, all tanks shall be located not closer to any property line than the greatest depth of the bottom of the buried tank. All incineration is prohibited.
B. Radioactivity or Electrical Disturbance. Devices which radiate radio -frequency energy shall be so operated as not to cause interference with any activity carried on beyond the boundary line of the property upon which the device is located. Radio - frequency energy is electromagnetic energy at any frequency in the radio spectrum between ten (10) kilocycles and three million (3,000,000) megacycles.
Item 2B - 53
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C. Noise. The provisions of Chapter 11.74 of the Municipal Code shall apply.
D. Vibration. Every use shall be so operated that the ground vibration inherently and recurrently generated is not perceptible, without instruments, at any point on any boundary line of the lot on which the use is located.
E. Emission of Smoke, Dust, Heat and Glare. Every use shall be so operated that it does not emit smoke, dust, heat or glare in such quantities or degree as to be readily detectable on any boundary line of the lot on which the use is located.
F. Emission of Odors/Gas.
1. Odor. The emission of obnoxious odors of any kind shall not be remitted.
2. Gas. No gas shall be emitted which is deleterious to the public health, safety or general welfare.
92.17.1.05 Property Maintenance Standards.
All properties shall be subject to property maintenance standards established in Section
93.19.00. E-I (Energy Industrial) Zone: Proposed Changes
92.17.2.00 “E-I” Energy Industrial Zone
The “E -I” energy industrial zone is intended to provide areas for alternative energy development and limited industrial and cultivation uses in those areas which by virtue of strong prevailing winds are ideally suited for large -scale development of wind energy.
Alternative energy development is intended as the principal land use. The retention of open space is encouraged. No industrial use shall be permitted which, by the nature of its development or operation, will in any way adversely affect the resort environment of the City. The “E-I” energy industr ial zone is intended to provide areas for alternative energy development, industrial development, and cultivation uses. By virtue of strong prevailing winds, the E-I zone is ideally suited for large-scale development of wind energy facilities. Additionally, due to the E -I zone’s location north of Interstate 10 and isolation from the resort areas of the city, land in the E -I zone is ideally suited for manufacturing, assembly, cultivation and distribution of products and fulfillment activities, all of which are compatible with the goal of enhancing the city’s economic base. No industrial use shall be permitted, which by the nature of its development or operation, will adversely affect the resort environment of the city.
92.17.2.01 Uses Permitted.
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A. Uses Permitted. Building, structures and land shall be used and buildings and structures shall hereafter be erected, altered or enlarged only for the following uses. All uses shall be subject to the standards in Section 92.17.2.03.
1. Accessory uses to permitted uses; provided, such uses are established on the same parcel as, and do not substantially alter the character o f, the principal use:
a. Storage of trucks and other vehicles,
b. Storage of materials and machinery,
c. Offices and maintenance shop structures,
d. Caretaker’s residence two thousand (2,000) square feet maximum, e. Meteorological towers under two hundred (200) feet in height;
2. Fabrication.
a. Manufactured housing and mobilehomes,
b. Cans and containers,
c. Cutlery, tableware, hand tools and hardware,
d. Wrought iron,
e. Fencing,
f. Metal buildings,
g. Ordinance and firearms, not including explosives, h. Vehicles, aircraft, boats, parts and repairs,
i. Railroad equipment,
j. Motorcycles, bicycles and parts,
k. Travel trailers and recreational vehicles;
3. Manufacturing.
a. Agricultural chemicals, not including pesticides and fertilizers, b. Bakeries,
c. Bottling plants,
d. Ceramic products using only previously pulverized clay and fired in kilns using only electricity or gas,
e. Electronics (electrical and related parts, electrical appliances, electrical devices, motors, and radio, television and phonograph), f. Furniture upholstering,
g. Garment manufacturing,
h. Glass blowing, pressing and cutting,
i. Instruments (electronic, medical and dental tools, precision, and timing and measuring),
j. Knitting, floor covering, and yarn and thread mills, k. Laboratories (dental, electrical, optical, mechanical and medical), l. Lumber yard (including incidental millwork but not including planing mill),
m. Machinery and Shop.
i. Blacksmith and forging shop,
ii. Cabinet or carpenter shop,
iii. Electric motor rebuilding,
iv. Engines, turbines and parts,
v. Farm, garden construction and industrial machinery, Item 2B - 55
Draft: 17 November 2021
vi. Lighting and wiring,
vii. Machine shop,
viii. Sheet metal shop,
ix. Welding shop,
x. Painting and powder coating,
n. Manufacturing (compounding, processing, packaging or treatment of such products as):
i. Bakery goods,
ii. Candy,
iii. Concrete, gypsum, plaster and mineral products, iv. Cosmetics,
v. Drugs,
vi. Food products,
vii. Fruit and vegetables (packing only),
viii. Glassware,
ix. Honey extraction plant,
x. Leather,
xi. Nonalcoholic beverages,
o. Manufacture and maintenance of electrical and neon signs, p. Manufacturing, compounding, assembly or treatment of articles o r merchandise from the following previously-prepared materials:
i. Canvas,
ii. Cellophane,
iii. Cloth,
iv. Cork,
v. Felt,
vi. Fiber,
vii. Fur,
viii. Glass,
ix. Leather,
x. Metals,
xi. Paper (no milling),
xii. Plaster,
xiii. Plastic,
xiv. Precious or semiprecious stones or metals,
xv. Rubber,
xvi. Shells,
xvii. Textiles,
xviii. Tobacco,
xix. Wood,
xx. Yarns,
q. Novelties and holiday paraphernalia,
r. Office and rela ted machinery (audio and visual machinery, computers),
s. Paper and paperboard mills,
t. Pharmaceutics (cosmetics, drugs, perfumes, soap and toiletries), Item 2B - 56
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u. Rubber and metal stamps,
v. Shoes,
w. Stone cutting and related activities,
x. Textiles;
4. Processing.
a. Carpet and rug cleaning,
b. Cleaning and dyeing,
c. Laundry;
5. Services.
a. Governmental facilities,
b. Newspaper publishing,
c. Ice and cold storage plant,
d. Offices (business, professional and research), e. Printing, lithographing, publishing,
f. Public utility service yards,
g. Radio and television broadcasting;
6. Wholesaling and warehousing Wholesale, w arehouse, distribution, fulfillment, and import/export centers;
7. Cannabis transportation and distribution facility, subject to the development standards contained in Section 93.23.15 of this Code.
B. Similar Uses Permitted by Commission Determination. The commission may, by resolution, permit any other uses which it may determine to be similar to those listed above, in conformity with the intent and purpose of this zone, and not more obnoxious or detrimental to the public health, safety and welfare, or to other uses permitted in this zone, as provided in Section 94.01.00. All u ses shall be subject to the property development standards in Section 92.17.2.03 and the performance standards in Section 92.17.2.04.
C. Uses Permitted by Land Use Permit.
1. Modifications to existing WECS, subject to the requirements and standards contained in Section 94.02.00(H)(8);
2. Meteorological towers in excess of two hundred (200) feet in height;
3. Operations and facilities providing tours of alternative energy facilities;
4. Recycling collection center;
5. Vehicle impound yards.
D. Uses Permitted by Conditional Use Permit. The following uses may be permitted subject to approval of a conditional use permit, as provided in Section 94.02.00:
1. Acid and abrasives manufacturing;
2. Animal hospitals, shelters or kennels;
3. Brewery, distillery or winery;
4. Chemical plating shop;
5. Concrete batch plants and asphalt plants;
6. Disposal service operations;
7. Energy Use.
a. Solar energy facility,
Item 2B - 57
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b. Wind energy conversion systems (WECS), subject to the requirements and standards contained in Section 94.02.00(H)(8), c. Co-generation facilities;
8. Fertilizer production;
9. Meat packing plants, not including slaughtering or rendering of animals;
10. Cannabis cultivation facility, subject to the development standards contained in Section 93.23.15 of this Code;
11. Cannabis manufacturing facility, subject to the development standards contained in Section 93.23.15 of this Code;
12. Cannabis testing facility, subject to the development standards contained in Section 93.23.15 of this Code;
13. Natural gas storage, above ground;
14. Paints and varnishes manufactured and incidental storage;
15. Paper storage and recycling, outdoor;
16. Petroleum and bulk fuel storage, above ground;
17. Planing mill;
18. Poultry and egg processing;
19. Recycling/salvage center.
92.17.2.02 Uses Prohibited.
The following uses are expressly prohibited in the “E -I” zone, and shall not be permitted by commission determination or by conditional use permit:
A. Residential uses, other than for a caretaker as specifically permitted;
B. The following manufacturing uses:
1. Bone black plant,
2. Carbon black and lamp black plant,
3. Charcoal manufacturing plant,
4. Chemical plant (heavy or industrial),
5. Coal and coke plant,
6. Detergents, soaps and by-products using animal fat,
7. Gas manufacturing plant,
8. Glue manufacturing plant,
9. Graphite manufacturing plant,
10. Insulation manufacturing plant (flammable types),
11. Metal extraction and smelting plant,
12. Metal ingots, pigs, casting or rolling mill,
13. Paraffin manufacturing plant,
14. Petroleum and petroleum products plant,
15. Serum, toxin and virus manufacturing laboratory,
16. Sugar and starch manufacturing plant,
17. Turpentine manufacturing plant,
18. Wax and wax products manufacturing plant,
19. Wool pulling or scouring plant;
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C. The following processing uses:
1. Animal by-products processing,
2. Carbon black and lamp black refining,
3. Chemical (heavy or industrial),
4. Coal and coke processing,
5. Detergents and soap processing,
6. Dog and cat food processing,
7. Fish by-products,
8. Fruit by-products,
9. Grain milling and sacking,
10. Petroleum and petroleum products processing or refining,
11. Potash works,
12. Printing ink processing,
13. Radium or uranium extraction,
14. Rubber reclaiming or processing,
15. Salt works,
16. Smelting works,
17. Soap works,
18. Sulfuric acid processing or bottling,
19. Vinegar processing or refining,
20. Volatile or poisonous gas storage or processing,
21. Wood and lumber kilns for industrial kiln-drying,
22. Wood preserving by creosoting or other pressure impregnation of wood by preservations.
92.17.2.03 Property Development Standards.
The following property development standards shall apply to all land and buildings in the “E-I” zone, except that any lot created in compliance with applicable laws and ordinances in effect at the time of its creation may be used as a building site.
These standards may be altered where a specific development plan is approved under a planned development or a conditional use permit or otherwise approved master plan of development where the development meets the intent of this Zoning Code.
A. Lot Area. Each lot shall have a minimum area of five (5) acres.
B. Lot Dimensions.
1. Each lot shall have a minimum width of two hundred fifty (250) feet.
2. Each lot shall have a minimum depth of two hundred fifty (250) feet.
C. Height Limits.
1. Buildings and structures shall have a height not greater than thirty (30) feet.
Buildings taller than thirty (30) feet may be permitted pursuant to Section C(2) below.
Item 2B - 59
Draft: 17 November 2021
2. Exceptions.
a. Exceptions. Projections above the height limit shall be permitted according to the provisions of Section 93.03.00.
b. Buildings of up to sixty (60) feet in height may be permitted, provided that: (1) the building is located on a parcel of not less than one (1) acre in size; (2) the building is located one thousand (1,000) feet or further from the Interstate 10 right-of-way; and (3) the building is set back one (1) foot from any pro perty line for every one (1) foot of vertical height.
c. Buildings of up to ninety -five (95) feet in height may be permitted, provided that: (1) the building is located on a parcel of not less than five (5) acres in size; (2) the building is located one thousand (1,000) feet or further from the Interstate 10 right-of-way; and (3) the building is set back one (1) foot from any property line for every one (1) foot of vertical height.
d. The provisions of Section 93.04.00 shall not apply to buildings in the M-2 (Manufacturing) zone.
2.3. WECS shall be subject to the requirements and standards contained in Section 94.02.00(H)(8) 93.23.07.
D. Yards.
1. General Provisions. Section 93.01.00 shall apply.
2. Energy Uses.
a. The minimum setback from any property line shall be fifty (50) feet. b. The setback for WECS shall be determined by the provisions of Section 94.02.00(H)(8) 93.23.07.
3. Other Uses.
a. No building shall be erected closer than twenty-five (25) feet from the front property line. Not less than twenty-five (25) fifteen (15) percent of such yard shall be landscaped and maintained.
b. Where the E -I zone abuts a street which is a boundary with a residential or open space zone, there shall be a yard abutting such street of not less than one hundred (100) feet. The twenty -five (25) feet nearest the street shall be landscaped and m aintained. The remainder may be used for parking.
c. Where the E -I zone abuts property in a residential or open space zone, there shall be a yard of not less than one hundred (100) feet.
The twenty -five (25) feet nearest the property line shall be landscaped and maintained. The remainder shall not be used for parking, loading or storage.
d. Landscaped buffers at least fifteen (15) feet in width may be required by the planning commission along interior yards.
E. Walls, Fences and Landscaping. The provisions of Section 93.02.00 shall apply.
Exception.
Item 2B - 60
Draft: 17 November 2021
1. Fences and walls shall not exceed eight (8) feet in height in any required interior side or rear yard.
2. Barbed wire may be used for security purposes at alternate energy installations.
F. Coverage. Where a site is developed or approved for wind energy or other alternative energy purposes, any industrial use thereon shall not occupy an area greater than fifteen (15) percent of any lot or planned development. Where a site is not so developed or approved, Lot coverage by buildings or structures shall not exceed sixty (60) percent of any lot or planned development.
G. Access. The provisions of Section 93.05.00 shall apply.
H. Off-street Parking. The provisions of Section 93.06.00 shall apply.
I. Off-street Loading and Trash Areas. The provisions of Section 93.07.00 shall apply.
J. Signs. The provisions of Section 93.20.00 shall apply.
K. Outdoor Storage.
1. Outdoor storage and activities associated with permitted uses s hall be adequately screened from view from any public street or abutting residential property by a solid masonry wall. Such wall shall return along any interior side property line which is perpendicular to such public street or residential property for a distance of not less than twenty -five (25) feet. Other fencing may be of chain link, or other open style, if the entire length of such fence is landscaped so to screen the storage area from view. Such landscaping shall be allowed to grow to eight (8) feet i n height and shall be adequately maintained and irrigated. Items shall not be stacked or stored higher than the wall if located within twenty -five (25) feet from any public street or residential property. All enclosures and stored materials must comply wit h fire department regulations for access and fire protection.
2. All enclosures and stored materials must comply with fire department requirements for access and fire protection.
3. No materials or waste shall be deposited or stored in any form or manner that they may be transferred off the lot by normally-occurring natural causes or forces. Waste which might cause dust or fumes or which constitutes a fire hazard or which may be edible by or otherwise be attractive to rodents or insects shall be stored only in closed containers in required enclosures.
L. Antennas. The provisions of Section 93.08.00 shall apply.
M. Public Art. The provisions of Section 93.11.00 shall apply.
Item 2B - 61
Draft: 17 November 2021
92.17.2.04 Performance Standards.
The uses established or placed into operation after the effective date of this Zoning Code, shall comply at all times hereafter with the following limitations or performance standards.
A. Energy Uses. The provisions of Section 94.02.00(H)(8) shall apply.
B. Other Uses.
1. Fire and Explosion Hazards.
a. All storage of and activities involving inflammable and explosive materials shall be provided with adequate safety devices against the hazard of fire and explosion and adequate firefighting and fire suppression equipment and devices standard in the industry. All incineration is prohibited; or
b. The storage and handling of flammable liquids, liquefied petroleum, gases and explosives shall comply with the state rules and regulations. Bulk storage of flammable liquids, liquid petroleum, gases and explosives above ground shall be unl awful, except gasoline and lubricating fuel oil. Storage below ground shall be permitted; provided, all tanks shall be located not closer to any property line than the greatest depth of the bottom of the buried tank.
All incineration is prohibited.
2. Radioactivity or Electrical Disturbance. Devices which radiate radio - frequency energy shall be so operated as not to cause interference with any activity carried on beyond the boundary line of the property upon which the device is located. Radio-frequency energy is electromagnetic energy at any frequency in the radio spectrum between ten (10) kilocycles and three million (3,000,000) megacycles.
3. Noise. The provisions of Chapter 11.74 of the Municipal Code shall apply.
4. Vibration. Every use shall be so operated that the ground vibration inherently and recurrently generated is not perceptible, without instruments, at any point on any boundary line of the lot on which the use is located.
5. Emission of Smoke, Dust, Heat and Glare. Every use shall be so operated that it does not emit smoke, dust, heat or glare in such quantities or degree as to be readily detectable on any boundary line of the lot on which the use is located.
6. Emission of Odors/Gas. The emission of obnoxious odors of any kind shall not be permitted. No gas shall be emitted which is deleterious to the public health, safety or general welfare.
92.17.2.05 Property Maintenance Standards.
The provisions of Section 93.19.00 shall apply.
Item 2B - 62
Draft: 17 November 2021
Parking Requirements: Proposed Changes
93.06.00 Off-Street Parking.
D. Off-street Parking Requirements.
36. Warehousing, Distribution and Wholesaling. Wholesaling and Warehousing. One (1) space for each eight hundred (800) square feet of gross floor area, plus one (1) space for each company truc k or motor vehicle. Parking shall be provided in accordance with the table below:
Under 100,000 SF total 1 space per 800 SF of gross floor area 100,001 SF and greater 1 space per 1,000 SF for first 20,000 SF of gross floor area 1 space per 2,000 SF for next 20,000 SF of gross floor area 1 space per 5,000 SF of gross floor area thereafter
Loading spaces shall not be included in the off-street parking requirements listed above.
Item 2B - 63
ATTACHMENT #2
Item 2B - 64
HPA, Inc. 6/12/19 pg. 1
Tall Tales
HPA looks at buildings above 40’ clear rev on 2/13/20
We have moved into one of those periods that are invoked in the curse: May you live in interesting times. The particular interesting issues we will look at in this paper have to do with the new ESFR configurations allowing increased clear height in buildings serviced by ESFR systems. They require some interested analysis because there is now a lack of synchronicity between the technology of ESFR and material handling fork lift equipment.
To set the stage:
For a period, ESFR systems have been limited to ceiling heights (effectively roof deck heights) of 45’ with a maximum storage height of 40’. That arrangement has led to today’s standard 36’ clear, (and 40’ clear with special roof designs), for buildings with 56’ column spacing. A little while ago NFPA included a UL approved system for a 48’ deck height and 43’ top of storage, however, it came with a restriction of 8’ minimum aisle width. There was the additional caveat that FM Global did not recognize the arrangement as tested by the UL labs.
Recently a new set of tests resulted in FM approved arrangements for both a 50’ and 55’ maximum deck height. Both of these arrangements come with the 8’ minimum aisle restriction, however. Very recently a UL approval was granted for a system with a 48’ deck height that allows aisles as narrow as 60”. As this paper by HPA is being written, FM is in the final stages of issuing an updated configuration for the 50’ and 55’ deck height arrangements that may end up revising the minimum aisle requirement, but no one is leaking information on the new reports just yet.
A Quick rule of thumb based on subjective viewpoint
Before we delve into the detail of the issues and surface a number of considerations, here are a few gross generalizations you can grab ahold of if you are in a hurry, or head to the last page.
If you bought the largest SUV they make and live in the biggest house on the highest hill in your neighborhood then check out the new 55’ deck height arrangements and consider a column grid spacing of 58’ – 6”. Extra in-rack sprinklers can be implemented if needed to get you around most of the complications for users with VNA material handling equipment.
If you keep to an expense budget, drive a car that gets great gas mileage, and are attracted to value then check out the brand new 48’ deck height UL approved Tyco system and a 56’ column grid.
If those two descriptions don’t fit well, or you are the curious type who wants to understand the specifics driving the rules of thumb, the rest of this paper will discuss ESFR, clear heights, racking systems, material handling fork lift equipment and how higher buildings will affect structural designs. It turns out that the restrictions on aisle width have large ramifications. Going higher than 36’ to 40’ clear moves into a realm of giants where different material handling systems may begin to affect decisions.
If you are a user and your company has committed to a specific material handling configuration and you are trying to understand what clear height and column spacing can optimize your operations; give us a call, we need to talk.
Item 2B - 65
HPA, Inc. 6/12/19 pg. 2
ESFR Configurations
There are a range of different ESFR configurations approved by a number of different codes and testing bodies available for building design today. From a practical point of view the specific approval body may be a moot distinction when the fire suppression contractor applies for permitting. Local jurisdictions will typically approve configurations formally approved by UL or FM even if they haven’t been adopted into the NFPA yet.
This table shows the current range of system configurations likely to be approvable by the local jurisdiction. We can now build ESFR serviced buildings with deck heights up to 55’ to store up to 50’ high.
So, we can go taller and store higher while keeping ESFR sprinklers the primary suppression system.
Let’s look at why we would want to go taller, the compromises that may be involved, and the ultimate value proposition.
First we will look at rack storage systems and the associated material handling equipment to point out an ironic problem with the taller building ESFR configurations. We will also surface a few structural issues that mean more than incremental cost increases. The HPA bottom line recommendations are on the last page if you just want to skip ahead.
ESFR Design Configurations HPA, Inc.
Max Deck Ht Max Storage Ht Typ. Clear Ht Approved by Aisle restrictions 35' 30' 30' NFPA, FM NA
40' 35' 32'-36' NFPA, FM NA
45' 40' 36'-40' NFPA, FM NA
48' 43' 42' NFPA, UL 8'
48' 43' 42' UL (Tyco) 5'
48' 43' 42' FM (Viking) 6'
50' 45' 44' FM (Viking) 8'
55' 50' 49' FM (Viking) 8'
These are current as of 1/3/20
Each approval is for specific head designs, pressure ratings and number of heads Commodities allowed are consistent across these approved configurations Types of racking allowed are consistent across these approved configurations Item 2B - 66
HPA, Inc. 6/12/19 pg. 3
This diagram illustrates the usual rack storage arrangements in relation to the ESFR requirements and clear height. In earlier white papers on 36’ clear and 40’ clear buildings we showed that going from 32’ clear to 36’ clear had significant advantages for increasing storage capacity for most rack configurations.
We also discussed why going from 36’ to 40’ clear had a less compelling set of advantages but would still make sense for some users.
This iteration of our diagram goes higher to show the ESFR configurations up to the current maximum storage height of 50’.
The advantages of going from 36’ clear and jumping to 42’ clear can be seen in the green shaded pallet layers. Going from 36’ to 40’ gets one extra pallet layer for the 72” pallet arrangement. Going to 42’ clear also adds an extra layer for the 64” and 56” pallet arrangements. There are also many users today that can configure pallet or case racking flexibly to take advantage of any incremental increase in clear height. There appears to be little advantage to a pure pallet rack operation to go to a 45’ clear condition. The next level that provides a significant advantage would be the 50’ clear condition.
While this diagram establishes the general capacity advantages of jumping to 42’ clear, there are a number of correlated issues regarding material handling equipment that must be looked at.
Item 2B - 67
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1 64" 64" tall pallet
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loads make
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50' Max storage height for 55' deck
45' Max storage height for 50' deck
43' Max storage height for 48' deck
40' Max storage height for 45' deck
36'
32'
30'
26'
24'
42' clear provides for 7 high 64" pallets and is at the outer range of VA reach fork lift capacity
36' clear provides for 6 high 64" pallets and would
generally use VA reach fork lifts
30' clear provides for 5 high 64" pallets and would
generally use VA reach fork lifts
NA Reach trucks operate around 400 " to 500" pick heights and use 108" to 120" aisles VNA Lift trucks operate in 400" and higher and use 60" to 72" aisles HPA, Inc. 6/12/19 pg. 4
Fork Lift Equipment and Aisle Widths
Most rack storage today in large distribution centers is serviced by reach fork trucks. These typically fall under the designation of narrow aisle fork lifts (NA). They can work effectively in five to six level rack arrangements but up at that sixth level and higher they are maxing out their capabilities. In a 36’ to 40’ clear building they are usually configured with a number of extra battery and mast options to pick the top rack level. The associated aisle width with this augmented equipment grows from around 8’-6” in a 32’ clear building to about 10’ as you get to 40’ clear buildings. Lift manufacturers will tell you these fork trucks can make picks at higher levels, but understand their utility is limited on high picks by weight and speed.
Some 36’ to 40’ buildings are housing racking systems that use a different kind of material handling equipment. Sometimes called swing reach trucks, transtackers, or order pickers, these fork trucks don’t turn in an aisle to make a pick. They have forks that extend perpendicular to the line of travel or that rotate. Generally the driver moves up with the forks to the level of the pick. These are generally classified as very narrow aisle equipment (VNA). They operate in a range of aisle widths from 4’-8” to just over 6’.
This equipment is designed for picking higher than the reach fork lifts. They can be productive over the 5 levels a reach fork truck excels in. The downside is that VNA equipment is much more expensive than NA equipment. Today, most distribution centers are using NA equipment with single selective rack. That has worked out since the ESFR maximum heights were within the capability of NA equipment. Well, until now that is…
The Problem
Now buildings designed to the new ESFR approvals facilitating clear heights of 42’, 44’, and 49’ will be moving outside the effective height range of the NA equipment. Today, VNA equipment is the natural approach to fully utilizing a building that is over 40’ clear and this is the fulcrum of the issue. The higher buildings are most effectively serviced by VNA equipment but the ESFR approvals restrict the smaller aisle widths associated with the VNA equipment. Most VNA equipment won’t work in the 8’ minimum aisle width mandated in the new approved ESFR configurations.
There are now two exceptions. UL has approved a Tyco manufactured K-25 head configuration for a deck height of 48’, storage height of 43’, and minimum aisles of 60”. FM Global has approved a Viking K28.0 head for a deck height of 48’, storage height of 43’ and minimum aisles of 72”. Everything else today above the 45’ deck height is restricted to 8’ minimum aisles.
Up front we indicated that if you are into bigger is better that you can build your 55’ tall building and lease it too. It does require a bit of a hack for VNA users though. The 8’ aisle restriction is for ESFR only installations. If a specific user comes along wanting to use all available 50’ of storage height but with a VNA layout and say, 60” aisles, you can add some in rack sprinklers to their arrangement and get it approved. They are used to in-racks at that height anyway.
If, on the other hand, you are the more value oriented person we mentioned but still trying to get ahead of the pack, The Tyco 48’ high building will accommodate almost all types of NA and VNA equipment in appropriate aisle widths without any in rack sprinklers up to a storage height of 43’. Plus you can save the cost of a building 7’ taller.
Item 2B - 68
HPA, Inc. 6/12/19 pg. 5
Column Grids
We have circled around ESFR configuration heights and aisle widths of NA and VNA material handling equipment to land in one of our favorite topics: column grid dimensions. The 56’ column bay promoted by HPA has become the industry standard for building at 36’ and 40’ clear because it accommodates many NA rack layout and VNA rack layouts with minimum inefficiency. How does this bay dimension accommodate the increased likelihood of VNA equipment in a building 42’ clear and higher? The illustration below shows a NA reach fork truck in a typical rack aisle. If we assume that pallet sizes are relatively standard at 4’ and that we stay with the NFPA minimum flu requirement of 6” then our only variable to optimizing a column bay for the rack layout is aisle width.
Item 2B - 69
Flue space is constant at 6"
Racked pallet is constant at 48"
Aisle width varies with equipment and height
HPA, Inc. 6/12/19 pg. 6
This illustration shows a layout with three rack aisles and single selective racks between columns. This arrangement is used in the majority of distribution centers today. A fully optimized layout would have 6 rows of 4’ pallets, three aisles of a specified width, two 6” flue spaces, and two flue spaces that accommodated the structural columns themselves. In keeping with optimizing with minimum dimensions, the columns are generally 10” tubes and adding 1” clearance means calculating 6” of space on each side of the bay where the column occurs.
For this three-aisle arrangement and a 56’ column bay the resulting aisle width is 10’. This is a very good aisle width for most NA equipment picking up to a 36’ clear building. But when the clear height goes up to 40’ or higher the narrow aisle reach fork is really at its limit. One reach fork truck manufacturer has a configuration set up for these heights with criteria for a 10’ 4”. Another major forklift manufacturer says the aisle should be 118” (just under 10’) when picking the maximum rated height with their equipment of about 36’ pick height. There are some users that prefer an even larger aisle, seeing it as increasing operational speed. There are specifications out there from these users for 57’ to 58’ bays.
Different lift manufacturers publish different specifications on aisle widths and pick heights, especially in the VNA lines of equipment. VNA equipment is much more expensive and requires more sophistication to operate effectively. Many manufacturers have the capability to customize this equipment for varying aisle widths and pick heights. One major manufacturer can deliver VNA equipment for aisles ranging from 66” to 74”.
On the following page, we have created a table that calculates a number of column grid spacing alternatives based on varying aisle widths and number of aisles between columns.
Item 2B - 70
HPA, Inc. 6/12/19 pg. 7
This table indicates that the optimum VNA aisle width in a 56’ bay spacing would be 64”. There are a number of manufacturers with this specification. If we go to the minimum aisle width allowed in the new ESFR Tyco UL approved 48’ deck configuration, we see it is also accommodated with some inefficiency in a 56’ bay. The FM approved system for 48’ high roof decks requires a 6’ minimum aisle and it would not fit well in a 56’ bay.
Rack Aisle to Column Spacing Comparisons 1/6/2020 HPA, Inc.
Palletized Racking Configurations
inches feet Two-aisle spacing Three-aisle spacing Four-aisle spacing Standard Aisle (Counter Balance) 144 in 12 288 in 432 in 576 in Flue 6 in 18 in 24 in 30 in
Pallet 48 in 192 in 288 in 384 in
498 in 744 in 990 in
Industry Norm 52' 41.5 ft 62 ft 82.50 ft
inches feet Two-aisle spacing Three-aisle spacing Four-aisle spacing NA Aisle (Reach Truck) 104 in 8.67 208 in 312 in 416 in Flue 6 in 18 in 24 in 30 in
Pallet 48 in 192 in 288 in 384 in
418 in 624 in 830 in
Industry Norm 52' 34.83 ft 52 ft 69.17 ft
inches feet Two-aisle spacing Three-aisle spacing Four-aisle spacing NA Aisle ( High Pick Reach Truck) 118 in 9.83 236 in 354 in 472 in Flue 6 in 18 in 24 in 30 in
Pallet 48 in 192 in 288 in 384 in
446 in 666 in 886 in
Industry Norm 56' 37.17 ft 55.5 ft 73.83 ft
inches feet Two-aisle spacing Three-aisle spacing Four-aisle spacing NA Aisle (42' High Pick Reach Truck) 126 in 10.50 252 in 378 in 504 in Flue 6 in 18 in 24 in 30 in
Pallet 48 in 192 in 288 in 384 in
462 in 690 in 918 in
38.50 ft 57.5 ft 76.50 ft
inches feet Two-aisle spacing Three-aisle spacing Four-aisle spacing VNA Aisle 56' optimum 64 in 5.33 128 in 192 in 256 in
Flue 6 in 18 in 24 in 30 in
Pallet 48 in 192 in 288 in 384 in
338 in 504 in 670 in
28.17 ft 42 ft 55.83 ft
inches feet Two-aisle spacing Three-aisle spacing Four-aisle spacing VNA Aisle Tyco UL Variation 60 in 5 120 in 180 in 240 in Flue 6 in 18 in 24 in 30 in
Pallet 48 in 192 in 288 in 384 in
330 in 492 in 654 in
Industry Norm 56' 27.50 ft 41 ft 54.50 ft
inches feet Two-aisle spacing Three-aisle spacing Four-aisle spacing VNA Aisle Viking FM Variation 72 in 6 144 in 216 in 288 in Flue 6 in 18 in 24 in 30 in
Pallet 48 in 192 in 288 in 384 in
354 in 528 in 702 in
29.50 ft 44 ft 58.50 ft
inches feet Two-aisle spacing Three-aisle spacing Four-aisle spacing VNA Aisle Narrow Variation 56 in 4.67 112 in 168 in 224 in Flue 6 in 18 in 24 in 30 in
Pallet 48 in 192 in 288 in 384 in
322 in 480 in 638 in
26.83 ft 40 ft 53.17 ft
Item 2B - 71
HPA, Inc. 6/12/19 pg. 8
All VNA equipment is not created equal, however. Some equipment specifies aisles closer to 6’ than 5’.
This table says that as the aisle moves above 64”, the layout no longer fits neatly between columns and some rack positions will be lost to column locations. If optimization on a 6’ aisle was desired, for example, the column bay would be 58’ 6”’.
These calculations are based on optimizing to minimum requirements. Some operations, for example, may require larger flu spaces than NFPA requires as part of their standards. Some may specify a larger aisle for their NA reach trucks for ease of operation. The 56’ bay spacing accommodates both NA and VNA layouts well and remains our recommendation on buildings above 32’ clear up to 40’ clear. A 40’ clear building is right at the gray zone where a 56’ bay will work well for many users but there will be some who ask for a 57’ or 58’ bay. Going over 40’ clear our recommendation would be to use 58’ bays.
Structural Gotcha’s
There are problems with just adding 3’ to 10’ of concrete into the height of the tilt up panels to estimate increased construction cost. The current designs for 40’ clear buildings are pushing against the incremental panel thickness and frame adjustments that have been made as we have gone from 30’ clear to 40’ clear. The new taller buildings will have a few challenges that are likely to make cost increases more than just incremental.
Panels will be getting thicker or will add pilasters.
The extent of the increase will depend on the local seismic factor. The 40’ clear buildings have maxed out the 10” to 11” flat panels. We do have some tricks to mitigate this with roof designs, but there will be additional costs overall required.
Braced frames will likely require an extra bay.
That is, where there used to be two braces on a column line there might be three. As the frames get taller, they get less efficient.
The joists of the speed bay will have larger upper cords.
The extra panel height and possible larger thickness means more weight being handled in the joists that frame into the panels. This will enlarge the size of the steel top chord in the joist resulting in increased cost.
Slab reinforcing will become a standard requirement
There is an ongoing discussion on the need/wisdom of reinforcing the slab in 36’ to 40’ clear buildings.
Going taller will tilt the equations toward reinforcing. The issue isn’t carrying additional weight in the rack legs, it’s in the increased height of the racks that need to be tied into the slab for the seismic overturning forces. This lateral force pulls at the slab and requires it to act structurally instead of just transmitting a downward force. As with roof configurations and increasing panel thickness, we have some tricks with reinforcing approaches that will mitigate the costs. But if you were leaning to unreinforced slabs in your current buildings, start pricing it into these taller buildings.
Floor slabs have moved to 8” thick as the standard recommended in a 40’ clear building. We will start talking 9” thick as we go to 42’ clear and some people may want to go to 10” slabs in the 50’ clear buildings.
Item 2B - 72
HPA, Inc. 6/12/19 pg. 9
Sloping Slabs
It has become common practice in the western US to slop the slabs of large buildings at .5% to minimize grading costs. Think about an 800,000 sf building, 600’ wide by 1,320’ long, running parallel to the street it fronts on. That street is going to be at about 2% minimum slope to drain water. In that case, over the 1,320’ length of the building, the street changes elevation by something like 26’. If the building slopes the same direction at .5% slope its finish floor changes over 6’ in elevation, minimizing grading work.
The finish floor changing over 6’ in elevation sounds pretty drastic, put in fact you drive by these buildings all the time. You cannot tell the difference in a sloped slab or a non-sloped slab without full survey equipment. Sloped slabs have been standard practice in large buildings for over 25 years and there are many millions of square feet in existence. Some have super-flat floors and are serviced by wire guided lift equipment. The FF-FL numbers used to specify slabs are independent of the overall slab slope.
That’s correct, a sloped slab may also be a ‘super-flat’ slab.
Having said all that, HPA is going to recommend that you should not slope the slabs on these taller buildings. While there is no real technical problem, there is a perception problem. Material handling equipment manufacturers have a difficult time getting their head around the practice of operating on a sloped slab even if their equipment is already in successful use in such a building. The issue gets increasingly sensitive as the racking gets taller and tolerances get tighter. We are approaching the time when a high clear height building, (40’ clear or higher), with a sloped slab will be viewed in the marketplace as inferior to a non-sloped slab.
This means that if you are factoring in grading savings from a sloped slab into estimated construction costs on a building 40’ clear or higher, you may want to reconsider. The savings ranges broadly based on actual sites and buildings, but on some specific situations it can rise into seven figures. HPA continues to recommend using .5% sloped slabs in buildings under 40’ clear where a cost savings in grading results.
Item 2B - 73
HPA, Inc. 6/12/19 pg. 10
HPA bottom line recommendations:
A building with a 48’ maximum deck height and a 42’ clear height can use the new ESFR configurations with the Tyco UL approval or FM Viking approval. It works without special roof designs or interior drains and provides an attractive upgrade to a 40’ clear building with little risk. Note the UL system allows 5’ aisles while the FM system has a minimum 6’ aisle.
A building with a 55’ deck height and 50’ clear is not as flexible today as it might sound but it can be made to work for VNA equipment with additional sprinkler configurations.
A 56’ column bay is still the most efficient solution going over 32’ and up to 40’ clear unless the user’s operational criteria are known ahead of design.
For buildings above 40’ clear a 58’ structural bay should be considered.
It may be time to stop sloping slabs and to start reinforcing them in buildings 40’ clear and higher. This will raise grading costs on some sites with significant topography.
Make sure there is sufficient allocation in your budget for construction.
Construction costs of buildings over 40’ clear are going to jump more than the incremental cost rise going from 32’ clear to 40’ clear.
Item 2B - 74
ATTACHMENT #3
Item 2B - 75
Examples: Narrow Aisle Racking Configuration
Item 2B - 76
Examples: Mezzanine Racking Configuration
Item 2B - 77
ATTACHMENT D
Item 2B - 78
EXCERPT OF MINUTES
At the Planning Commission meeting of the City of Palm Springs , held November 17, 2021, the Planning Commission took the following action:
2A. CITY OF PALM SPRINGS FOR A ZONE TEXT AMENDMENT TO AMEND CHAPTER 92 AND CHAPTER 93 OF THE PALM SPRINGS ZONIN G CODE RELATIVE TO DEVELOPMENT STANDARDS FOR THE M -2
(MANUFACTURING) AND E -I (ENERGY INDUSTRIAL) ZONES (CASE NO.
5.1547 ZTA) (FF)
Development Services Director Fagg presented the report.
Chair Weremiuk opened the public hearing.
JERRY KELLER , Lulu California Bistro, commented on the potential for a distribution center in the area and spoke in support of the project.
There being no further speakers the public hearing was closed.
Commissioner Moruzzi opposed encouraging massive warehouses to be built and thinks the original height limit of thirty feet should be maintained.
Discussion followed regarding the economic be nefits of warehouses/fulfillment centers, other than property taxes , job generation, considering diversification of the City's econo my, conformance with the General Plan and such centers not impacting the City's resort area.
Vice Chair Roberts expressed concerns regarding en vironmental impacts , specifically to the aquifers related to semi-truck traffic and discussed possible mitigation efforts.
Commissioner Song commented on the possibility of considering the structures for Zone M-2 and le aving E-I, as i s and asked about e nvironmental issu es in connection with the Fed Ex facility.
Discussion followed regarding the heights of warehouses/distribution centers and existing structures within 1,000 feet of the freeway.
Commissioner Ervin agreed with Commissio ner Moruzzi's comments; and thinks the structures are eye sores and spoke about low -wage employment not being desirable.
Commissioner Hirschbein questi oned if sales taxes were a ccrued to the City for warehouses and distribution center; and requested verification from the City Item 2B - 79
Planning Commission Minutes - Excerpt
City of Palm Springs
November 17, 2021
2 Attorney’s office. He spoke about avoiding oversaturation of these buildings and suggested requiring a CUP for buildings that exceed existing heights.
Chair Weremiuk underst ood that tax is generated out of the point of sale and agreed with Vice Chair Roberts that such struct ures should not be on the south side of the freeway.
Commissioner Moruzzi agreed but thinks it applies to the north side of the freeway, as well, and did not believe the City should sacrifice desert views.
Commissioner Aylaian commented on projects that will pay real wages and stated changes should be mad e for m eaningful resu lts rather t han "quick and easy" results.
Commissioner Song spoke about proceeding with a b ase height of thirty feet, looking carefully at parking ratios, designing projects under current conditions, and requiring sustainable energy sources and the creation of a natural habitat to offset the impacts of the buildings.
Development Services Director Fagg reported the use is allowed but the height would prevent the development of these types of facilities.
Discussion followed regarding the nee d for more informa tion on e conomic and environmental impacts and benefits, approving the height but locating structures further back from the freeway, determining mitigation measures, t riggers for the request, and continu ing the item to review all standard s for these types of applications.
ACTION: Roberts, seconded by Weremiuk to continue to date uncertain.
I, TERRI HINTZ, Planning Administrative Coordinator for the City of Palm Springs, hereby certify that the above action was taken by Planning Commission of the City of Palm Springs on the 17th day of November, 2021, by the following vote:
AYES: AYLAIAN, SONG, ROBERTS, WEREMIUK
NOES: ERVIN, HIRSCHBEIN, MORUZZI
ABSENT: None
__________________________________________
Terri Hintz
Planning Administrative Coordinator
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ATTACHMENT E
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Legislative Draft: 13 January 2022
PLANNING COMMISSION SUBCOMMITTEE RECOMMENDATIONS
The following draft ordinance was developed by a subcommittee of the Planning Commission, appointed by the Planning Commission Chair pursuant to the Pl anning Commission bylaws ( adopted via Resolution #6683) . A report on the in itial recommendations of the subcommittee was provided at the Planning Commission meeting of December 8, 2021.
Chapter 92.30.00 “LC” Logistics Center Overlay Zone.
A. Purpose. The purpose of the “LC” Logistics Center Overlay Zone is to address the distinct development characteristics and environmental impacts of large -scale warehouse and wholesaling facilities, including e-commerce operations.
B. Definitions. The definition for “warehousing” as contained in Section 91.0 0.10(B) shall include distribution facilities, fulfillment facilities , import/export facilities, and similar e-commerce facilities.
C. Applicability. The standards defined in the following section shall be applicable to warehousing and wholesaling development within the “LC” overlay zone that exceeds one-hundred thousand (100,000) gross square feet of floor area.
D. Location. The “LC” zone may be established only in conjunction (as an overlay symbol) with the M-2 or E -I zones. The locations of the “LC” overlay zone are depicted in Exhibit “A,” incorporated at the end of this section.
E. Permitted Uses. Uses permitted shall be as provided in the underlying zone upon which the “LC” zone is overlaid.
F. Development Standards and Parking Requirements. Except as provided herein, the development stand ards and parking requirements of the underlying zone district shall apply to warehousing development within the “LC” overlay zone.
However, for warehousing development within the “LC” overlay zone in excess of 100,000 gross square feet of floor area, the following development standards and parking requirements shall apply.
1. Height and Setback Requirements.
a. Buildings of up to thirty (30) feet in height may be permitted subject to the setbacks required for the underlying zone district.
b. Buildings between thirty (30) and sixty (60) feet in height may be permitted, subject to the approval of a Conditional Use Permit. In addition to the criteria listed in Section 94.02.00( B) relative to the approval of Conditional Use Permit applications , the following standards shall be a pplicable to buildings over thirty (30) feet in height:
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Legislative Draft: 13 January 2022
1) Additional Setbacks. The building shall be set back a minimum of two (2) feet from any property line for each one (1) foot of vertical building height.
2) Building Orientation. Where possible, the longest building frontage shall be oriented perpendicular to Indian Canyon Drive or the Interstate 10 Freeway rights-of-way, whichever may be applicable.
3) Building Articulation. Offsets in the exterior wall plane of the building shall be employed to reduce the apparent massing of the structure. No exterior wall shall extend more than one hundred (100) feet without a minimum two (2) foot offset from the adjacent wall plane. Articulation of each exterior corner of the building shall be required; var iations in the height of the exterior wall plane are also encouraged.
4) Colors and Materials. Colors shall be selected for appropriateness for the desert environment and to assist the building in receding into the adjacent landscape. No reflective materials, including glazing, shall be permitted.
5) Landscaping. Landscaping of the perimeter setback areas and the areas immediately adjacent to the building shall be designed to screen and buffer the building as much as
possible from the adjacent rights-of-way. Plant materials shall be selected for durability in the local environment, with an emphasis on species that are native to the immediate area.
While buffer areas may be used for stormwater management, the topography shall appear naturalized, and gro undcover materials shall be selected for consistency in color and texture with native ground materials.
6) Public Art. The provisions of Chapter 3.37 shall apply.
Placement of artwork on site shall be preferred, in accordance with the following standards:
i. Large-format sculptures, incorporated as part of the landscape treatment along the principal frontage of the property; or
ii. Large-format murals, incorporated as part of the
building design, and visible from the adjacent principal right-of-way.
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Legislative Draft: 13 January 2022
The application shall identify placement of the public art and a generalized depiction of the proposed artwork. Public art is subject to approval process identified in Chapter 3.37.
c. Buildings greater than sixty (60) feet in height are not permitted.
2. Lot Coverage. Lot coverage by buildings and structures shall not exceed sixty (60) percent of any lot.
3. Landscaping. A minimum of fifteen (15) percent of the front yard setback area shall be landscaped and maintained. A minimum fifteen (15) foot wide landscape buffer shall be provided along all interior property lines. Native plant material present on site at the time of submission of an application for development shall either be protected in place, or shall be removed and replaced in like amount by plant species indigenous to the lower Colorado Desert, as part of the landscape design that has been reviewed and approved by the Architectural Review Committee in conjunction with the Major Architectural Application. To the greatest extent practicable, design shall incorporate natural groupings, plant spacing, and hardscape materials, rather than formal or engineered patterns.
4. Low-Impact Development Standards. Conformance to low-impact development (LID) standards shall be required purs uant to the adopted standards of the Riverside County Flood Control and Water Conservation District in order to protect water quality and supply. Site plans , including hardscape and paving materials, shall be evaluated for conformance to LID standards as part of the hydrology plan approval process.
5. Off-Street Parking Requirements. The following parking standards shall apply:
• 125 parking spaces for the first 100,000 square feet of gross floor area;
• 1 space per 1,000 square feet for the next 50,000 squ are feet of gross floor area or portion thereof;
• 1 space per 2,000 square feet for the next 50,000 square feet of gross floor area or portion thereof; and
• 1 space per 5,000 square feet of gross floor area thereafter.
As an alternative to the standards listed above, applicants may submit a Specific Parking Plan pursuant to Section 93.06.00 where specific operational standards may warrant a different parking ratio. Parking, loading, and unloading spaces for delivery vehicles shall be in addition to the off-street parking requirements listed above . Delivery vehicles shall be parked on site in designated areas.
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Legislative Draft: 13 January 2022
6. Parking Lot Shading. Parking lot shading shall be provided in accordance with the requirements of Section 93.06.00(C).
7. Parking Lot Paving Materials. Paving materials with higher albedo ratings shall be used for paved areas and walkways. Applicants shall provide the albedo rating of selected paving materials as part of the Major Architectural Application submittal.
G. Application Processing and Review. Applications for warehousing development in excess of 100,000 gross square feet of floor area within the “LC” overlay zone shall require the approval of a Major Development Permit and Major Architectural Application in accordance with Chapter 94.04.00 and Chapter 94.04.01. Due to the size of buildings allowed in the “LC” overlay zone, the Planning Commission and Architectural Review Committee shall consider the placement of the building relative to adjacent streets and adjacent development, and may require measures to minimize the mass and visual impact of the building(s).
H. Environmental Review and Mitigation Measures.
1. California Environmental Quality Act (CEQA). Applications for warehousing development in the “LC” overlay zone shall be subject to review under the California Environmental Quality Act.
2. Study. An initial study shall be required for warehousing development in the “LC” overlay zone, and shall be utilized to determine any additional studies that may be needed to quantify and address identified impacts.
3. Traffic Analysis. Due to the significant traffic impacts that can be generated by warehousing and wholesaling facilities, a traffic impact analysis shall be prepared following the finalization of the Initial Study. In addition to the standard analysis of impacts to affected intersections and roadways, the traffic impact analysis shall include but not be limited to the following additional topics:
a. Trip forecasting data based on the specific warehousing or wholesaling use, including employee trips and all car, truck and van traffic;
b. An analysis of routes of travel to and from the proposed facility, including any queuing locations;
c. Distance and routes to fueling facilities for delivery vehicles; and
d. VMT (Vehicle Miles Traveled) analysis in accordance with the requirements of the General Plan.
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Legislative Draft: 13 January 2022
4. Noise and Air Quality Analysis. Due to the potential for noise and air quality impacts, noise and air quality studies shall be prepared following the finalization of the Initial Study.
5. Mitigation Measures. Based on the analyzed impacts, mitigation measures shall be developed and included as conditions of approval of the Major Development Permit application. Mitigation measures shall address all potentially significant impacts, including impacts to affected roadways and intersections, and may include the following:
a. Necessary improvements to such roadway, intersection, highway, and overpass facilities;
b. An on-site and off-site traffic circulation plan;
c. A traffic demand management program, to discourage employees from traveling by single-occupancy vehicles;
d. An ongoing traffic monitoring program to be reviewed on an annual basis;
e. Measures to address idling vehicles or use of alternative fuel vehicles as a means to address air quality issues;
f. Measures to reduce energy usage at the proposed facility, including the use of wind and solar power;
g. Provision of street signage and directional signage as a means to reduce vehicle trips or trip length; and
h. Use of measures such as click & collect points, multi-brand lockers, drones, and other similar measures to reduce delivery vehicle use.
The cost of all required mitigation measures shall be borne by the applicant.
Chapter 5.87 Wholesaling and Warehousing Businesses
In addition to the creation of a Logistics Center Overlay Zone, it is recommended that a chapter be added to Title 5 (“Business Regulations”) of the Palm Springs Municipal Code (tentatively Chapter 5.87), which would establish minimum operational requirements for warehousing businesses as follows:
• Vehicle registration requirements;
• Insurance requirements and requirements for driver background checks; • Driver protocols such as training, discipline, and incident management procedures; • Illegal parking of delivery vehicles on city streets; Item 2B - 86
Legislative Draft: 13 January 2022
• Incentives for use of “click and collect” points or other methods that reduce delivery traffic in neighborhoods and on city streets;
• Any other similar operational requirements that are not typically addressed under the land use entitlement process.
Item 2B - 87
Legislative Draft: 13 January 2022
PROPOSED LOGISTICS CENTER OVERLAY ZONE
E-1 Zone
M-2 Zone
City Boundary Line
Overlay Zone
Boundary
Item 2B - 88
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Hidden and in Plain Sight:
Impacts of E-Commerce in Massachusetts
MetroCommon × 2050
Transportation and Mobility
FEBRUARY 2021
Photo: Amazon Prime Van in Revere; Shutterstock
Item 2B - 89
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Hidden and in Plain Sight: Impacts of E-Commerce in Massachusetts Authors
Primary Authors: Alison Felix, AICP, Senior Transportation Planner & Emerging Technologies Specialist; Travis Pollack, AICP, Senior Transportation Planner Contributors: Eric Bourassa, Director of Transportation; Josh Eichen, Senior Economic Development Planner; Alyssa Kogan, Regional Planning Data Analyst; Lily Perkins-High, Analytical Services Manager; Tim Reardon, Director of Data Services; Kit Un, Visual Designer Editor: Karen Adelman, Senior Communications Strategist MAPC Director: Marc Draisen, Executive Director
A special thank you to Eric Bourassa and Tim Reardon for their guidance and feedback.
Thank you to Karen Hollinger, AvalonBay; Bill Kuttner, Central Transportation Planning Staff; Mark Giuffre, UPS; James Fitzgerald and Tad Read, City of Boston; Melissa Santucci-Rozzi, Town of Braintree; Jeremy Rosenberger, Town of Dedham; Robert O’Brien, City of Revere. Thank you also to the members of the South West Advisory Planning Committee and MetroWest Regional Collaborative subregions of MAPC for their feedback during presentations on this topic by the authors.
About MAPC and this Report
The Metropolitan Area Planning Council (MAPC) is the regional planning agency for the 101 cities and towns of Greater Boston. Our mission is to promote smart growth and regional collaboration.
Today, the Commonwealth is seeing rising numbers of delivery trucks and vans on the roadway network as people increasingly ordering online for goods, meals, and groceries. For these deliveries to arrive timely each day, a sophisticated logistics network of warehouses, distribution centers, and delivery vehicles needs to be in place. While the effects of this growing form of retail on the roadway network may be noticeable, e-commerce is also having effects on land use, traditional retail, and employment which are not as directly apparent.
MAPC has undertaken Hidden and in Plain Sight: Impacts of E-Commerce in Massachusetts to better understand how e-commerce affects the region’s communities, and to provide a resource for municipalities and policy makers grappling with the rapid growth and multiplying impacts of this expanding form of retail.
This report concentrates primarily on the transportation and land use effects of increasing online shopping, highlighting key trends both nationally and in Massachusetts. We suggest directions for further research, and we put forward potential policies that could help communities sustainably manage the growth in warehousing and distribution centers and its associated delivery traffic.
MAPC intends to serve as a resource for continued information sharing and findings from e-commerce surveys and pilot programs and conduct research on how municipalities in Massachusetts are currently mitigating and managing the impacts of warehouse and distribution centers. As a follow up to this report, MAPC plans to collaborate with municipalities to develop a playbook on the management of e-commerce warehouse and distribution centers as a resource for other municipalities. Please e-mail [email protected] with relevant information or to be informed of future initiatives.
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Hidden and in Plain Sight: Impacts of E-Commerce in Massachusetts Executive Summary
E-Commerce Today
E-commerce – the buying and selling of goods or services via the internet, and the transfer of money and data to complete the sale – is a $600 billion industry in the United States, comprising approximately 14 percent of total retail sales.
1, 2 In 2019, Amazon alone delivered about 2.5 billion packages in the United States, an estimated 20 packages for every household.3 In the first 9 months of 2020, which forced many to remain at home due to the pandemic, e-commerce sales increased 34 percent. The increasing availability and use of next-day and same-day deliveries and the growth in restaurant deliveries via third-party apps such as Uber Eats also fueled this rapid growth.
Despite its impressive growth, e-commerce currently represents less than a fifth of total retail sales.
Yet its impacts on traffic, employment, and land development are already apparent across the U.S. In Massachusetts, the impacts of e-commerce can be seen in shifts in employment and in the growth of warehouse and distribution centers. The state’s non-store retail employment – which includes online retail occupations – grew 64 percent from 2010 to 2019, while its employment in transportation and warehousing increased 30 percent. During this same period, traditional retail employment numbers in Massachusetts remained relatively flat.
The rapid growth of e-commerce has had widespread effects, especially on transportation networks and land use. These impacts include increased traffic and emissions from delivery vehicles, greater competition for curb space during deliveries, and greater demand for land for warehouse and distribution centers.
Amazon, the world’s largest retailer, has 34 facilities either operating or proposed in Massachusetts. Once all facilities are operational, the Amazon footprint in Massachusetts will comprise over 12 million square feet of warehouse and distribution space.
4 A significant component of e-commerce is restaurant delivery and the purchase of prepared meals.5 Nationwide, transactions from services such as DoorDash, Grubhub, Uber Eats, and Postmates increased approximately 200 percent between 2015 and 2020, generating an estimated $26 billion in revenue in 2020. 6 Online grocery sales for home delivery and pickup reached $5.9 billion in November 2020, a threefold increase from August 2019. The volume of orders has more than tripled to almost 63 million, and the number of customers has more than doubled to nearly 39 million during this period. There is also an increase in the average amount of spending per order and shopping frequency. 7 Many industry experts believe that the
consumer shift to online grocery delivery and pickup will continue even beyond the COVID-19 pandemic.8, 9 There are also equity concerns, including whether low-income neighborhoods and communities of color are disproportionally bearing the traffic, noise, and air pollution from distribution facilities, and whether the shift from traditional retail jobs to warehousing and deliveries is having a greater impact on certain subsets of the population, especially in regard to employment, wages, benefits, and working hours.
Other impacts include reduced spending and associated employment and tax-revenue generation at brick- and-mortar retail stores, and the possible erosion of job security due to a shift toward the use of contractors for deliveries.
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Of course, not every effect of e-commerce is negative. The online retail business model and economies of scale have lowered prices for many consumer goods, and have enabled home-bound and carless residents to purchase goods, services, and foods that might otherwise be unavailable to them. Unfortunately, a lack of reliable data makes assessing impacts difficult and complicates the task of managing e-commerce to ensure greater equity and sustainability in the region.
Transportation Impacts
In response to the needs of e-commerce, the supply chain has expanded and evolved. It is now a vast network of interconnected facilities that can terminate not at a store, but at the consumer’s home.
10 The resulting increase in delivery-vehicle traffic affects the region’s transportation network.
Since 2010, total Vehicle Miles Traveled (VMT) nationwide has grown nine percent overall, with a 13 percent increase in urban areas. In Massachusetts, between 2010 and 2019, total VMT grew 19 percent statewide and 23 percent in urban areas.
11 Some of this can
be attributed to recovery from the Great Recession, but there is also evidence that e-commerce and the widespread adoption of ride- hailing services are contributing to the growth and its impacts.
It is difficult to determine the extent to which e-commerce deliveries may be replacing vehicle trips for shopping. In theory, a consolidated delivery system of e-commerce could reduce VMT as compared to individual households making their own shopping trips in cars. The reality is more complex. A single online order may arrive in multiple shipments. Thirty percent of online orders are returned, and 15 percent never make it to the correct address on the first delivery attempt.
At least one survey suggests, perhaps counterintuitively, that the more in-store shopping trips a household conducts per week, the more weekly online packages the household receives. Moreover, higher-income households are more likely to pay for expedited or same-day deliveries. These services have relatively greater traffic impacts, since expedited deliveries are typically shipped in a single package and are less likely to be consolidated with other packages for delivery efficiency. 12, 13
The growth in e-commerce creates conflicts on local streets. Deliveries compete with bicycle lanes, on- street parking, transit stops and bus lanes, as well as with passenger pickup and drop off. These conflicts are not limited to business districts and commercial areas; they also occur in residential neighborhoods that rely on on-street residential parking. Outdated curb regulations and pricing policies and ineffective enforcement are ill-suited to an era in which commercial demands for curb space are growing so rapidly. 14 E-commerce distribution nodes also strain the transportation system. These facilities are often 24-hour operations, typically generating more than 1,000 vehicle trips each day. 15 They are frequently located in
places where access by public transit is limited.16
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Land Use Impacts
The pressure to maintain dependable and ever-quicker delivery times has resulted in e-commerce companies adding warehouse and distribution centers closer to consumers as part of their regional networks.
17 In 2020, Amazon opened more than 175 new fulfillment centers, sortation centers, delivery stations, and regional air hubs in the U.S. and Canada, a trend that shows no signs of slowing.
The competition to add warehouse and distribution centers has resulted in a high demand for industrial real estate, particularly in urban areas. In urban Boston, warehouse rents have increased 42 percent over the last two years.
18 Primarily sited in industrially zoned
areas, these facilities require both substantial amounts of land and easy access to the regional highway network.
19 The U.S. has more retail space than any other country. Even in the absence of e-commerce, the nation’s retail space is considered to be “overbuilt,” and that in-person retail activity is insufficient to support the existing retail footprint. Malls and commercial real estate have been contending with sizable and steady closures, vacancies, and declining profits over the past several years. Nationwide, physical-store closures reached an all-time high in 2017 and again in 2019.
20 Approximately 25 percent of all malls nationwide (approximately 1,000) are projected to close over the next five years.21 At the same time, online shopping’s share of total retail sales is projected to increase to 25 percent by 2026, if not sooner.22, 23 These trends, a function of changing consumer behavior and a rise in e-commerce, predated the pandemic; but the social distancing and economic recession associated with the pandemic have accelerated physical retail decline. 24 ES-3
Potential Policy Strategies and Next Steps
E-commerce is changing our economy, consumer practices, and society. It is imperative that state and municipal governments prepare for and manage these disruptions. Land use and transportation policy and planning can ensure that the growth of e-commerce helps the region and the state to achieve its goals related to transportation, equity, economic growth, and sustainability. 25 The five potential policy strategies,
which can be implemented at the state and local levels, identified in this report include:
Advance regional coordination among municipalities. Create a regional strategy for the siting and operations of warehouse and distribution centers to manage impacts such as traffic congestion and emissions. The regional strategy includes developing a transportation and land use design playbook for municipalities, which would include recommendations about zoning, building codes, proposal review, mitigation, tax incentives, and monitoring. A playbook will promote consistency and ensure a level playing field across cities and towns.
Increase transparency in the growing e-commerce industry. Require e-commerce companies to report information and metrics such as the location of warehouse and distribution centers, employment, and transportation impacts of e-commerce logistics and delivery. Data sharing is a critical step to understand and sustainably manage the impacts of e-commerce.
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I
Implement curb management strategies. After conducting comprehensive curb space inventories, municipalities should use that information to establish curbside management policies that reduce congestion, safety risks, and conflicts. These policies should designate delivery and loading zones, establish dynamic pricing mechanisms to foster efficient utilization of the zones, and authorize rigorous enforcement practices.
Track innovations in e-commerce. Track new technologies and innovations in the e-commerce industry such as package lockers, cargo bikes, air and ground drones, and autonomous vehicles to minimize negative impacts while ensuring public safety and convenience.
Establish incentives for efficient deliveries. Both the public and private sectors should incentivize more efficient deliveries to reduce traffic and associated greenhouse gas impacts. This can be done by determining a method to assess the impact of e-commerce on congestion and emissions, and then setting a fee structure that incentivizes companies and customers to opt for more sustainable delivery options, such as combining orders into a single delivery and not choosing expedited deliveries.
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I
f
Executive Summary ES-1
Frequently Used E-Commerce Industry T
erms 1
Chapter 1: E-Commerce in the US 2
Introduction 3
National T
rends and Impacts 4
Massachusetts E-Commerce Trends 5
Chapter 2: Transportation and E-Commerce 7
Traffic and Air Quality Impacts 10
Deliveries and Curb Impacts 11
Package Lockers 14
T
raffic from Warehouses and Distribution Centers 16
Emerging Delivery Models 17
• Cargo Bike Deliveries 17
• Drones – Air and Ground 18
• Autonomous V
ehicle Deliveries 18
Chapter 3: Land Use and E-Commerce 19
Amazon Facilities in Massachusetts 21
Warehousing and Distribution Centers in Eastern Massachusetts 23 Delivery Operations 26
Impacts of E-Commerce on Retail Infrastructure 27
State and Municipal Revenues 28
Impacts of E-Commerce on the Restaurant and Grocery Industries 28 Chapter 4: Context of COVID-
19 Pandemic 30
Chapter 5: Future Trends and Additional Research Areas 32 Omni-channel Retail 33
Sustainable Logistics 34
Waste and Recycling 34
Shifts in the W
arehouse and Distribution Center Marketplace 34
Third-Party Delivery Service Fees 34
Residential and Commercial Building Design 34
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Hidden and in Plain Sight: Impacts of E-Commerce in Massachusetts Table of Contents
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Endnotes 46
Chapter 6: Potential Policy Responses to E-Commerce
35 Regional Coordination Among Municipalities
36 Increase T
ransparency into the Growing E-Commerce Industry
36 Create Incentives for Efficient Deliveries
36 T
rack Innovations in E-Commerce
36 Implement Curb Management Strategies
37 Chapter 7
: Next Steps and Areas for Further Research
38 Data Collection
39 Management of W
arehouse and Distribution Centers
41 Data Sharing Legislation
41 Information Sharing
41 Appendix:
Pla
ybook of Actionable Steps to Manage Warehouses and Distribution Centers 42 T
raffic Impact Studies
43 T
rip Forecasting
43 Site Plan Review
44 T
raffic Mitigation
44 Off-Site Parking
45 T
raffic Demand Management (TDM) Program
45 Fueling Operations
45 Excise T
ax
45 V
ehicular and Roadway Signage
45 Idling
45 T
ruck and Van Drivers
45 Project Monitoring Post Occupancy and Corrective Actions 45 Item 2B - 96
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Hidden and in Plain Sight: Impacts of E-Commerce in Massachusetts Figures and Table
Figure 1. E-Commerce as a Percent of Total Retail Sales Nationwide 4 Figure 2. U.S. Post Office Package Deliveries, 2010-
2019 4
Figure 3. Massachusetts Retail and T
ransportation & Warehousing Employment, 2010-2019 5
Figure 4. Massachusetts and U.S. Department Store Employment, 2010-2019 6 Figure 5. Supply Chain Logistics: T
raditional Delivery Model and Trending Delivery Model 8 Figure 6. City of Boston Commercial Parking Violations 13 Figure 7. Consolidated Deliveries, A
valonBay Communities in Massachusetts 15
Figure 8. Amazon E-Commerce Facilities in Massachusetts, 2020 23 Figure 9. Location of W
arehouse and Distribution Centers, Eastern Massachusetts 24 Figure 10. W
arehouses and Distribution Centers in Eastern Massachusetts, 2006-2020 25 Figure 11. Omni-channel Retail 33
Table 1. Operational and Planned Amazon Facilities 22
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Impacts of E-Commerce in Massachusetts
1 Frequently Used E-Commerce Industry Terms
Frequently used e-commerce industry terms which are also applied throughout this report:
Click and Collect: Models offered by retailers such as Target, Walmart, and grocery stores.
Orders are placed online and picked up by the purchaser curbside at the store or in the store.
Dark Store: A store that stocks items for fulfillment but is not open to the public.
Delivery Service Provider or DSP: Independent delivery organizations that help e-commerce providers such as Amazon deliver packages.
Distribution Center (or Fulfillment Center): A building specifically designed to receive, store and redistribute goods and designed for rapid turnaround for e-commerce and similar “just in time” product deliveries.
Ghost Kitchen: A single commercial facility that houses multiple restaurant operators who prepare food for takeout or delivery exclusively to fulfill online orders. Also referred to as cloud kitchens, dark kitchens, or virtual food halls.
Package Locker: Self-service secure containers where customers can pick up packages at their convenience. Also referred to as parcel lockers.
Warehouse: A large building where raw materials or finished goods are stored, for either a short or longer time. Warehouses can include buildings designed to fulfill e-commerce orders.
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Impacts of E-Commerce in Massachusetts
2 Impacts of E-Commerce in Massachusetts
2 E-commerce is a $600 billion industry in the United States,1 having grown by more than 300 percent since 2010. This shift in how Americans shop is impacting traffic, with millions of daily deliveries to businesses and households. It is changing the built environment by shifting retail activity from traditional retail locations to an increasing number of e-commerce warehouse and distribution centers in both suburban and urban areas. The pandemic has accelerated these changes, with a greater growth of online commerce and more home deliveries of all types of retail, including groceries.
MAPC, the regional planning agency for Greater Boston, has undertaken this study to better understand how the rapid growth in e-commerce impacts the region’s communities, and how municipalities and the Commonwealth can meet the streetscape and land use challenges that online retail is creating. MAPC intends to serve as a resource for continued information sharing and findings from e-commerce surveys and pilot programs and conduct research on how municipalities in Massachusetts are currently mitigating and managing the impacts of warehouse and distribution centers.
This study highlights key trends both nationally and in Massachusetts, and concludes with suggestions for further research.
Chapter 1:
E-Commerce in the US
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Impacts of E-Commerce in Massachusetts
3 Introduction
E-commerce2 is the buying and selling of goods or services via the internet, typically with the online transfer of money and data to complete the sale. It can be business to consumer, direct to consumer, business to business, and consumer to consumer (e.g., on platforms such as eBay).3 Although it’s been around since the invention of the modem, e-commerce has grown rapidly over the last ten years, thanks to advances in technology. Leaps in mobile technology, wireless networks, order tracking, online financial transactions, and logistics have all contributed to e-commerce’s rise.
The growth in e-commerce is affecting both transportation networks and land uses (zoning, building design, etc.) at both the regional and local levels:
Increasing traffic with a greater number of vehicles delivering goods to warehouses and distribution centers and vehicles delivering individual orders to consumers. The increase in truck, van, and cars on the road has an impact on both traffic congestion and air quality.
Greater competition for curb space on local streets. The increased competition can cause conflicts with on-street parking, bicycle lanes, transit lanes/bus stops, and recently expanded pedestrian and outdoor dining space.
Greater demand for warehouse and distribution sites that require a large footprint, generate truck, van, and car traffic, but also bring jobs, and are increasingly locating in urban locations to meet demand.
Impacts to brick-and-mortar retail, including retail closures, that may affect local land uses and employment. The extent to which brick-and-mortar retail may be repurposed to warehouse and distribution centers or other land uses remains uncertain.
Impacts on restaurants with greater take-out and delivery and reduced or eliminated in-person dining.
Equity concerns, including whether low-income residents and communities of color are disproportionally subject to the traffic, noise, and air pollution from distribution center operations, as well as whether the shift from traditional retail jobs to warehousing and deliveries has greater impacts on certain subsets of the population.
Architects and urban designers are reacting to the changing commerce landscape by designing building lobbies and entries and off-street loading areas for parcel delivery and storage, and by designating places for rooftops and building entrances to accommodate robots and drone deliveries. 4 Of course, not every impact is negative: the e-commerce business model and economies of scale have resulted in lower prices for many consumer goods; and e-commerce enables home-bound residents and those without a car to purchase a breadth of goods, services, and foods they might not otherwise be able to access. Unfortunately, the lack of good data about online retail makes assessing the benefits and impacts difficult, which in turn complicates managing the growth of e-commerce to ensure greater equity and sustainability in the region.
E-commerce is projected to grow rapidly over the next few years, and recent surveys of households during the COVID-19 pandemic show that many plan to shop online at higher rates in the future. Therefore, it is imperative that municipalities and state governments better understand and determine ways to manage impacts related to e-commerce.
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4 National Trends and Impacts
The Census Bureau estimates that as of the third quarter in 2020, e-commerce represented 14.3 percent of total retail sales (Figure 1). While most retail sales are still made in traditional in-person settings, e-commerce has more than doubled in the last five years. Primarily due to the COVID-19 pandemic, which forced many in the United States to stay at home, e-commerce sales increased 30 percent from December 2019 to July 2020, to levels originally forecasted to be reached by late 2022. 6 Prior to the pandemic, UBS, a global financial
services company, projected the share of online retail to rise to 25 percent by 2026 nationwide.7 Figure 1. E-commerce as a Percent of Total Retail Sales Nationwide Percent of US Retail Sales Made Online
Source: US Census Bureau, estimate based upon quarterly U.S. retail sales in dollars (adjusted). 2020 Figures preliminary.
The National Capital Region Transportation Planning Board estimates that on average, every person nationwide generates demand for roughly 60 tons of freight each year.8 In the past ten years, the increase in e-commerce caused U.S. Postal Services (USPS) package deliveries to double (Figure 2). In 2019, Amazon delivered about 2.5 billion packages in the United States, an estimated 20 packages for every household. Due to the pandemic, analysts forecast this number will increase by at least 20 percent. 9 Figure 2. U.S. Post Office Package Deliveries, 2010-2019 0 1
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USPS Package Deliveries (Billons)
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5 While the impacts of e-commerce are global, urbanized areas are experiencing the greatest effects. New York City alone receives an estimated 1.5 million deliveries per day, more than one for every six residents. While London’s congestion pricing program has reduced single occupancy car use from 50 percent to 37 percent since 2003, the number of delivery vehicles has increased by 25 percent over the last ten years. 10 A 2017 survey of households in New York City and Paris revealed that couples with children were more likely to purchase non-food items and groceries online to avoid trips and save time. More than one-third of New York City households surveyed were willing to pay extra for same-day deliveries, nine out of ten had ordered restaurant food online, and 33 percent stated that they began to eat out less frequently once they started using online food ordering apps. The study also found a positive correlation between income and the amount of online shopping.
11 A study of millennials – who now make up the largest percent of the workforce nationwide – found that this age group received two to three packages per week, and similarly found a positive correlation between income and the number of packages received each week from online purchases. 12 Massachusetts E-Commerce Trends
While there are data showing the trends of e-commerce and online retail in the United States, there are almost no e-commerce data collected on the local or state level. The U.S. Census Bureau does not report retail sales by state, and the USPS and other package carriers do not report their data on deliveries at a localized level. Furthermore, while there are limited studies on parking and vehicular traffic impacts in select downtowns such as Manhattan, there have been no comprehensive studies on vehicular traffic generated by e-commerce. Select state and national employment data, however, help show e-commerce trends in the Commonwealth.
Employment sectors measured by the Bureau of Labor Statistics 13 that reflect changes from e-commerce
include retail, department store retail, non-store retail (which includes online retailers), and transportation and warehousing. According to data from the Bureau of Labor Statistics, Massachusetts retail and department store employment levels have remained relatively steady since 2010 at 330,000 to 350,000 employees (overall retail) and 33,000 to 35,000 employees (department store retail). Non-store retail employment and transportation and warehousing, however, have seen steady increases in the last ten years. Between 2010 and 2019, the state’s non-store retail workforce and transportation/warehousing workforce increased by approximately 64 percent (over 19,000 employees) and 31 percent (90,000 employees) respectively (Figure 3).
Figure 3. Massachusetts Retail and Transportation & Warehousing Employment, 2010-2019 Massachusetts Retail and Transportation & Warehousing Employment, 2010-2019 Source: Bureau of Labor Statistics. Note: The index is the number of jobs in 2010 = 100. Each subsequent year is
either a percent decrease or increase from the year 2010.
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6 Figure 4. Massachusetts and U.S. Department Store Employment, 2010-2019 US and Massachusetts Retail and Department Store Employment, 2010-2019 Source Bureau of Labor Statistics. Note: The index is the number of jobs in 2010 = 100. Each subsequent year is either a percent decrease or increase from the year 2010.
By comparison, U.S. employment in both transportation/warehousing and non-store retail employment grew by 39 percent since 2010. Interestingly, both U.S. and Massachusetts retail employment grew slightly from 2010 to 2019, while department store employment in Massachusetts decreased slightly and national employment for department stores saw steady losses (Figure 4).
There are equity concerns with this changing retail and e-commerce landscape. The shift from brick-and- mortar to online retail has impacts on gender equity in employment. Currently, brick-and-mortar retail employment in the U.S. is 70 percent staffed by women, while warehousing and package delivery jobs are three-fourths staffed by men.
14 Furthermore, there are concerns about whether the growing number of e-commerce jobs, particularly delivery positions, are filled by independent contractors with limited or no benefits, such as retirement, paid leave, and health insurance. Finally, there may be geographic equity impacts, as the siting of e-commerce warehouse and distribution centers may or may not be accessible by public transportation.
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7 Chapter 2:
Transportation and
E-Commerce
Impacts of E-Commerce in Massachusetts
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8 The transportation impacts of e-commerce are primarily due to what is called “supply chain logistics.” The supply chain consists of the material and informational interchanges in the logistical process stretching from acquisition of raw materials to delivery of finished products to the end user. Distributors, stores, and buyers are some of the links in the supply chain. For e-commerce, supply chain logistics primarily refers to the processes involved in storing and shipping inventory for an online store or marketplace, including inventory management and the picking, packing, and shipping of online orders (Figure 5). 1 Figure 5. Supply Chain Logistics
Traditional Delivery Model
Trending Delivery Model
Source: APA Learn, Live-Work-Play Dispatch: Designing for E-Commerce Presentation: E-commerce Trends and Vehicle Types, Lisa Nisenson, WGI Factory Distributor Retail Store Buyers
Online Order Package Distributors
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Drone Delivery
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Store Pick-up
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Microwarehouse
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Retail/Grocery +
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Food Distributors
Restaurants
Online Groceries
Online Food
Centered on a model of same-day delivery and a local approach to distribution, e-commerce has reshaped how supply chains work. In the past, goods moved first from the factory to the distributor, and then to the store where consumers made purchases. Due to e-commerce, the supply chain has evolved into an expanded model that moves goods across a complex network of interconnected facilities. This complex network includes brick-and-mortar stores, multiple warehouse and distribution centers, customer click-and-collect points, and package lockers.
2 As a result, e-commerce impacts transportation networks regionally with increased vehicle traffic on roadways and streets, and locally with multiple daily deliveries at workplaces and residences where delivery vehicles compete for use of the curb.
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9 New approaches are being designed to manage and facilitate the reverse logistics of returning items ordered online. For example, in a partnership with Amazon, Kohl’s accepts returns of Amazon orders.
Kohl’s will package and send returned items to Amazon on behalf of customers at no cost. Walmart offers a Mobile Express Returns service which allows Walmart products purchased online to be returned in Walmart’s physical stores at no additional cost. By these stores leveraging their physical locations, returns are more convenient for the customer and the retailer benefits from a centralized pick-up point. 9 However, a shopper making a trip to the retail center to return an online purchase results in additional Vehicle Miles Travelled (VMT) and associated traffic congestion and Greenhouse Gas (GHG) emissions. This again illustrates the difficulty in calculating whether e-commerce has a net positive or negative impact on regional traffic.
A comprehensive study of the online shopping habits of Manhattan residents found that more than a third were willing to pay extra for same-day delivery. Meeting this immediate demand entails the use of more delivery vehicles. The study also found a positive correlation between income and the amount of online shopping. Similar research on shoppers in Texas found that wealthier households (those making more than $75,000 annually) had an average of three package deliveries per week, compared to two packages per week for households with an annual income of less than $25,000. This research also found that the more in-store shopping trips a household conducts per week, the more online packages the household receives each week; it found, too, that higher-income households were more likely to pay for expedited or same-day deliveries. These findings all suggest that e-commerce at this time may not be directly replacing in-person shopping trips, but rather providing another way for those with more disposable income to shop more. 11 An additional number of households are also embracing the “click and collect” models offered by retailers such as Target, Walmart, and grocery stores. Orders are placed online and picked up by the purchaser curbside at the store or in the store. This does not reduce VMT. 12 It is worth noting that the customer
in-store or curbside pickup model is more cost effective for retailers, as they do not handle the last-mile delivery process.
13 Some researchers have begun to estimate the impacts of e-commerce on both VMT and vehicle emissions, both now and in the future. As of 2018, approximately five percent of e-commerce was same-day delivery. Same-day delivery is forecast to increase to 15 percent within five years. Analysis by UC Davis found that offers for same-day deliveries are estimated to be among the most important determinants in increasing the number of vehicle miles traveled per package delivery. Their research estimates that an expedited one-hour delivery requires an average of 1.3 miles per package delivery, compared to less than 0.2 miles for next-day delivery.
15 A study by the World Economic Forum projected the growth in deliveries using traffic and other data from several cities across the globe. The study concluded that without policy intervention, the number of delivery vehicles will increase 36 percent from 2019 to 2030, along with a 32 percent increase in carbon-dioxide emissions. The study also found that impacts of growth in last-mile deliveries alone could increase average commutes by 21 minutes by 2030. The report recommended various interventions to reduce traffic congestion and associated carbon-dioxide emissions, including mandated electric vehicle fleet adoption, use of drones for deliveries, increased double-parking enforcement, installation of package lockers, and creating more delivery parking zones. Implementing these interventions will require substantive policy changes, monetary investments, along with changes in customer shopping habits.
16 Both the public and private sectors have begun to incentivize more efficient deliveries to reduce traffic and associated GHG impacts. A surcharge on same day deliveries could monetize the traffic impacts created by same-day deliveries and encourage users to select less-expedited delivery options. Amazon at times incentivizes customers (through discounts or reduced fees) to combine purchases into a single delivery. If this option was applied on a more widespread basis, and not just by Amazon, the number of deliveries and packing materials could be reduced. Since the pandemic in early 2020, UPS has added “peak” surcharges for large, high-volume companies such as Amazon, Target, and Best Buy in an effort to manage increasing numbers of shipments. Typically, these extra fees are imposed during the holiday shopping season. The surcharge could impact the volume and sizes of packages these companies ship with UPS. 17 Item 2B - 106
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10 Traffic and Air Quality Impacts
The increased use of e-commerce raises two traffic-related questions: how much added traffic is due to e-commerce deliveries (trucks, vans, and cars), and do e-commerce deliveries replace vehicle trips that used to be made to traditional retail stores.
Since 2010, total Vehicle Miles Travelled (VMT) nationwide has grown nine percent overall but increased 13 percent in urban areas, while VMT in Massachusetts has grown 19 percent statewide and 23 percent in urban areas between 2010 and 2019.
3 While some of this growth can be attributed to recovery from the Great Recession, there is also evidence that e-commerce and the widespread adoption of ride-hailing services are contributing to the growth in VMT and associated traffic congestion and vehicle emissions.
In 2018, New York City received 1.5 million deliveries each day, a number that has tripled over the last eight years. As of 2018, at least 15 percent of New York City households received at least one package daily. The number of trucks on tolled bridges into New York City rose nine percent from 2014 to 2018. 4 However, this growth in truck traffic only tells part of the story, as many deliveries are now made by vans and cars. Local data on the number of deliveries and their traffic impacts remains difficult to collect.
There has been almost no research on the extent to which e-commerce deliveries may be replacing vehicle trips for shopping. In theory, a consolidated delivery system of e-commerce orders compared to each individual household driving for their shopping trips should have lowered overall VMT. 5 The reality is more complex, indicating that online shopping may not necessarily be directly replacing in-person shopping trips:
• An online order for several items from a single site, such as Amazon or Target, can be shipped from separate warehouse or distribution centers. This can result in multiple deliveries from a single online order.
•
Households are now offered more options for same-day or next-day shipping, which requires faster deliveries. This can require more vehicles and less opportunity to optimize distribution and routing.
6 • Thirty percent of online orders are returned.7 This has created the need for what the industry calls “reverse logistics” – the moving of returned orders from the buyer, preferably to a destination that allows for some value recapture.
Additionally, due to theft or deliveries to the wrong location, the rate of failed first delivery attempts can be as high as 15 percent in some cities. 8 Reverse
logistics and multiple delivery attempts increases the number of vehicular trips. • Surveys of shoppers indicate that online deliveries are not wholly replacing in- person shopping trips. Rather, shoppers continue to shop in person on a regular basis and also go online primarily to purchase select items they have not bought during their in-person shopping trips.
In some cases, e-commerce may entail both an in-person store visit and a delivery. Some consumers visit a brick-and-mortar store to look at products before comparing prices and purchasing online for delivery.
This in
volves both a car and a delivery trip. Another question is what consumers do with the time saved by making purchases online, and whether they are using any new “free time” for other trips.
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11 Photo: FedEx trucks in downtown Boston; Shutterstock A bill was proposed in December 2020 in New York City that would require residents to pay a $3.00 surcharge on packages they order online, with the exception of medicine and food. The online shopping fee would be used to fund the operating costs of New York’s public transit system and is intended to support small businesses and protect the environment.
18 Chicago also proposed in late 2020 a $1.25 to $2.50
surcharge on deliveries, with the exception of medicine and restaurants. The purpose of the tax is to help raise revenues for the city.
19 To date, these proposals have not been adopted, in part due to equity concerns about the tax’s impacts on lower-income households. While these surcharges could help monetize the traffic impacts created by e-commerce, research suggests they must be done in conjunction with other interventions, such as package lockers and improved delivery parking regulations/enforcement to have the greatest impacts on reducing traffic and air quality impacts.
Deliveries and Curb Impacts
The growth in e-commerce also creates conflicts on local streets where delivery vehicles must compete with other uses of the curb, such as bicycle lanes, on-street parking, transit stops and bus lanes, as well as passenger pickups and drop offs for taxis and transportation network companies (TNCs). Parklets and extended outdoor dining areas, which have become more widespread during the COVID-19 pandemic, are also occupying curb space previously dedicated to other uses.
Delivery vehicles double parked (particularly in bike and bus lanes) have become a frequent hazard in urban areas. These curb space conflicts are not limited to central business districts, but also are in suburban neighborhoods with a greater prevalence of on-street residential parking.
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12 The first step in tackling the problem with the curb is to understand the delivery-zone supply and demand in
downtowns and other dense areas. Since the pandemic,
data is suggesting that, nationwide, commercial vehicles comprise nearly 30 percent of parking activity in cities and that more than 50 percent of parking violations in cities are committed by commercial operators.
20 Los Angeles, Seattle,
San Francisco, New York, and Washington, D.C. have studied the number of deliveries in key locations and developed pilot programs to better manage both the supply of curbside delivery spaces and enforcement.
21, 22
Seattle, Toronto, and San Francisco have developed
comprehensive framework and policy guides to inform
future decision-making about using curb space for a variety of uses. Seattle’s Flex Zone/Curb Use Priorities defines the curb lane as a “flex zone,” and allocates ranked curb use priorities (mobility, access for people, access for commerce, activation, greening, and storage) according to street types.
Toronto’s Curbside Management Strategy and San Francisco’s Curb Management Strategy have comprehensive policy
approaches and implementation plans that manage curbside space while supporting mobility and access for people and goods. For example, the GoDCgo program in Washington,
D.C. allows commercial vehicles to park in loading zones during designated times via a mobile service or smartphone application. DC has found that companies are willing to pay for the reliability, time savings, and reduction in parking violations that result from this program.
23 Photo (right): UPS truck in Brookline Village in bike/parking lane; MAPC In 2018, the City of Boston began an effort to identify curb lane parking areas that were over- and under- utilized. The city studied its parking violations to determine where delivery vehicles were double-parking in travel lanes, bus lanes, and bicycle lanes and where vehicles were overstaying in loading zones. Boston found substantial variation in curb space utilization within only a few hundred feet throughout the day (7 a.m. – 7 p.m.). As seen in Figure 6, commercial parking/delivery spaces in purple had passenger vehicle violations, indicating they are likely underutilized by commercial vehicles. Red spaces show double-parking violations of commercial vehicles (suggesting too few spaces dedicated for deliveries and commercial vehicles), and black show commercial vehicles that were parked beyond the 30-minute limit for deliveries (indicating spaces are overutilized). In the Back Bay, streets that are primarily residential and closer to the Charles River show higher concentrations of commercial vehicles double parking, suggesting there is not enough parking designated for delivery vehicles. The same applies for Commercial Street in the North End. In comparison, the Financial District has several zones for deliveries that are used by personal vehicles, which may indicate an oversupply of delivery parking spaces.
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13 On the basis of this study, Boston is developing pilot programs to manage deliveries through more dynamic curbside-parking pricing. The City also plans to advance a pilot program for e-cargo bike deliveries.
Figure 6. City of Boston Commercial Parking Violations
Source: City of Boston
The Boston Metropolitan Area Planning Organization (MPO) is undertaking research on the future of the curb. It recommends communities in the Boston area consider pilot programs to better manage curbside use for parking and deliveries.
25 Potential strategies include making street parking along entire city blocks for deliveries only, which has reduced double parking and dwell times for delivery vehicles in Washington, DC.
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14 Not surprisingly, an analysis of package deliveries to residential buildings mirrors the tremendous increase in the e-commerce sector. For example, AvalonBay Communities, a real estate investment trust that has an ownership interest in about 80,000 apartments nationwide, reported in 2017 that the average apartment community in the company’s portfolio received approximately 1,000 packages a month, up from 650 in the prior year. Over the past several years, the company reported having a 30 percent annual increase in the volume of packages it receives.
27 In Massachusetts, AvalonBay has an ownership interest in about 10,530 apartment units in 40 buildings.28 These apartment buildings are in 25 municipalities throughout Eastern Massachusetts.29 Recently, AvalonBay contracted with Amazon to install package lockers at their apartment buildings, which allows data on package deliveries to be collected. Even though the parcel locker system was installed by Amazon, all carriers (e.g., UPS, FedEx, and small regional carriers) can be assigned a carrier code that allows them to deliver to the lockers. The figure below depicts the consolidated data on deliveries across the 10,530 apartment units in the 40 buildings in Massachusetts. Over a 19-month period from January 2019 to July 2020, package deliveries increased by 65 percent. As of July 2020, the average number of monthly package deliveries per apartment unit is 5.3.
Photo: UPS locker at Stop & Shop in Dedham; MAPC
Package Lockers
Package lockers (sometimes called parcel lockers) are self-service secure containers where customers can pick up packages at their convenience. After carriers make deliveries, customers can then retrieve their packages, usually with a personalized access code sent by text or e-mail. Package lockers are typically sited at centralized locations such as apartment buildings, office buildings, grocery stores, and convenience stores. There are various locker services such as the USPS, Gopost, UPS Access Point, DHL Lockers, FedEx Ship & Get, and Amazon Hub.
Delivering to a package locker removes the need for multiple delivery attempts and reduces vehicle dwell times. Enabling drivers to make one delivery trip quickly and efficiently to a centralized location can reduce congestion and emissions. A study by Urban Freight Lab found that package lockers at an apartment complex in Seattle reduced the time UPS trucks were parked in front of the complex by 78 percent. 26 Item 2B - 111
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15 Notes:
• Deliveries include both manually delivered packages and packages delivered to package lockers. • AvalonBay notes this number is understated as packages are sometimes delivered to the apartment door or left by carriers around the community.
• Package returns are not managed.
• While AvalonBay does not share occupancy data, they utilize an industry benchmark of 95 percent.
Figure 7. Consolidated Deliveries, AvalonBay Communities in Massachusetts Consolidated Package Volume by Month, for AvalonBay Communities, in Massachusetts 20000
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Photo (left): Amazon Prime delivery in Revere; Shutterstock Photo (right): UPS Driver; MAPC
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16 Traffic from Warehouses and Distribution Centers
Warehouses and distribution centers generate three distinct types of trips and associated traffic patterns:
‘inbound’ traffic from wholesalers, retailers, or other distribution centers (primarily via tractor-trailers); ‘inbound’ employee traffic via personal vehicles; and ‘outbound’ delivery traffic via trucks, vans, or smaller vehicles. Each trip, of course, entails a corresponding leg where the vehicle leaves or returns to the facility.
While the traffic generated by e-commerce warehouse and distribution centers vary by size and type of product being delivered, most centers have 24-hour operations. 30 The typical cycle of activity consists of
the receipt of bulk deliveries from distribution centers late at night from tractor-trailers. The items are sorted and prepped, then loaded into vans overnight for delivery. Delivery vans depart from distribution centers in waves starting in the late morning, make deliveries during the day, and then return in the evening. Employees driving to and from the site are also part of the traffic generated. 31 A more detailed
description of the operations of a distribution center can be found in Chapter 3.
The total volume of traffic to and from warehouse and distribution centers in Massachusetts is currently unknown, as is the extent to which vehicular trips generated by an e-commerce distribution center are replacing other trips that might have been made by shoppers to traditional stores.
Understanding the traffic volume generated by these facilities is further complicated by the number of e-commerce distribution centers repurposed from older warehouses or large buildings. The Amazon distribution center in Dedham, for example, was previously a warehouse used by a Macy’s department store and Restoration Hardware. The Amazon facility in Revere occupies an old Necco candy factory. In each location, some of the Amazon activity replaces traffic from previous activities at these sites.
Photo (left): Amazon van entering Milford delivery station on Industrial Road; Neal McNamara, Northborough Patch Photo (right): Amazon Prime vans departing Milford delivery station on Industrial Road; Central Transportation Planning Staff Item 2B - 113
Impacts of E-Commerce in Massachusetts
17 Emerging Delivery Models
Emerging delivery models for e-commerce include new technologies such as air and ground drones, autonomous vehicles, as well as using existing technology such as e-bikes in new applications. Several municipalities and the private sector have developed pilots of emerging delivery models to determine their effectiveness. Package lockers (described earlier) started as pilots and are now becoming more widespread in deployment and use. The pilots described below are still early in their development.
Photo: UPS e-assist bike in Seattle, Washington; UPS
Cargo Bike Deliveries
Whether pedal-operated or electric, cargo bikes can serve as a nimble, carbon-neutral last-mile delivery solution which could reduce delivery times, traffic, emissions, as well as competition for curb space. In Miami, DHL is piloting e-assist cargo bikes, New York City launched an initiative to encourage freight companies to use cargo bikes, and in Seattle, UPS recently conducted a one month e-cargo bike pilot.
32,33,34
London implemented a successful pilot in which delivery vans drove to strategically placed meet-up points where the goods were distributed to a team of bicyclists and pedestrians. In turn, the bicyclists and pedestrians delivered the packages while the delivery vans went back to the warehouse, reloaded, and drove to another meet-up point. It was determined that this delivery method allowed for four times as many packages to be delivered during one shift. Following this pilot, the City is considering next steps.
35 In the summer of 2020, Boston released a Request for Information (RFI) for Electric Cargo Bikes as a Delivery Solution.
36 With a better understanding of existing initiatives in the Boston metro area and elsewhere, the City plans to launch an e-cargo bike delivery pilot program which will identify the potential regulatory, administrative, and operational challenges to e-cargo bike delivery and establish strategies to address those challenges.
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18 Drones – Air and Ground
Numerous companies are exploring the expansion of aerial and ground drones for deliveries of medical, package, and food deliveries. Walmart and FedEx plan to collaborate on a pilot to send on-demand deliveries of household, and grocery items in North Carolina. Amazon, UPS, and Walgreens all have plans to conduct air drone pilot programs.
37, 38 CVS and Nuro, a robotics company, have partnered to deliver prescriptions in Houston with ground drones. CVS also has a partnership with UPS to deliver medical supplies via ground drones to retirement communities in Florida. 39 Starship Technologies,
a delivery robotics company, has new grocery and meal delivery programs at university campuses, including Arizona State University, James Madison University in Virginia, and Georgia Southern University; and in communities such as Mountain View and Modesto in California. 40 Autonomous Vehicle Deliveries
Pilots are also underway using autonomous vehicles. In Phoenix, UPS will be undertaking a pilot in which autonomous vehicles will pick up packages dropped off at UPS stores and bring them to a UPS logistics facility.
41 In Bentonville, Arkansas, Walmart and autonomous vehicle startup Gatik have plans for delivering customer orders from a dark store. In Scottsdale, Walmart and GM Cruise have plans to test driverless deliveries using electric vehicles.
42 Toyota has developed an autonomous delivery service
concept called e-Palette, which is a modular store on wheels that could deliver food and packages.43 Although widespread deployment of air and ground drones and autonomous vehicles will take several years to become mainstream, these types of services could dramatically impact personal trips, especially since 45 percent of household trips are for groceries and errands. 44 Item 2B - 115
Impacts of E-Commerce in Massachusetts
19 Impacts of E-Commerce in Massachusetts
19 Chapter 3:
Land Use and
E-Commerce
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20 The dramatic increase of e-commerce is having major effects on land use. The pressure to maintain dependable and quicker delivery times has resulted in e-commerce companies adding smaller warehouse and distribution centers closer to consumers as part of their regional networks, a trend which shows no signs of changing.
1 Consumers are increasingly expecting to receive the goods they purchase promptly and retailers such as Amazon, Walmart, and Target are competing to reduce order-fulfillment times by offering next day and even same-day deliveries. Aimed to compete with Amazon Prime, which has an estimated membership of 112 million,
2 Walmart launched its own membership service for free deliveries, Walmart Plus, in September 2020. As transportation is the greatest cost as part of e-commerce logistics, the siting of smaller warehouse and distribution centers closer to consumers saves on both delivery times and expenses. Subsequently, the placement of warehouse and distribution centers in urban areas is an integral component of the “last mile” delivery process.
The competition to add warehouse and distribution centers has resulted in a high demand for industrial real estate, particularly in urban areas. According to real estate firm Cushman & Wakefield, the demand for industrial space in North America exceeded supply in 2019 for the first time since before the Great Recession.
3 Industry publications report that warehouse rents in the Boston-area market have increased 42 percent over the last two years to an average of just over $12.00 per square foot.
4 According to a report by the Industrial Asset Management Council and the Society of Industrial and Office Realtors, “The rise of e-commerce is a primary reason for the growing demand for new warehouse space, strategically located within closer proximity to consumers.” 5 The push to site warehouse and distribution centers closer to consumers is a significant industry change that impacts both land use and transportation. The increased traffic, emissions, and noise caused by delivery vehicles accessing the warehouse and distribution centers has raised concerns about potential negative health impacts to area residents.
6 As the distribution centers are located within
urbanized areas to meet demand, these centers may be situated in communities of color and lower- income neighborhoods and could create disproportionate impacts.
At the same time, there is significant demand to site large e-commerce warehouse and distribution centers outside of urban areas. Primarily located in industrially-zoned areas, these facilities require both substantial amounts of land and easy access to the regional highway and rail network. It is worth noting that these facilities are frequently located where access by public transit is limited. 7 While the pandemic has had considerable and immediate negative impacts on businesses and real estate, industrial properties are thriving primarily due to increased e-commerce activity. In 2020, Amazon opened more than 175 new fulfillment centers, distribution centers, sortation centers, delivery stations, and regional air hubs in the U.S. and Canada, a trend which shows no signs of slowing. 8 As of December 2020, Amazon had 762 active facilities across the country and another 240 in the pipeline that would bring its footprint to over 352 million square feet. 9 As e-commerce warehouse and distribution facilities are designed to prioritize goods movement and/or short-term goods storage, they require more loading docks, more space for parking, and higher ceiling heights than do traditional warehouses.
10 Item 2B - 117
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Impacts of E-Commerce in Massachusetts
21 Amazon Facilities in Massachusetts
Amazon is one of the largest industrial tenants in the greater Boston industrial market and has plans for continued expansion. As of February 2021, 20 Amazon facilities were in operation and 14 facilities were in the pipeline. While the oldest of these facilities became operational in late 2014, ten became operational in 2020 alone. As shown in Table 1 and Figure 8, existing square footage is approximately 4.79 million square feet and planned development is an estimated 7.3 million square feet. If all planned facilities become operational, the total square footage could exceed 12 million square feet. 11 Definition of Amazon Facilities
• Amazon Pantry and Fresh Distribution Center. Facilities which service dry grocery merchandise (Pantry) or perishables or frozen merchandise (Fresh). • Amazon Prime Now. Facilities that stock a limited line of products that are in high demand and can be delivered within 1-2 hours of order placement. • Amazon Whole Foods Retail Distribution Center. A facility which services Whole Foods grocery products.
• Delivery Station. Facilities where packages are sorted and then dispatched directly to the customer. These facilities represent the last leg of the delivery network. • Distribution Center (or Fulfillment Center). A building specifically designed to receive, store and redistribute goods and designed for rapid turnaround for e-commerce and similar “just in time” product deliveries. •
Sortation Center. Facilities generally used to sort packages for a geographical region whereby the packages have originated from one or more fulfillment centers within the Amazon network. Packages are usually shipped to delivery stations.
Modified from https://www.mwpvl.com/html/amazon_com.html Item 2B - 118
Impacts of E-Commerce in Massachusetts
22 Table 1. Operational and Planned Amazon Facilities
Facility Type Address Municipality Square Feet
In Operation
Fullfillment Center 1180 Innovation Way Fall River 1,015,700 Delivery Station 135 American Legion
Highway Revere 830,000
Delivery Station 800 John Quincy Adams
Road Taunton 350,300
Sortation Center 1000 Technology Center
Drive Stoughton 332,700
Sortation Center 1 National Street Milford 332,000
Sortation Center 350 Bartlett Street Northborough 300,000 Sortation Center 330 Bartlett Street Northborough 300,000 Delivery Station 351 Maple Street Bellingham 300,000
Delivery Station 732-750 Everett Street Norwood 162,700 Delivery Station 4400 Computer Drive Westborough 156,500 Delivery Station 20 Colonial Road Salem 147,000
Delivery Station 161 Lower Westfield Road Holyoke 145,000 Delivery Station 30 Commerce Boulevard Middleborough 132,300 Delivery Station 110 Fordham Road Wilmington 100,200
Delivery Station 8 Industrial Road Milford 81,900
Amazon Prime Now 30 Northampton Street Boston 72,300
Delivery Station 500 Sprague Street Dedham 60,500
Amazon Pantry and Fresh
Distribution Center 201 Beacham Street Everett 51,000
Amazon Whole Foods
Retail Distribution Center 15 Parker Street Gloucester 20,400 Delivery Station 415 Summer Street Boston n/a
4,890,500
Planned
Distribtion Center 1600 Osgood Street North Andover 3,800,000 Distribtion Center 555 Hopping Brook Road Holliston and Medway 1,500,000 Delivery Station 139 Intervale Road Fitchburg 350,000
Delivery Station 560 West Street Mansfield 350,000
Delivery Station 125 Goddard Memorial
Drive Worcester 177,000
Delivery Station 100 Industrial Park Road Hingham 149,000 Delivery Station 39 Presitge Way Kingston 145,000
Delivery Station 151 Taylor Street Littleton 143,000
Delivery Station 25 Computer Drive Haverhill 142,000
Delivery Station 7 Neponset Street Worcester 121,000
Distribtion Center 300 Dan Road Canton 106,698
Distribtion Center 565 Squire Road Revere 102,000
Delivery Station 100 Mazzeo Drive Randolph 93,200
Delivery Station 350 Revolutionary Drive Taunton 74,500 7,253,400
Total 12,143,900
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As illustrated in Figure 8, current last-mile delivery stations are in Bellingham, Dedham, Everett, Holyoke, Milford, and Revere. Amazon is proposing to expand its network of last-mile delivery stations in Massachusetts with facilities in Boston, Hingham, Kingston, Mansfield, Middleborough, Salem, Taunton, Wilmington, and Worcester.
12 Both existing and planned facilities are heavily concentrated in the southeastern part of the state. This is attributed to the area having proximate access to the regional highway network and a building inventory that meets building specification demands of e-commerce providers (e.g., high ceiling heights and multiple loading docks).
13 Figure 8. Amazon E-Commerce Facilities in Massachusetts, 2020 Warehousing and Distribution Centers in Eastern Massachusetts According to Colliers International, the rest of the Greater Boston industrial market (not including Amazon) has slightly under two million square feet in the construction and renovation pipeline.
Colliers has identified the growing importance of two areas in the Commonwealth for the siting of warehousing and distribution: the Route 2 corridor, which provides access to Boston, Worcester, and New Hampshire; and the area south of I-495, which is proximate to the I-95/I-495 interchange. 14 Colliers has also
determined that interest in industrial operations has also reached beyond the Boston market. 23 Item 2B - 120
Amazon E-commerce Facilities in Massachusetts l 2020
34 facilities
Total square footage of facilities in operation: 4,890,500 sq ft Total square footage of planned facilities: 7,253,400 sq ft Total footprint: 12,143,900 sq ft
Facility
•
Amazon Pantry and Fresh
Distribution Center
Amazon Whole Foods
Distribution Center
• Amazon Prime Now
• Delivery Station
• Distribution Center
• Fullfillment Center
• Sortation Center
@ Planned Facilities
Facility
• • • -
Less than 1 00,000 sq ft
100,000 - 200,000 sq ft
200,000 - 500,000 sq ft
500,000 - 1,000,000 sq ft
• 1,000 ,00 - 4,000 ,000 sq ft
j\ ~ ~ w"7 Data Sources, MAP\:=, MassGIS, MassDOT, MWPVL I - - - Date, December, 2 ' 20
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24 Figure 9. Location of Warehouse and Distribution Centers, Eastern Massachusetts Consistent with national trends, Greater Boston’s industrial market is in demand and growing.15 Industrial vacancy rates reached a record low of 8.2 percent in Greater Boston at the end of 2020.16, 17 According to Colliers, e-commerce is the “major demand driver” in the Greater Boston market.18 MAPC used CoStar, a commercial vendor that provides information, analytics, and marketing services to the commercial and property industry, to develop an inventory of warehouse and distribution centers. As shown in Figure 9, warehouse and distribution centers are distributed throughout Eastern Massachusetts. 19 The
facility types comingle and are generally concentrated along the regional highway network. There are nodal concentrations of both facility types at the major highway interchange areas of I-90/I-190/I-290 (Worcester area), I-90/I-93/I-95 (Boston area), I-495/Route 3 (Lowell area), and I-95/and I-295/I-495 (southwest of Boston).
Note: MAPC’s CoStar subscription coverage is for the eastern part of the state extending to the Quabbin Reservoir and does not include Cape Cod.
Item 2B - 121
Location ~f Warehouse and Distribution Centers
Eastern M, ssachusetts*
Type of Property
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Doto Sources: MA.PC, ManGIS, Mos0OT, Co-Star
November 2020
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Impacts of E-Commerce in Massachusetts
25 As shown in Figure 10, the number of warehouses and distribution centers has been steadily climbing since 2006. Currently, warehouse facilities comprise an estimated 790 buildings and total 108.6 million square feet. Distribution centers comprise an estimated 277 buildings, totaling 28.4 million square feet. It should be noted that not all of these facilities operate for e-commerce, but they illustrate the trends of warehousing and distribution centers in Massachusetts.
Figure 10. Warehouses and Distribution Centers in Eastern Massachusetts, 2006-2020 Warehouses
Source: CoStar, 2020 YTD
Distribution Centers
Source: CoStar, 2020 YTD
Item 2B - 122
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Impacts of E-Commerce in Massachusetts
26 CoStar Definitions
Distribution: Typically large buildings, both single and multi-tenant, used for the warehousing and distribution of inventory. Buildings are typically 200,000 square feet or more, with clear heights 28 feet plus, up to five percent office space and the balance being warehouse/storage space. These buildings typically have one loading door for every 10,0000 square feet of Rentable Building Area (RBA) and site coverage up to 40 percent. These buildings are often cross-docked with trailer parking. MAPC included all properties listed as “Existing,” “Under Renovation,” “Proposed,” and “Under Construction” with no square footage minimum.
Warehouses: Typically 25,000 square feet or greater in size, box shape, with one loading dock for every 15,000 square feet of Rentable Building Area (RBA). Up to 20 percent office area with clear heights of 22 feet or greater. Site coverage is typically up to 50 percent. MAPC included all properties listed as “Existing,” “Under Renovation,” “Proposed,” and “Under Construction.” A square footage minimum of 60,000 square feet was applied.
One limitation of CoStar is that the data only represents commercial/rental properties. Accordingly, if a property is owned and operated by the same entity and not leased, the property is likely to not be included in the CoStar database.
Delivery Operations
Frequently, e-commerce companies such as Amazon lease and repurpose space in existing warehouses for distribution centers.
20 Distribution centers require large parking lots where employees can park their personal vehicles and the company can stage delivery vans. Distribution centers provide “last mile” package delivery and expedite deliveries to residences and businesses. Their deliveries typically cover a 45-mile radius and serve a market area within an approximate 60-minute driving time of the site. 21 In general, the daily operations of distribution centers begin with the arrival of tractor trailers that bring packages in bulk from fulfillment centers throughout the night, usually starting after 11 p.m. Customer orders are then sorted, prepped, and loaded into hundreds of delivery vans. Each morning, delivery van drivers travel to the distribution centers, typically by personal vehicle. After arriving, the drivers get into a loaded delivery van, drive out of the site, and make deliveries to customers. Delivery drivers are usually scheduled to enter and leave the site during off-peak morning traffic times. After all deliveries are made, drivers will drive their delivery vans back to the distribution center in the evening and depart from the site. 22 In many cases, the departure of delivery vans is scheduled in waves. As one wave of vans leaves the site, another is loaded. Waves can continue throughout the morning, depending on demand. When there is additional demand, on-call drivers will be used to fulfill customer deliveries. On-call drivers usually arrive in the middle of the day and use their personal vehicle to make deliveries. Once deliveries are completed, the on-call drivers do not return to the site.
23 Including tractor trailers, delivery vans, and on-call drivers, a typical facility can generate more than 1,000 vehicle trips each day.24 Amazon also works with third-party Delivery Service Partners (DSPs) to make deliveries. Independently owned companies, DSPs manage employee benefits, compensation, and address liability issues. Amazon Flex, a program where independent contractors, called delivery partners, deliver Amazon orders to customers, may be used but Amazon will first hire a DSP with their own vans to deliver packages. 25 Amazon Flex drivers
use their own vehicles and deliver what cannot be accommodated by vans.
The variety of delivery vehicle owners and operators adds to the challenge of managing and regulating transportation impacts such as curb usage. The novelty of this rapidly evolving business/operations model means that traditional trip generation forecasting methods are not applicable.
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Impacts of E-Commerce in Massachusetts
27 Sortation systems and robotics automate and streamline orders inside warehouse facilities and increase the speed and intensity of their operations. Such technological innovations are projected to accelerate the e-commerce industry – and of course, could further increase the numbers of vehicles making deliveries.
Impacts of E-Commerce on Retail Infrastructure
The United Sates has more retail space than any other country. Price Waterhouse Coopers has estimated that there are about 24 square feet of retail floorspace per person in the United States, followed next by 11 square feet in Australia and between two and five square feet in Europe. 26 Brick-and-mortar retail
real estate is vastly overbuilt in the United States, with some industry experts estimating the amount of overbuild to be about 50 percent.
Many malls and other traditional retail locations have been contending with sizable and steady closures, vacancies, and declining profits over the past several years. Nationwide, physical-store closures reached an all-time high in 2017 and again in 2019.
27 According to Coresight Research, approximately 25
percent of all malls nationwide (approximately 1,000) are projected to close over the next five years.28 Despite these significant and steady declines, retail sales are not diminishing. Rather, the retail landscape is transitioning from malls and physical retail locations to warehouses and distribution centers. Online shopping’s share of total retail sales has been increasing by approximately one percentage point per year.
29 The overbuild of brick-and-mortar retail, coupled with the rise in e-commerce, has accelerated as to what industry professionals refer to as the ‘retail apocalypse,’ which began during the Great Recession of the late 2000s.
30 Both trends – the decline of traditional retail and
the dramatic increase in e-commerce – predate the pandemic but have been accelerated by it.31 Photo: Example of an Underutilized Strip Mall; MAPC
According to a July 2020 report by CBRE Group, Inc., a commercial real estate firm, an estimated 13.8 million square feet of retail space has been converted to 15.5 million square feet of industrial space over the past three years nationwide.
32 Depending on where e-commerce facilities locate and where in- person retail stores close, municipalities could face various land use and fiscal challenges.
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Impacts of E-Commerce in Massachusetts
28 Some malls are being converted to warehouse and distribution centers. One well-known example is the Randall Park Mall near Cleveland, Ohio. Touted in the mid-1970’s as one of the nation’s largest shopping centers, Randall Park Mall was abandoned in 2009 and became an Amazon fulfillment center in 2018.
33 The retrofitting of malls with housing, offices, and other non-retail uses is likely to continue.
According to a report issued by Barclay’s, turning a closed mall into an e-commerce warehouse or a residential complex could reduce the value of the property between 60 percent to 90 percent. 34 Nationwide, Simon Property Group has been exploring with Amazon the possibility of converting some of the property owner’s anchor department stores into Amazon distribution hubs. Since many malls are sited near major highways and residential areas, these sites are considered strategic locations for distribution centers. The Simon Property Group owns 14 properties, mostly in eastern Massachusetts. 35 Should Amazon and Simon Property Group come to an agreement about utilizing department stores in Massachusetts to warehouse/distribution centers, the land use impacts could be significant. 36, 37
State and Municipal Revenues
The effect of e-commerce on state and municipal revenues that come from state sales and income taxes and municipal property taxes is difficult to gauge and not yet fully known. A study by the Economic Policy Institute concluded that Amazon fulfillment centers do not generate broad-based employment growth and that state and local policymakers seeking to maximize long-term benefits should avoid extending tax incentives to lure these businesses. The report argues that investments in public services are more effective than tax incentives at generating long-term economic growth. 38 In Massachusetts, North Andover approved an estimated $27 million in tax incentives to Amazon for a 3.6 million square foot distribution center. This tax increment financing (TIF) agreement will reduce Amazon’s property tax bill over a period of ten years. Amazon will not receive a state tax break for this site. North Andover is expected to receive $18 million in new net tax revenue over the ten-year agreement. In the decade after the agreement expires, the Town anticipates receiving an additional $45.5 million in property taxes from Amazon.
39, 40
Amazon has received tax breaks for other facilities in Massachusetts. In 2015, Amazon received approval for nearly $16 million in state and local tax incentives for a distribution center in Fall River and an estimated $3.5 million for a facility in Stoughton. Amazon will also receive up to $10 million in property tax breaks from the City of Boston for offices in the Seaport District.
Impacts of E-Commerce on the Restaurant and Grocery Industries The restaurant and grocery industries are undergoing disruption by e-commerce. A significant component of e-commerce incudes restaurant delivery and prepared meals. 41 Nationwide, transactions from services such
as DoorDash, Grubhub, Uber Eats, and Postmates increased by approximately 200 percent between 2015 and 2020, generating an estimated $26 billion in revenue in 2020. 42 The pandemic, due to the attendant closure
of restaurants and restrictions to takeout and delivery, has reversed the prolonged trend of declining grocery consumption relative to eating out. Since the pandemic, traditional grocery consumption has grown faster than both restaurant deliveries and eating out.
According to research firm Brick Meets Click, online grocery sales for home delivery and pickup reached $5.9 billion in November 2020, a threefold increase from August 2019. 43 The volume in number of orders has more
than tripled to almost 63 million, and the number of customers has more than doubled to nearly 39 million during this period – along with an increase in the average amount of spending per order and shopping frequency.
Despite these increases, grocery delivery comprises an estimated 4.9 percent of the total grocery market.
Increases in the grocery market are attributed to a decline in in-store grocery sales, rather than new growth.
There is consensus among industry experts that, due to consumer demand, investments in e-commerce technology are accelerating online grocery sales. It is forecasted that online grocery sales are expected to grow Item 2B - 125
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Impacts of E-Commerce in Massachusetts
29 to 20 percent of total grocery retail by 2025. However, the overall growth of the grocery sector will most likely be moderate in the long term.44, 45
To meet current demand and maintain market share, grocers are improving their operational efficiency and enabling online sales with investments in delivery infrastructure and e-commerce technology. Shop & Shop, for example, is adding “warerooms” to their stores. Usually attached to traditional retail stores, warerooms serve as e-commerce distribution/spaces.
46 In some cases, retail and grocery stores have become places to accommodate various combinations of in-store shopping, curbside pick-up, and distribution center operations. In other instances, retail and grocery stores are being converted to operate as dark stores or micro-fulfillment centers for home delivery or curbside pick- up – the latter of which is preferred by most customers. According to grocery store chain Kroger, for every customer who wants a home delivery, five customers want curbside pick-up. 47 Municipalities are increasingly
faced with the challenge to revise their zoning laws to accommodate for these new land use demands.
Also referred to as cloud kitchens, dark kitchens, or virtual food halls, a ghost kitchen is a single commercial facility that houses multiple restaurant operators who prepare food for takeout or delivery exclusively to fulfill online orders. An emerging model and type of facility, these operations have no storefronts and no dining areas for patrons. Ghost kitchens are comparable to a coworking space for restaurant operators, with the exception that there is no need for front-of-house labor. These types of facilities are typically owned and operated by a third-party company, not a restaurant, and meal delivery companies such as DoorDash, GrubHub, and Uber Eats deliver the food.
Opening a traditional restaurant can be expensive, high-risk, and complex: ghost kitchens are considered to be lower-risk and more affordable. The up-front costs of restaurant space and equipment can be shared and rented under a ghost kitchen model and the costs of front-of-house staff are eliminated. The ghost kitchen model enables existing restaurants to expand their customer base without having to invest in and establish full-service restaurants. It offers a lower cost of entry, and as such can benefit newcomers to the industry. The ghost kitchen model is considered to have a large potential market opportunity and technology is enabling the restaurant industry to rapidly change.
48, 49 The long-term land use implications of dark stores and ghost kitchens, especially as they pertain to street vitality and local economies are unknown, but should be monitored.
Photo (left): Delivery & Pick Up Prep Room - Dedham Stop & Shop, MAPC Photo (right): A Curbside Pick Up Sign - Dedham Stop & Shop, MAPC Item 2B - 126
Impacts of E-Commerce in Massachusetts
30 Impacts of E-Commerce in Massachusetts
30 Chapter 4:
Context of COVID-19
Pandemic
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Impacts of E-Commerce in Massachusetts
31 Context of COVID-19 Pandemic
While COVID-19 has accelerated certain consumer patterns and behaviors, many of the trends impacting e-commerce were already underway prior to the pandemic. Although the long-term impacts of the COVID-19 pandemic are less certain, much of the shift to e-commerce will likely remain.
The role of the COVID-19 pandemic in the spike in U.S. online retail sales in 2020 can be broken into four major areas of impact:
Growth in non-store shopping and greater downturns in brick-and-mortar retail: Amazon, the largest online retailer, saw its business increase by 43 percent in 2020.1 By comparison, industry experts anticipate 15,000 to 25,000 store closures in the U.S. in 2020, mostly in malls; a projection which will shatter the 2019 record of 9,800 closures. The COVID-19 pandemic is accelerating changes in urban and suburban land uses, as malls and shopping centers close and as Amazon and other online realtors increase the number of warehouses and distribution centers.
Increased growth in “click and collect” shopping: Customers have learned to order online and pick up their orders at larger brick-and-mortar retailers, including Target, Walmart, and Home Depot, either in-store or at the curb. Retailers who have invested in their online presence with same day “touch free pickup” will continue to generate traffic, both online and in-person. 3 Stores morphing
into both in-person shopping and distribution/fulfillment centers may require the repurposing of parking lots. Parking areas may need less customer parking, but more space for curbside pickup and loading for trucks and vans. Measures to repurpose these facilities could cause increases in car, van, and truck traffic.
More online grocery purchases: Amazon’s growth in 2020 has been led by their growth in grocery orders via Amazon Fresh and Whole Foods. Since the pandemic started in March 2020, 21 percent of consumers have tried online grocery shopping for the first time. Of that 21 percent, many have continued to shop for groceries online even as they also physically returned to food stores. 4 Accelerated growth in online restaurant orders: Over 40 percent of restaurants surveyed added delivery options during the pandemic. Many have stated that they will retain delivery options,5 which means increases to curbside traffic and deliveries to households.
The pandemic has prompted more households to try their hand at e-commerce services that they may have not previously attempted. Once shopping habits are developed during the COVID-19 pandemic, these habits may continue. Any long-term shifts will likely mean changes in the physical layout and staffing of local retail facilities, along with increased delivery traffic, as stores and restaurants become both in-person destinations and distribution centers of online orders.
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Impacts of E-Commerce in Massachusetts
32 Impacts of E-Commerce in Massachusetts
32 Chapter 5:
Future Trends and
Additional Research Areas
Item 2B - 129
Q .
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Impacts of E-Commerce in Massachusetts
33 While writing this report, MAPC uncovered several trends and topics that were beyond the scope of this work, but which may be of interest to municipalities, policy analysts, and others. MAPC will continue following these trends and may study them further in the future.
Omni-channel Retail
It is projected that e-commerce by itself will not be the future of retail. Rather, e-commerce will be omni- channel. Omni-channel retail integrates multiple sales channels (e.g., brick-and-mortar store, smart phone, laptop). The goal of the omni-channel retail business model is to provide customers with a seamless and a personalized shopping experience. Due to centralized data management, omni-channel retail simultaneously manages inventories (Figure 11).
Facilitated by technology and based on predicting customer behaviors, the omni-channel business model uses social media and is anticipated to apply emerging technologies such as augmented reality and personalized video soon. Omni-channel retail will successfully leverage and blend the online and in-store shopping experiences. Presently, the leading retailers in this space are Target and Walmart. 1, 2 Further research of
omni-channel retail will allow for a better understanding of future e-commerce trends in in-person or online shopping, the siting of warehouse and distribution centers and brick-and-mortar stores, and trip patterns.
Figure 11. Omni-channel Retail
Item 2B - 130
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Impacts of E-Commerce in Massachusetts
34 Sustainable Logistics
E-commerce logistics and delivery companies such as Amazon, Walmart, and UPS have announced goals to attain carbon neutrality and are making investments in the electric vehicle market.3 In September 2019, Amazon announced a Climate Pledge. As part of the Climate Pledge, Amazon plans to have 10,000 electric delivery vans on the road by 2022 and 100,000 by 2030. 4, 5 In June 2020, Amazon
launched a $2 billion fund to help attain carbon neutrality by 2040.
In September 2020, Walmart announced an initiative to reduce its global carbon footprint and is aiming for zero carbon emissions by 2040 for all its global operations. Part of this initiative is to convert to an all-electric vehicle fleet.
6 Similarly, in January 2020, UPS announced plans to add 10,000 electric trucks to its fleet,7 and DHL has launched a GoGreen initiative that aims to perform 70 percent of last-mile deliveries with green vehicles by 2025, and reduce its logistics emissions to zero by 2050.8, 9 Additional research is needed to better understand how these programs are being deployed, the types of vehicles that are being invested in, and how other e-commerce companies can replicate programs by these early adopters.
Waste and Recycling
Increasing e-commerce creates greater demand for cardboard and recycling, as well as packing materials that are not always recyclable. Recently, Amazon has turned to lighter weight plastic envelope mailers, which save both space and fuel, but which are not recyclable in some local single-stream recycling programs.
10 Additional research is needed to understand how the growth and changes in package materials are affecting the production of packaging in Massachusetts as well as waste and recycling.
Shifts in the Warehouse and Distribution Center Marketplace An increasing number of retailers are incorporating e-commerce, including making more deliveries and offering click-and-collect options. This further amplifies the demand for warehouse and distribution centers.
Prologis, an owner, operator, and developer of industrial real estate, estimates that e-commerce retailers need approximately three times the warehouse space to generate revenues comparable to brick-and-mortar sales.
In other words, to generate $1 billion of revenue, a traditional retailer needs about 350,000 to 400,000 square feet of warehouse/distribution space, while an e-commerce retailer needs about 1.2 million square feet. 11 More
research is needed on how the shift of in-person retail to online business models affect the size and spacing of warehouse and distribution centers and the warehouse real estate marketplace in Massachusetts.
Third-Party Delivery Service Fees
Many consumers use third-party, app-based delivery platforms such as Grubhub, Uber Eats, DoorDash, and Postmates to place orders with restaurants for delivery. These third-party platforms charge restaurants delivery commission fees based on the purchase price. The fees are usually between 20 percent and 30 percent.
12 The Economic Development Bond Bill, which was passed by the Massachusetts General Court and signed to law by Governor Baker in January 2021, approved a 15 percent cap on these fees for the duration of the pandemic state of emergency.
13, 14 It is expected that this legislation will balance both the business interests of third-party delivery companies and the restaurants serviced by them.
Residential and Commercial Building Design
As noted in Chapter 1, e-commerce and deliveries create a need for more parcel delivery and storage. This can be expected to affect the design of residential and commercial buildings, most of which were not designed for the heavy volumes of packages currently being delivered. For example, residential buildings will increasingly need to be designed with sufficient storage for packages and with refrigerated areas for groceries. The design of single-family houses could include repurposing porches and garages to serve as secure storage areas for deliveries.
15 Research is needed to identify potential design practices. This information can inform updates to zoning and building codes that would enable more efficient deliveries.
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Impacts of E-Commerce in Massachusetts
35 Impacts of E-Commerce in Massachusetts
35 Chapter 6:
Potential Policy
Responses to E-Commerce
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Impacts of E-Commerce in Massachusetts
36 Municipalities have an important role regarding the siting and operation of distribution/ warehousing facilities, and their approaches should align with and advance transportation, economic, and sustainability goals for the region.
1 While many of the following strategies can be implemented on the local level, others should be done regionally through regional planning agencies (RPAs). Some strategies could be implemented via the Commonwealth (agency to be determined) and may require state legislation to implement.
Regional Coordination Among Municipalities
Municipalities must coordinate with one another proactively to understand e-commerce’s cumulative impacts and to develop a comprehensive, regionwide strategy that can inform long-range planning and freight planning. The strategy should balance the region’s vision and goals for employment, land uses, and traffic management with the needs of the private sector.
A comprehensive strategy can include standards for facility siting and design, transportation demand management policies, equitable employment practices, tax incentive programs, and operations monitoring.
It can establish performance metrics, evaluation criteria, and formulas for determining mitigation fees. A comprehensive strategy can also identify specific recommendations for zoning, building codes, and other local regulations that manage the growth and impacts of e-commerce. Drawing from lessons learned in Boston and elsewhere, it can also spell out ways that municipalities can promote low-carbon, low-traffic last- mile delivery services.
The regional strategy should also include the development of an online transportation and land use design playbook for municipalities. This would help municipalities implement development standards and review specific facility proposals through a lens of equity, sustainability, and municipal finance. Standards may include designating truck routes to avoid residential neighborhoods, implementing safety measures to reduce conflicts on roadways, and requiring the use of cleaner vehicles (e.g., compliance with EPA emission standards).
2 With a common playbook, every municipality will be in a better position to consistently respond to facility proposals.
Increase Transparency into the Growing E-Commerce Industry The Commonwealth should require e-commerce companies to report information and metrics, such as the location of warehouse and distribution centers; employment (status, occupation, wages, and benefits); and transportation impacts (e.g., truck and other vehicle traffic) of e-commerce logistics and delivery. This data collection is a critical step in understanding and sustainably managing the impacts of e-commerce. New legislation authorizing state agencies to require this data may be needed.
Create Incentives for Efficient Deliveries
Both the public and private sectors should incentivize more efficient deliveries to reduce traffic and associated GHG impacts. This can be done by determining a method to assess the impact of e-commerce on congestion and GHG emissions, and then setting a fee structure that incentivizes both companies and customers to opt for the more sustainable delivery options. These options can include combining orders into a single delivery, using common delivery/pick up areas such as package lockers, and not choosing expedited deliveries.
Track Innovations in E-Commerce
The Commonwealth and regional planning agencies should track new technologies and innovations in the e-commerce industry to ensure that these developments have positive impacts. Amazon, UPS and others have implemented package lockers to make the last-mile delivery process more efficient, and implemented pilot programs with cargo bikes, autonomous vehicles and drones in select areas such as college and medical campuses. RPAs and others should monitor these new developments against public-sector performance standards for traffic congestion, GHG emissions, safety, waste, employment, workers’ rights, and equitable service. Where needed, the Commonwealth and municipalities should develop regulations to minimize impacts and sustainably manage these innovations.
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37 Implement Curb Management Strategies
The explosive growth in e-commerce deliveries and ride-hailing is spurring municipal endeavors to control curbside congestion. Controlling curb space serves multiple functions, including providing access for e-commerce. The challenge is to manage this public right-of-way for all users, rather than just for the efficient delivery of goods. The following recommendations manage the curb are anticipated to promote a more efficient use of curb space and to reduce emissions caused by “cruising for parking” and engine idling. 3 Conduct a comprehensive assessment of curb demand and designate spaces for the use of delivery vehicles. There should be sufficient numbers of these spaces, and they should be distributed appropriately. The designation for deliveries could be both by location and time of day to allow for flexible uses. For example, curb lanes could be reserved for buses in peak commute periods, reserved for deliveries and other short-term uses at mid-day, and then allowed for overnight parking of private vehicles.
Establish mechanisms for delivery companies and TNCs to reserve those spaces as needed and to pay for the privilege of doing so, using a dynamic pricing model that will maximize efficient utilization of designated spaces.
Examples include providing discounts for TNC riders who walk to designed pick-up zones away from high traffic streets, and peak-period surcharges for deliveries (e.g., a grocery delivery will cost more if delivered at 5:30 pm).
Establish comprehensive and effective enforcement mechanisms that can utilize both in-field enforcement and camera- or GPS-based enforcement with penalties and sanctions for violations, especially for violations in transit and active transportation facilities.
Conduct continuous re-evaluation of curb uses and violations to determine if the curb management policies should be revised to ensure mobility goals (and other goals) are being met.
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38 Impacts of E-Commerce in Massachusetts
38 Chapter 7:
Next Steps and Areas
for Further Research
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39 This report identified trends where data was available to determine the impacts of e-commerce on our Commonwealth, particularly with regard to land use and traffic. As this report makes clear, while there is abundant evidence that e-commerce is a significant and growing part of the Commonwealth’s economy, we know little about essential details such as trip generation, GHG emissions, local and regional impacts on brick-and-mortar retail, and on land development needs for warehouse and distribution centers.
Finally, the growing e-commerce sector has impacts in other areas not explored in detail in this report, including the environment (e.g., packaging waste), safety, employee rights and benefits, equity, and shifting employment and tax revenues.
Much more work needs to be done to understand this enormous and rapidly changing industry and its significant social and economic consequences. A deeper understanding will put the public sector is in a better position to both manage the growth of the e-commerce sector and ensure the advancement of critical regional and local goals.
To collect information and meet this challenge, MAPC has identified the following steps: Data Collection, Management of Warehouse and Distribution Centers, Data Sharing Legislation, and Information Sharing.
Data Collection
Continue investigating available data sources to better understand the composition of the e-commerce workforce in Commonwealth, the scale of the industry, and its impacts on congestion, emissions, tax revenue, and other topics.
The impacts of e-commerce on malls and traditional retail, land use, the transportation network and employment all need to be better understood. MAPC and other RPAs should work with state agencies and municipal officials to identify and gain access to administrative data that can help shed light on these issues.
Additionally, more immediate data collection and analysis needs to be done in the following areas.
Research online sales versus traditional retail in Massachusetts.
This research will uncover the extent to which online retail trends (and their impacts) in Massachusetts compare with the nation. Regional data from brick-and-mortar retail sales can shed light on geographic differences of e-commerce’s impacts on traditional retail in the Commonwealth. Understanding the level of e-commerce retail in Massachusetts will help policy makers determine better ways to manage the land development, employment, and tax impacts of the shifting retail landscape.
Research the changes in Massachusetts retail and other key employment sectors by income and demographics.
This research will enable policy makers to better understand the economic and equity impacts of the shift from in-person to online retail in the Commonwealth. Furthermore, this research could uncover the extent to which the growing number of e-commerce jobs, particularly delivery positions, are filled by independent contractors who may have limited or no retirement, paid leave, and health insurance benefits.
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40 Research the changes in Massachusetts retail and other key employment sectors by geography.
Not all e-commerce warehouse and distribution are accessible by public transportation, and their operations could create negative traffic, noise, and air quality impacts. It is important to know if, as distribution centers are increasingly located within urbanized areas to meet demand, these centers are being situated in communities of color and lower-income neighborhoods and creating disproportionate impacts.
Research the municipal fiscal impacts of e-commerce.
More needs to be understood about the tax revenue implications for municipalities that experience mall and other traditional retail closures, and about the economic impacts to municipalities that host more e-commerce warehouses and distribution centers. While tax incentive programs, such as TIFs, encourage growth by lowering taxes in exchange for job creation and private investment, the long-term implications are unclear, and more research is needed.
Analyze online delivery vehicle patterns and volumes.
This information could be obtained by conducting studies of larger scale residential buildings, e-commerce warehouse and distribution centers, and congested urban areas to better understand traffic and delivery trends. Findings from these studies could be used to create pilot programs for new delivery systems (e.g., e-cargo bikes, electric vehicles), to deploy innovative curb management practices, and to implement local options to moderate traffic and other impacts of e-commerce distribution and warehouse centers.
Investigate available sources of data about consumer preferences and shopping habits.
More specific survey data are needed to determine the extent to which online orders may be replacing personal trips. Based upon similar national survey data, MAPC should determine whether a Massachusetts-focused survey of e-commerce consumer patterns is needed. If so, the agency would develop partnerships and solicit funding for a broad-based survey that would provide statistically significant results at the sub-regional level and for specific segments of the population. This information could be used to better estimate vehicular traffic, the number of deliveries per household, and the extent to which the number of deliveries per household varies according to demographic factors such as age, income, and automobile ownership.
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41 Data Sharing Legislation
Based upon the findings from the additional research above, draft legislation that will authorize state agencies to require e-commerce companies to provide data on impacts of critical public concern where it has been determined that information is not available. As noted in Chapter 6, this legislation is needed to create visibility in the e-commerce industry and sustainably manage its impacts in employment and workers’ rights, safety, traffic, equity, and the environment. The adoption of legislation will require the cultivation of advocacy partners and legislative sponsors.
Information Sharing
Regularly collect, compile, and evaluate permitting and monitoring documents for warehouse and distribution facilities statewide, including information about economic incentive programs and tax revenue collections.
The collected information will be publicly available and configured to allow for comparative analysis.
A consistent data collection method will enable a consistent approach to monitoring warehouse and distribution center projects, identifying example policies, and assessing the cumulative siting of warehouse and distribution facilities. This information will also aid in right-sizing mitigation and forecasting trip generation rates.
Create a research clearinghouse on e-commerce, including findings from local pilot programs. As a regional planning agency, MAPC intends to serve as a resource for continued information sharing and findings from surveys and pilot programs. Please e-mail [email protected] with relevant information you would like to contribute as part of this effort as well as to be informed of future initiatives.
Management of Warehouse and Distribution Centers
Collect and distribute actionable steps and example practices for municipalities for the review of warehouse and distribution centers. The integration of warehouse and distribution centers will require deliberate design, mitigation, and management, especially where e-commerce facilities are proximate to higher density residential areas.
MAPC has been conducting research on how municipalities in Massachusetts are currently mitigating and managing the impacts of warehouse and distribution centers, and as an early follow up to this report, will develop a document on the management of e-commerce warehouse and distribution centers as a resource for other municipalities.
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42 Impacts of E-Commerce in Massachusetts
42 Appendix:
Playbook of Actionable
Steps to Manage
Warehouses and
Distribution Centers
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43 At a minimum, traffic impact studies should include the following:
• Projected trips for all vehicular types (e.g., employee vehicles, vans, trucks, and flex drivers). • Site design (ingress, egress, and circulation).
• Accommodations for pedestrians and bicyclists.
• Amount of parking.
The integration of warehouse and distribution centers will require deliberate design, mitigation, and management, especially if they are proximate to higher density residential areas.
Below are actionable steps for municipalities to consider implementing should a warehouse and/or distribution center be proposed for e-commerce related services. It is important to note that there is not one actionable step; rather several steps need to occur simultaneously.
MAPC conducted research on how municipalities in Massachusetts are currently mitigating and managing the impacts of warehouse and distribution centers. Several of the actionable steps contained in this chapter are based on that research. In particular, Everett’s site plan approval process and the Traffic Engineering Peer Review recommendations for the Hingham contributed to the development of this chapter. 1 MAPC anticipates
this section will be expanded as ongoing work continues and to reflect changes in the industry.
Traffic Impact Studies
Trip Forecasting
Presently, the Institute of Transportation Engineers (ITE) Trip Generation Manual2 does not include a land use type that is directly applicable for warehouse and distribution centers. While ITE Land Use Codes for Industrial Park (140), Warehousing (150), High Cube Fulfillment Center Warehouse (155), and High-Cube Parcel Hub Warehouse (156) are related, they are not an exact match for e-commerce operations. If the ITE Trip Generation Manual does not include data for a similar land use, MAPC recommends the application of empirical trip data. According to ITE, “When practical, the user is encouraged to supplement the data in this document with local data that have been collected at similar sites.” 3 Since complex logistics facilities such as warehouse and distribution centers are not included in the ITE manual, trip forecasting should be based on proponent's plans for facility activity; and permits should be structured so as to establish clear, enforceable performance metrics for vehicle trips to and from the site.
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44 Site Plan Review
A comprehensive site plan review and approval process should address the adequacy of the following:
• Building Design
• Parking and Loading Facilities
• Proposed Number and Type of Parking Spaces
• Provide a breakdown of the parking demands by functional use (i.e., associates/managers, visitors, Delivery Service Providers (DSPs) vans and drivers, etc.) in order to demonstrate that the proposed number of parking spaces is sufficient to meet the predicted parking demands. •
Traffic flow, Circulation, and Traffic Impact
• Access points and routes to and from the site to adjoining streets • Pedestrian and bicycle circulation systems to and from parking areas and structures • External Lighting
• Type and amount to be provided
• Landscaping and Screening
• Type, quality, and quantity to promote an aesthetically pleasing environment and to properly screen the development from adjacent land uses
•
Stormwater
• Method of surface drainage
• Utilities
• Methods of waste disposal (e.g., sewage and refuse) and water distribution • Snow Removal and Storage
• Protection and Enhancement of Natural Features
• Compatibility of Architecture with Surrounding Area
Traffic concerns residents frequently express regarding warehouse and distribution centers are as follows:
•
Queuing, traffic, and idling on-site and in the community. • Trucks and vans utilizing residential streets and trucks accessing bridges with low underpasses. • Vehicles overwhelming gas stations when shifts begin or end. • Illegal off-site parking.
• Vans pulled off to the sides of roads creating hazardous conditions for drivers to pass. • Processions of trucks and vans causing traffic at key intersections.
Traffic Mitigation
Negotiate appropriate traffic mitigation agreements.
Traffic mitigation agreements can include the installation of traffic signals, intersection improvements, and monetary contributions.
Restriction Zones
Where appropriate, such as where a warehouse is adjacent to a residential area, restrict truck and van access during certain times of the day/or day of week. This measure can reduce congestion and the road impacts of the facility on nearby neighborhoods.
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45 Off-Site Parking
To minimize logistical and traffic issues, it is recommended that parking for all vehicular operations remain on-site. It critical that the on-site circulation plan be designed to reduce potential conflicts with different vehicle types, pedestrians, and bicyclists, and to minimize vehicles queuing in the street.
Traffic Demand Management (TDM) Program
Implement a Traffic Demand Management (TDM) program that will discourage employees from traveling by single occupancy vehicles. TDM components can include discounted MBTA passes, internally secure bike racks, carpooling incentives, and a shuttle service accessing the Commuter Rail and MBTA Stations.
Fueling Operations
It is common practice for e-commerce companies to assign fuel cards to drivers or vehicles. To manage traffic and queuing, municipalities should work with e-commerce companies to determine appropriate times (e.g., on return trips) and locations for refueling. This will help ensure vans don’t overwhelm gas stations when shifts begin or end.
Excise Tax
A proposed facility’s vans should be required to be registered in the municipality where the facility is sited so the municipality can capture the excise tax.
Vehicular and Roadway Signage
To promote public awareness and safety, ensure that vehicles (e.g., vans) and the site are appropriately signed.
Idling
Do not permit on or off-site idling for all vehicles servicing the facility.
Truck and Van Drivers
Prior to making deliveries, require all Delivery Service Provider (DSP) companies to be properly insured and perform driver background checks.
Be informed of truck and van driver protocols such as training, discipline, and incident (e.g., speeding) procedures.
Project Monitoring Post Occupancy and Corrective Actions Including a traffic monitoring program is essential. For example, the Traffic Engineering Peer Review for Hingham recommended a monitoring program that will commence within 90 days of the issuance of a Certificate of Occupancy for the Project and be repeated annually.
Any monitoring program should include established thresholds for traffic and/or motor vehicle crash volumes for trucks, vans, and passenger vehicles.
In Hingham, it was also proposed that to the extent measured traffic volumes for the project exceed the projected traffic volumes by more than 10 percent (i.e., 110 percent of the projected traffic volumes) and/or the calculated motor vehicle crash rates exceed the MassDOT average crash rates for similar intersections, corrective actions to reduce the unmitigated impact of the project should be proposed and implemented. Corrective actions should be documented in the traffic monitoring report.
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46 Endnotes
Impacts of E-Commerce in Massachusetts
46 Executive Summary
1 Digital Commerce 360, “US Ecommerce Sales,” 2020.
2 U.S. Census Bureau, “Monthly Retail Trade Report,” 2021, https://www.census.gov/retail/index.html. 3 Tim Logan and Janelle Nanos, “To Deliver More Goods Faster, Amazon is Getting Closer to Your Door,” Boston Globe, December 5, 2020, https://www.bostonglobe.com/2020/12/05/business/deliver-more-goods-faster- amazon-is-getting-closer-your-door/.
4 See sources listed for Table 1 in main body of report. 5 Includes meals ordered online which are: 1) directly delivered by the restaurant, regardless if they are ordered via a platform (e.g., Delivery Hero) or a restaurant website (e.g., Domino’s), 2) online meal order and delivery both carried out by a platform (e.g., Deliveroo), and 3) online orders that are picked up in the restaurant. Does not include deliveries of non-processed or non-prepared food (e.g., HelloFresh). 6 Statista, “Online Food Delivery,” (2021), https://www.statista.com/outlook/dmo/eservices/online-food-delivery/ united-states; and Business of Apps, “Food Delivery App Revenue and Usage Statistics (2021),” https://www. businessofapps.com/data/food-delivery-app-market/#1.1.
7 Brick Meets Click, “November 2020 Scorecard: Customer & Sales Mix Shift Toward Delivery & Pickup” https://www.brickmeetsclick.com/nov-2020-online-grocery-scorecard--customer---sales-mix-shift-toward- delivery---pickup.
8 McKinsey & Company, “Survey: US Consumer Sentiment During the Coronavirus Crisis,” December 8, 2020, https://www.mckinsey.com/business-functions/marketing-and-sales/our-insights/survey-us-consumer- sentiment-during-the-coronavirus-crisis.
9 Torie Wells, “Consumer Behavior Has Shifted Significantly During Pandemic, Survey Reveals,” Renssalaer News, August 3, 2020, https://news.rpi.edu/content/2020/08/03/consumer-behavior-has-shifted-significantly- during-pandemic-survey-reveals.
10 Isabel Cañete-Medina, AICP, Cañete-Medina Consulting Group, Inc, “Evolving Trends in eCommerce Facilities,” presentation at NPC 188263, Effects of eCommerce on Land Use, National Planning Conference 2018.
11 U.S. Department of Transportation, DOT Table VM-2, 2010 and 2019, Highway Statistics Series, https://www. fhwa.dot.gov/policyinformation/statistics.cfm.
12 Sarah Overmeyer, “How Will Millennials Impact Freight Flows in Texas?” PRC 16-63 F, Texas A&M Transportation Institute, January 2017.
13 6t-bureau de recherche and N.Y.U. Rudin Center for Transportation, “Online Consumption and Mobility Practices: Crossing Views from Paris and NYC, Quantitative Survey,” November 2018. 14 Institute of Transportation Engineers, “Curbside Management Practitioners Guide,” and NACTO Transit Leadership, “Curb Appeal: Curbside Management Strategies for Improving Transit Reliability,” NACTO, November 2017, https://nacto.org/tsdg/curb-appeal-whitepaper/. 15 Spencer Soper, “Amazon Plans to Put 1,000 Warehouses in Suburban Neighborhoods,” Bloomberg, September 16, 2020, https://www.bloomberg.com/news/articles/2020-09-16/amazon-plans-to-put-1-000- warehouses-in-neighborhoods.
16 Adie Tomer and Joseph Kane, “Where Will Online Orders Get Fulfilled? The Changing Local Geography of eCommerce,” Brookings, September 11, 2018, https://www.brookings.edu/research/where-will-online-orders-get- fulfilled-the-changing-local-geography-of-e-commerce/.
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47 Chapter 1
1 Digital Commerce 360, “US Ecommerce Sales,” 2020.
2 The U.S. Census Bureau defines e-commerce as “sales of goods and services where the buyer places an order, or the price and terms of the sale are negotiated over an Internet, mobile device (M-commerce), extranet, Electronic Data Interchange (EDI) network, electronic mail, or other comparable online system. Payment may or may not be made online.” See https://www.census.gov/retail/mrts/www/data/pdf/ec_current.pdf. 3 Modified from Jenn Van Sande, “What is e-commerce? Definition, benefits, examples,” https://www.the- future-of-commerce.com/2020/01/19/what-is-e-commerce-definition-examples/. 4 ACEScene, “Online retail could impact residential architectural design”, https://aecscene.com/2017/11/online- retail-impact-residential-architectural-design/; Ronnie Koening, “Where the Packages Go,” New York Times, November 7, 2019, https://www.nytimes.com/2019/11/07/realestate/where-the-packages-go.html; The Wall Street Journal, “Drones are poised to reshape home design,” updated December 6, 2020, https://www.livemint.com/ news/world/drones-are-poised-to-reshape-home-design-11607247643367.html. 5 McKinsey & Company, “Survey: US Consumer Sentiment During the Coronavirus Crisis,” December 8, 2020, https://www.mckinsey.com/business-functions/marketing-and-sales/our-insights/survey-us-consumer- sentiment-during-the-coronavirus-crisis.
6 Comparing e-commerce projections from CBRE done in 2018 with July 2020 e-commerce figures from the U.S. Census Bureau. See CBRE, “How High Will E-Commerce Sales Go?”, 2018, http://www.cbre.us/real-estate- services/real-estate-industries/omnichannel/the-definitive-guide-to-omnichannel-real-estate/by-the-numbers/ how-high-will-e-commerce-sales-go and U.S. Census Monthly Retail Trade Report, 2020, https://www.census. gov/retail/index.html.
7 Lauren Thomas, “75,000 more stores need to close across the US, UBS estimates, as online sales and Amazon grow,” CNBC.com, April 9, 2019, https://www.cnbc.com/2019/04/09/75000-more-stores-need-to-close-ubs- estimates-as-online-sales-grow.html.
8 Alek Pochowski, Matt Bell, Meredyth Sanders (Kittleson & Associates), “Curbside Management on Urban Streets, Part One: The Value of the Curb,” https://www.kittelson.com/ideas/curbside-management-on-urban- streets-part-one-the-value-of-the-curb/.
17 Deloitte Real Estate, “The Shed of the Future. E-commerce: Its Impact on Warehouses,” 2014. 18 Cameron Sperance, “Shipping Giants Are Furiously Building Warehouses Around a Handful of Inland Logistics Hubs,” Bisnow.com, March 9, 2020, https://www.bisnow.com/national/news/industrial/want-to-build- an-industrial-boomtown-build-a-runway-and-wait-103309.
19 The e-commerce landscape is comprised of a complex network of multiple transportation modes that include roadway, rail, air, and water. This report focuses on the roadway network. 20 Derek Thompson, “The Pandemic Will Change American Retail Forever,” The Atlantic, April 27, 2020, https://www.theatlantic.com/ideas/archive/2020/04/how-pandemic-will-change-face-retail/610738/. 21 Dees Stribling, “At Least a Quarter of U.S. Malls will Disappear,” Bisnow.com, August 30, 2020, https://www. bisnow.com/national/news/retail/a-quarter-or-more-of-mall-space-will-disappear-permanently-105778?utm_ source=outbound_pub_49&utm_campaign=outbound_issue_41612&utm_content=story&utm_medium=email. 22 Derek Thompson, “The Pandemic Will Change American Retail Forever,” The Atlantic, April 27, 2020. 23 Lauren Thomas, “75,000 More Stores Need to Close Across the US, UBS Estimates, as Online Sales and Amazon Grow,” CNBC.com, April 9, 2019, https://www.cnbc.com/2019/04/09/75000-more-stores-need-to-close- ubs-estimates-as-online-sales-grow.html.
24 Spencer Soper, “Amazon Plans to Put 1,000 Warehouses in Suburban Neighborhoods,” Bloomberg, September 16, 2020.
25 Lisa Nisenson, “Primed for Deliveries,” Planning, April 2020.
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48 9 Tim Logan and Janelle Nanos, “To Deliver More Goods Faster, Amazon is Getting Closer to Your Door,” Boston Globe, December 5, 2020, https://www.bostonglobe.com/2020/12/05/business/deliver-more-goods-faster- amazon-is-getting-closer-your-door/.
10 Lisa Nisenson, “Primed for Deliveries,” Planning, April 2020. 11 6t-bureau de recherche and N.Y.U. Rudin Center for Transportation, “Online Consumption and Mobility Practices: Crossing Views from Paris and NYC, Quantitative Survey,” November 2018. 12 Sarah Overmeyer, “How Will Millennials Impact Freight Flows in Texas?” PRC 16-63 F, Texas A&M Transportation Institute, January 2017.
13 The Bureau of Labor Statistics North American Industry Classification System defines retail as establishments engaged in retailing merchandise, generally without transformation, and rendering services incidental to the sale of merchandise (including the subsectors department store retail and non- store retail); department store retail as establishments that have separate departments for general lines of new merchandise, such as apparel, jewelry, home furnishings, and toys, with no one merchandise line predominating; non-store retail establishments include mail-order houses, vending machine operators, home delivery sales, door-to-door sales, party plan sales, electronic shopping, and sales through portable stalls; and transportation and warehousing as industries providing transportation of passengers and cargo, warehousing and storage for goods, scenic and sightseeing transportation, and support activities related to modes of transportation. See https://www.bls.gov/iag/home.htm.
14 Business of Fashion, “Op-Ed | The Shifting Gender Split of Retail Workers,” April 19, 2017, https://www. businessoffashion.com/opinions/retail/op-ed-the-shifting-gender-split-of-retail-workers. 15 Adie Tomer and Joseph Kane, “Where Will Online Orders Get Fulfilled? The Changing Local Geography of eCommerce,” Brookings, September 11, 2018, https://www.brookings.edu/research/where-will-online-orders-get- fulfilled-the-changing-local-geography-of-e-commerce/.
Chapter 2
1 Council of Supply Chain Management Professionals, “What is a Supply Chain?” https://cscmp.org/ CSCMP/Career/CSCMP/Develop/Starting_Your_Career/Starting_Your_SCM_Career.aspx; Kristina Lopienski, “Ecommerce Logistics: From Your Site to Their Doorstep,” March 30, 2020, https://www.shipbob.com/blog/ ecommerce-logistics/.
2 Isabel Cañete-Medina, AICP, Cañete-Medina Consulting Group, Inc, “Evolving Trends in eCommerce Facilities,” presentation at NPC 188263, Effects of eCommerce on Land Use, National Planning Conference 2018.
3 U.S. Department of Transportation, DOT Table VM-2, 2010 and 2019, Highway Statistics Series, https://www. fhwa.dot.gov/policyinformation/statistics.cfm.
4 Matthew Haag and Winnie Hu, “1.5 Million Packages a Day: The Internet Brings Chaos to N.Y. Streets,” New York Times, October 27,2019, https://www.nytimes.com/2019/10/27/nyregion/nyc-amazon-delivery.html. 5 Miguel Jaller and Anmo Pahwa, “Analytical Modeling Framework to Assess the Economic and Environmental Impacts of Residential Deliveries, and Evaluate Sustainable Last-Mile Strategies,” Miguel Jaller, University of California, Davis Institute for Transportation Studies, March 2020. 6 Nicole Ngyuen, “The Hidden Environmental Cost of Amazon Prime’s Free, Fast Shipping.” Buzzfeed, July 21, 2018, https://www.buzzfeednews.com/article/nicolenguyen/environmental-impact-of-amazon-prime. 7 Joe Mikes, “The Surprising Impact of E-Commerce on Urban Real Estate Markets, Area Development,” Area Development, Q4 2018, https://www.areadevelopment.com/logisticsInfrastructure/Q4-2018/impact-of-e- commerce-on-urban-real-estate-markets.shtml.
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49 Impacts of E-Commerce in Massachusetts
49 8 “The Final 50 Feet Urban Goods Delivery System: Common Carrier Locker Pilot Test at the Seattle Municipal Tower,” Urban Freight Lab, Supply Chain Transportation and Logistics Center, University of Washington, October 2018.
9 Alan Hooper and Dan Murray, “E-commerce Impacts on the Trucking Industry,” American Transportation Research Institute, February 2019.
10 6t-bureau de recherche and N.Y.U. Rudin Center for Transportation, “Online Consumption and Mobility Practices: Crossing Views from Paris and NYC, Quantitative Survey,” November 2018. 11 Sarah Overmeyer, “How Will Millennials Impact Freight Flows in Texas?” PRC 16-63 F, Texas A&M Transportation Institute, January 2017.
12 “The Race for Online Grocery Shopping Heats Up,” Pymnts.com, August 21, 2020, https://www.pymnts.com/ news/e-commerce/2020/the-race-for-online-grocery-shopping-heats-up/. 13 Ibid.
14 National Academies of Sciences, Engineering, and Medicine, “Foreseeing the Impact of Transformational Technologies on Land Use and Transportation.” Washington, D.C.: The National Academies Press, NCHRP Research Report 924, 2019.
15 Miguel Jaller, Anmol Pahwa, Seth Karten, “Keeping e-Commerce Environmentally Friendly—What Consumers Can Do,” Blog post on U.C. Davis Institute of Transportation Studies, December 1, 2020, https://its. ucdavis.edu/blog-post/keeping-e-commerce-environmentally-friendly-what-consumers-can-do/. 16 World Economic Forum, “The Future of the Last-Mile Ecosystem,” January 2020. 17 Paul Ziobro, “UPS Adds Peak Delivery Surcharge to Manage E-Commerce Demand Amid Coronavirus,” Wall Street Journal, May 28, 2020.
18 NBC New York, “New Yorkers May Have to Pay Package Delivery Surcharge to Help Fund MTA”, December 8, 2020, https://www.nbcnewyork.com/news/local/new-yorkers-may-have-to-pay-package-delivery-surcharge-to- help-fund-mta/2767045/.
19 John Byrne, “Ground delivery tax would tack $1.25 onto Amazon orders in Chicago,” Chicago Tribune, November 23, 2020, https://www.chicagotribune.com/coronavirus/ct-coronavirus-chicago-lori-lightfoot- restaurant-delivery-fees-budget-20201123-xxrmoqtiujgh5oiycnlwhtk74u-story.html. 20 Aryan Devani, “Delivery Vehicles are a Necessary Target to Patch City Revenues,” Smart Cities Dive, September 17, 2020, https://www.smartcitiesdive.com/news/delivery-vehicles-are-a-necessary-target-to-patch- city-revenues/585349/?utm_source=Sailthru&utm_medium=email&utm_campaign=Issue:%202020-09-17%20 Smart%20Cities%20Dive%20Newsletter%20%5Bissue:29723%5D&utm_term=Smart%20Cities%20Dive. 21 Andrew Zaleski, “Cities Seek Deliverance From the E-Commerce Boom,” Bloomberg CityLab, April 20, 2017, https://www.bloomberg.com/news/articles/2017-04-20/how-cities-are-coping-with-the-delivery-truck-boom. 22 Institute of Transportation Engineers, “Curbside Management Practitioners Guide,” and NACTO Transit Leadership, “Curb Appeal: Curbside Management Strategies for Improving Transit Reliability,” NACTO, November 2017, https://nacto.org/tsdg/curb-appeal-whitepaper/. 23 Institute of Transportation Engineers, “Curbside Management Practitioners Guide.” 24 Bonnie Fan, “Recommendations to Improve Urban Freight,” City of Boston, August 2, 2019. 25 Andrew Clark, Boston MPO, “The Future of the Curb,” Technical Memorandum, December 5, 2019. 26 “The Final 50 Feet Urban Goods Delivery System: Common Carrier Locker Pilot Test at the Seattle Municipal Tower,” Urban Freight Lab, Supply Chain Transportation and Logistics Center, University of Washington, October 2018.
27 Laura Kusisto, “Amazon and Big Apartment Landlords Strike Deals on Package Delivery,” Wall Street Journal, October 17, 2017, https://www.wsj.com/articles/amazon-and-big-apartment-landlords-strike-deals-on- package-delivery-1508261759.
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50 28 As of January 2020.
29 Acton, Bedford, Boston, Burlington, Cambridge, Cohasset, Dedham, Framingham, Hingham, Lexington, Marlborough, Natick, Newton, Northborough, Norwood, Peabody, Plymouth, Quincy, Saugus, Sharon, Somerville, South Easton, Sudbury, Waltham, and Wilmington. 30 Amazon Logistics Summary of Operations – 480 Sprague Street, Dedham, MA (Site DB02). 31 Core Investments and On the DOT “Last Mile” Warehouse/Distribution Project Presentation to Andrew Square Civic Association, May 20, 2020, https://onthedotboston.com/Core-Investments-Presentation-Andrew- Square-Civic-Association-Recap.
32 Cailin Crowe, “Miami Pilots E-cargo Bikes to Reduce Congestion, Pollution,” Smart Cities Dive, May 18, 2020, https://www.smartcitiesdive.com/news/miami-e-cargo-bike-pilot-dhl-city-congestion-pollution/578115/. 33 “Mayor de Blasio Announces Commercial Cargo Bike Program to Reduce Delivery Congestion,” New York City Department of Transportation, December 4, 2019, https://www1.nyc.gov/office-of-the-mayor/news/594-19/ mayor-de-blasio-commercial-cargo-bike-program-reduce-delivery-congestion. 34 Monica Nickelsburg, “UPS Launches Cargo E-bike Delivery in Seattle, Returning to Bicycle Courier Origins a Century Later,” GeekWire, October, 25, 2018, https://www.geekwire.com/2018/ups-launches-cargo-e-bike- delivery-seattle-returning-bicycle-courier-origins-century-later/. 35 Jasper Dekker, “One-Day Deliveries are Breaking Our Cities,” FastCompany, December 23, 2019, https:// www.fastcompany.com/90442742/one-day-deliveries-are-breaking-our-cities?utm_campaign=citylab-daily- newsletter&utm_medium=email&silverid=%25%25RECIPIENT_ID%25%25&utm_source=newsletter. 36 City of Boston, “City releases RFI for electric cargo bikes as a delivery solution,” July 20, 2020, http://www. boston.gov/news/city-releases-rfi-electric-cargo-bikes-delivery-solution. 37 “Walmart, Zipline partner to launch 'first-of-its-kind' drone delivery service in U.S.,” AUVSI, September 14, 2020, https://www.auvsi.org/industry-news/walmart-zipline-partner-launch-first-its-kind-drone-delivery-service- us.
38 Matt Leonard, “Walmart Pilots Drone Delivery for Groceries with Flytrex,” Supply Chain Dive, September 10, 2020, https://www.supplychaindive.com/news/walmart-grocery-drone-pilot-flytrex-delivery-faa/584965/. 39 Alex Frederick and Asad Hussain, “Delivery Technologies Are Reshaping the Grocery Industry,” PitchBook, June 17, 2020.
40 Starship Technologies Website, https://www.starship.xyz/company/. 41 Alan Ohnsman, “UPS Jumps into The Future With Plan To Buy 10,000 Electric Vans And A Waymo Self- Driving Delivery Pilot,” Forbes, January 29, 2020, https://www.forbes.com/sites/alanohnsman/2020/01/29/ ups-jumps-into-the-future-with-plan-to-buy-10000-electric-vans-and-a-waymo-self-driving-delivery- pilot/#526c9c0e5aa5.
42 J. Fingas, “Walmart will Test Self-Driving Delivery Services with Electric Cars,” Engadget, November 10, 2020, https://www.engadget.com/walmart-cruise-self-driving-delivery-ev-pilot-2021-162209048.html; Aine Cain, “Walmart Looks to Expand its Futuristic Delivery Capabilities with a New Driverless Truck Trial in its Home State of Arkansas,” Business Insider, December 15, 2020, https://www.businessinsider.com/walmart-gatik- louisiana-arkansas-autonomous-vehicle-2020-12.
43 Andrew J. Hawkins, “Toyota’s ‘e-Palette’ is a Weird, Self-Driving Modular Store on Wheels,” The Verge, January 18, 2018, https://www.theverge.com/2018/1/8/16863092/toyota-e-palette-self-driving-car-ev-ces-2018. 44 Matthew Lipka, Nuro, Alia Verloes, Steer, Paul Lewis, Eno Center for Transportation, “How Automated Delivery Could Shape the Future of Local Commerce,” ENO Webinar, September 10, 2020, https://www. enotrans.org/event/webinar-how-automated-delivery-could-shape-the-future-of-local-commerce/.
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51 Chapter 3
1 Deloitte Real Estate, “The Shed of the Future. E-commerce: Its Impact on Warehouses,” 2014. 2 Statista, “Number of Amazon Prime Members in the United States as of December 2019,” March 10, 2020, https://www.statista.com/statistics/546894/number-of-amazon-prime-paying-members/. 3 Matthew Rothstein, “Grocery Gains On E-Commerce In Warehouse Market As Supply Outstrips Demand,” Bisnow, January 27, 2020, https://www.bisnow.com/national/news/industrial/grocery-ecommerce-warehouse- usage-supply-outstrips-demand-102687.
4 Cameron Sperance, “Shipping Giants Are Furiously Building Warehouses Around a Handful of Inland Logistics Hubs,” Bisnow.com, March 9, 2020, https://www.bisnow.com/national/news/industrial/want-to-build- an-industrial-boomtown-build-a-runway-and-wait-103309.
5 “Roadmap for Change: The Flexible Industrial Distribution Facilities Network for the Future, Industrial Asset Management Council (IAMC) and the Society of Industrial and Office Realtors (SIOR),” March 2018. 6 Quan Yuan, “Planning Matters: Institutional Perspectives on Warehousing Development and Mitigating Its Negative Impacts,” Journal of the American Planning Association, Vol. 85, No. 4, 2019. 7 Adie Tomer and Joseph Kane, “Where Will Online Orders Get Fulfilled? The Changing Local Geography of eCommerce,” Brookings, September 11, 2018, https://www.brookings.edu/research/where-will-online-orders-get- fulfilled-the-changing-local-geography-of-e-commerce/.
8 Dees Stribling, “Amazon Opening Hundreds of Facilities During its Hiring Binge,” Bisnow.com, September 14, 2020, https://www.bisnow.com/national/news/industrial/amazon-on-hiring-binge-opening-hundreds-of- facilities-105943.
9 MWPVL, December 2020, https://www.mwpvl.com/html/amazon_com.html. 10 Deloitte Real Estate, “The Shed of the Future. E-commerce: Its Impact on Warehouses,” 2014. 11 Compiled from:
•
MWPVL https://www.mwpvl.com/html/amazon_com.html, as of December 2020. • Allison Corneau, “Amazon to Open Distribution Center Hub at Former Haverhill Southwick Factory Site,” Eagle Tribune, January 22
, 2021.
• Mark Conti, “Amazon Plans Second Last Mile Delivery Center in Worcester,” Telegram and Gazette, December 5, 2020
.
• Tim Logan and Janelle Nanos, “To Deliver More Goods Faster, Amazon is Getting Closer to Your Door,” Boston Globe, December 5, 2020
.
• Cliff Clark, “Fitchburg is Working to Land Amazon Distribution Facility,” Sentinel and Enterprise, December 2, 2020.
•
Grant Welker, “Greendale Mall-to-Amazon Would be a First for New England,” Worcester Business Journal, November 30
, 2020.
• Grant Welker, “Amazon Establishing Major New Milford Warehouse,” Worcester Business Journal, November 5
, 2020.
• Gintautas Dumcius, “Amazon Eyes Second Distribution Facility in Revere,” Boston Business Journal, October 7, 2020.
•
J.D. O’Gara, “Holliston and Medway Residents Concerned Over Hopping Brook Proposal,” Holliston News, August 27, 2020.
•
Susanna Sudborough, “Amazon Opening New Delivery Stations in Taunton, Middleboro,” The Enterprise, June 30, 2020.
•
Greg Ryan, “Amazon Given $27M Tax Break for North Andover Site,” Boston Business Journal, June 25, 2020.
•
Doug Banks, “Amazon Opens Delivery Station; Signs New Leases,” Boston Business Journal, February 15, 2021.
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52 12 Lucia Maffei and Catherine Carlock, “Amazon Logistics Expands with Eight New Mass. Delivery Stations,” Boston Business Journal, June 30, 2020, https://www.bizjournals.com/boston/news/2020/06/30/amazon-logistics- expands-with-eight-mass-delive.html.
13 Andrew Martinez, “'Land-Starved' Boston Sets New Pricing Highs In Tight Industrial Market,” Bisnow Boston, December 3, 2020, https://www.bisnow.com/boston/news/industrial/tenants-set-new-standards-in- bostons-tight-industrial-market-106954.
14 Colliers International, “Greater Boston – Industrial Viewpoint, Q4 2019.” 15 Dion Sorrentino, “New Industrial Revolution – Disruption 2020, Vol. 1., No. 14,” Colliers International, June 16, 2020.
16 Colliers International, “Greater Boston Industrial Viewpoint, Q4 2020.” 17 Colliers defines the greater Boston market as comprising Essex, Middlesex, Norfolk, Plymouth, Suffolk Counties.
18 Colliers International, “Greater Boston – Industrial Viewpoint, Q1 2020.” 19 MAPC’s CoStar subscription coverage is for the eastern part of the state extending to the Quabbin Reservoir and does not include Cape Cod.
20 Spencer Soper, “Amazon Plans to Put 1,000 Warehouses in Suburban Neighborhoods,” Bloomberg, September 16, 2020, https://www.bloomberg.com/news/articles/2020-09-16/amazon-plans-to-put-1-000- warehouses-in-neighborhoods.
21 BL Companies, “Traffic Study - Proposed Delivery Station Improvements, 480 Sprague Street, Dedham, MA,” July 2020.
22 Core Investments and On the DOT “Last Mile” Warehouse/Distribution Project Presentation to Andrew Square Civic Association, May 20, 2020, https://onthedotboston.com/Core-Investments-Presentation-Andrew- Square-Civic-Association-Recap.
23 Howard Stein Hudson, “ ‘Tripod’ Distribution Center, South Boston – Transportation Impact Technical Memorandum” February 2020.
24 Spencer Soper, “Amazon Plans to Put 1,000 Warehouses in Suburban Neighborhoods,” Bloomberg, September 16, 2020.
25 BL Companies, “Traffic Study - Proposed Delivery Station Improvements, 480 Sprague Street, Dedham, MA,” July 2020.
26 Robin Wigglesworth, “Will the Death of U.S. Retail be the Next Big Short?,” Financial Times, July 16, 2017, https://www.ft.com/content/d34ad3a6-5fd3-11e7-91a7-502f7ee26895?mhq5j=e3. 27 Derek Thompson, “The Pandemic Will Change American Retail Forever,” The Atlantic, April 27, 2020, https://www.theatlantic.com/ideas/archive/2020/04/how-pandemic-will-change-face-retail/610738/. 28 Dees Stribling, “At Least a Quarter of U.S. Malls will Disappear,” Bisnow.com, August 30, 2020, https://www. bisnow.com/national/news/retail/a-quarter-or-more-of-mall-space-will-disappear-permanently-105778?utm_ source=outbound_pub_49&utm_campaign=outbound_issue_41612&utm_content=story&utm_medium=email. 29 Derek Thompson, “The Pandemic Will Change American Retail Forever,” The Atlantic, April 27, 2020. 30 Matt Townsend, Jenny Surane, Emma Orr and Christopher Cannon, “America’s ‘Retail Apocalypse’ is Really Just Beginning”, Bloomberg, November 8, 2017; Sabrina Helm, Soo Hyun Kim, Silvia Van Riper, “Navigating the ‘Retail Apocalypse’: A Framework of Consumer Evaluations of the New Retail Landscape,” Journal of Retailing and Consumer Services, Volume 54, May 2020.
31 As noted in Chapter 1, Massachusetts retail employment has been relatively flat over the last 10 years as e-commerce sales have increased. More research on shifts in statewide retail sales and statewide retail employment is needed to understand these trends, and their impacts on employment and tax revenues.
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53 Impacts of E-Commerce in Massachusetts
53 32 Spencer Soper, “Amazon Plans to Put 1,000 Warehouses in Suburban Neighborhoods,” Bloomberg, September 16, 2020.
33 Josh Stevens, “A Turning Point for Malls,” InTransition Magazine, June 2020, https://intransitionmag.org/ Issues/June-2020/A-Turning-Point-for-Malls.aspx.
34 Lauren Thomas, “Turning a Dead Mall into a Warehouse will Slash its Value as Much as 90 percent, Barclays Predicts,” CNBC, October 15, 2020, https://www.cnbc.com/2020/10/15/mall-values-could-b.html. 35 Auburn (Auburn Mall), Boston (Copley Place), Braintree (South Shore Plaza), Burlington (Burlington Mall), Danvers (Liberty Tree Mall and Liberty Tree Strip), Hyannis (Cape Cod Mall), Lee (Lee Premium Outlets), Marlborough (Solomon Pond Mall), Newton (The Shops at Chestnut Hill), North Attleboro (Emerald Square), Peabody (Northshore Mall), Saugus (Square One Mall), and Wrentham (Wrentham Village Premium Outlets). 36 Esther Fung and Sebastian Ferrera, “Amazon and Mall Operator Look at Turning Sears, J.C. Penney Stores Into Fulfillment Centers,” Wall Street Journal, August 9, 2020, https://www.wsj.com/articles/amazon-and-giant- mall-operator-look-at-turning-sears-j-c-penney-stores-into-fulfillment-centers-11596992863. 37 Catherine Carlock, “More Than a Dozen Massachusetts Malls Could be Transformed as Part of Deal with Amazon,” MassLive, August 15, 2020, https://www.masslive.com/business/2020/08/more-than-a-dozen- massachusetts-malls-could-be-transformed-as-part-of-deal-with-amazon.html. 38 Janelle Jones and Ben Zipperer, “Unfulfilled Promises,” Economic Policy Institute, February 2018, https:// www.epi.org/publication/unfulfilled-promises-amazon-warehouses-do-not-generate-broad-based-employment- growth/.
39 Paul Tennant, “Special Town Meeting Supports Amazon Project,” The Eagle Tribune, June 19, 2019, https:// www.eagletribune.com/news/merrimack_valley/special-town-meeting-supports-amazon-project/article_ d0aa2bc8-62ff-5ba1-a78b-047b17e82720.html.
40 Greg Ryan, “Amazon Given $27M Tax Break for North Andover Site,” Boston Business Journal, June 25, 2020.
41 Includes meals ordered online which are: 1) directly delivered by the restaurant, regardless if they are ordered via a platform (e.g., Delivery Hero) or a restaurant website (e.g., Domino’s), 2) online meal order and delivery both carried out by a platform (e.g., Deliveroo), and 3) online orders that are picked up in the restaurant. Does not include deliveries of non-processed or non-prepared food (e.g., HelloFresh). 42 Statista, “Online Food Delivery,” (2021), https://www.statista.com/outlook/dmo/eservices/online-food- delivery/united-states; and Business of Apps, “Food Delivery App Revenue and Usage Statistics (2021),” https:// www.businessofapps.com/data/food-delivery-app-market/#1.1. 43 Brick Meets Click, “November 2020 Scorecard – Online Grocery Delivery and Pickup,” https://www. brickmeetsclick.com/nov-2020-online-grocery-scorecard--customer---sales-mix-shift-toward-delivery---pickup. 44 Alex Frederick and Asad Hussain, “Delivery Technologies Are Reshaping the Grocery Industry,” PitchBook, June 17, 2020.
45 “Grocery Fulfillment and Dark Stores,” InVisible Capital with PitchBook, Podcast, December 1, 2020. 46 “Stop & Shop to Accelerate Omnichannel Growth with Three New Warerooms and at Least 50 Additional Pickup Locations by Year-End,” Stop & Shop Press Release, July 1, 2020, https://www.globenewswire.com/news- release/2020/07/01/2056260/0/en/Stop-Shop-to-Accelerate-Omnichannel-Growth-With-Three-New-Warerooms- and-At-Least-50-Additional-Pickup-Locations-by-Year-End.html. 47 “Grocery Fulfillment and Dark Stores,” InVisible Capital with PitchBook, Podcast, December 1, 2020. 48 Joseph Pimentel, “Ghost Kitchens Aim to Capitalize During Coronavirus Pandemic,” Bisnow, April 14, 2020, https://www.bisnow.com/los-angeles/news/retail/ghost-kitchens-thriving-during-coronavirus-pandemic-103820. 49 Jenifer Martson, “A Rough Guide to Ghost Kitchens, According to Chowly CEO Sterling Douglass,” The Spoon, January 21, 2019, https://thespoon.tech/a-rough-guide-to-ghost-kitchens-according-to-chowly-ceo- sterling-douglass/.
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54 Chapter 4
1 Don Davis, “Amazon’s Q2 North American Revenues Surges 43 percent as Web Grocery Sales Triple,” DigitalCommerce360.com, July 30, 2020, https://www.digitalcommerce360.com/2020/07/30/amazons-q2-north- america-revenue-surges-43-as-web-grocery-sales-triple/. 2 Kim Behasin, “As Many as 25,000 U.S. Stores May Close in 2020, Mostly in Malls,” Blomberg, June 9, 2020, https://www.bloomberg.com/news/articles/2020-06-09/as-many-as-25-000-u-s-stores-may-close-in-2020-mostly-in- malls.
3 Melissa Repko and Lauren Thomas, “6 Ways the Coronavirus Pandemic has Forever Altered the Retail Landscape,” CNBC, September 29, 2020, https://www.cnbc.com/2020/09/29/how-coronavirus-pandemic-forever- altered-retail.html.
4 Michael Browne, “Retention of Online Growth Looks Strong, but a COVID-19 Recession Looms Ahead.” Supermarket News, October 16, 2020, https://www.supermarketnews.com/online-retail/retention-online- growth-looks-strong-covid-19-recession-looms-ahead.
5 Joe Guskowski, “4 Trends Defining Delivery During COVID-19” Restaurant Business, August 4, 2020, https:// www.restaurantbusinessonline.com/operations/4-trends-defining-delivery-during-covid-19.
Chapter 5
1 Southern California Association of Regional Governments, “Final Industrial Warehousing in the SCAG Region,” April 2018.
2 Jason Study, Richard Stein, Lisa Nieenson, “Live-Work-Play-Dispatch: Designing for E-Commerce,” APA Learn Webinar - NPC20 @ Home, APA April 30, 2020, https://www.planning.org/events/activity/9199186/. 3 Nick Carey, “E-commerce Surge Spurs Race for Electric Delivery Vehicles,” Automotive News, September 9, 2020, https://www.autonews.com/manufacturing/e-commerce-surge-spurs-race-electric-delivery-vehicles. 4 Andrew J. Hawkins, “Amazon Unveils its New Electric Delivery Vans Built by Rivian,” The Verge, October 8, 2020, https://www.theverge.com/2020/10/8/21507495/amazon-electric-delivery-van-rivian-date-specs. 5 Justine Calma, “Amazon Boosts Climate Commitments and Greenhouse Gas Emissions,” The Verge, June 23, 2020, https://www.theverge.com/2020/6/23/21300427/amazon-climate-change-commitments-greenhouse-gas- emissions-jeff-bezos.
6 Voice of America, “US Retail Giant Walmart Aims for Zero Global Emissions by 2040,” Tucson Post, September 21, 2020, https://www.tucsonpost.com/news/266462735/us-retail-giant-walmart-aims-for-zero-global- emissions-by-2040.
7 “UPS Invests in Arrival, Accelerates Fleet Electrification with Order of 10,000 Electric Delivery Vehicles,” UPS Press Release, January 29, 2020, https://stories.ups.com/upsstories/us/en/newsroom/press-releases/sustainable- solutions/ups-invests-in-arrival-accelerates-fleet-electrification-with-order-of-10-000-electric-delivery-vehicles. html.
8 Matt Leonard, “NYC Launches Commercial Cargo Bike Pilot to Reduce Congestion,” Smart Cities Dive, December 5, 2019, https://www.smartcitiesdive.com/news/amazon-dhl-ups-cargo-bikes-new-york-city/568553/. 9 “Mayor de Blasio Announces Commercial Cargo Bike Program to Reduce Delivery Congestion,” New York City Department of Transportation, December 4, 2019, https://www1.nyc.gov/office-of-the-mayor/news/594-19/ mayor-de-blasio-commercial-cargo-bike-program-reduce-delivery-congestion. 10 Kristen Millares Young, “Why Amazon’s New Streamlined Packaging is Jamming Up Recycling Centers,” Washington Post, February 11, 2019, https://www.washingtonpost.com/technology/2019/02/11/why-amazons- new-streamlined-packaging-is-jamming-up-recycling-centers/. 11 Dr. Victor Canalog, Thomas P. LaSalvia PhD, “Why Industrial (Warehouse) is Likely to Fare Better,” Moody’s Analytics, June 17, 2020.
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55 12 Adam Bagni, “Cambridge Restaurant Owner Fed Up with High Delivery Service Fees,” WCVB-5, May 11, 2020, https://www.wcvb.com/article/cambridge-massachusetts-restaurant-owner-fed-up-with-high-delivery- service-fees/32441552#.
13 “An Act addressing challenges faced by food and beverage establishments resulting from the COVID-19 pandemic,” House Bill 4767, https://malegislature.gov/Bills/191/H4767. 14 Adam Bagni, “Cambridge Restaurant Owner Fed Up with High Delivery Service Fees,” WCVB-5, May 11, 2020.
15 Courtney Humphries, “How Amazon Prime will Change the Way Our Cities Look,” Boston Globe, December 6, 2018, https://www.bostonglobe.com/ideas/2018/12/06/how-amazon-prime-will-change-way-our-cities-look/ POt25dZIWoaph01gNKkJoN/amp.html.
Chapter 6
1 Lisa Nisenson, “Primed for Deliveries,” Planning, April 2020. 2 “Draft California Freight Mobility Plan 2020,” December 2019, California Department of Transportation. 3 Institute of Transportation Engineers, “Curbside Management Practitioners Guide,” and NACTO Transit Leadership, “Curb Appeal: Curbside Management Strategies for Improving Transit Reliability,” NACTO, November 2017, https://nacto.org/tsdg/curb-appeal-whitepaper/.
Appendix
1 The City of Everett’s Planning Board used these criteria as specified in Section 19 of the Everett Zoning Ordinance in order to grant Site Plan Approval. See Board Decision – Site Plan Approval, November 5, 2015; Vanasse & Associates Supplemental Traffic Engineering Peer Review, June 24, 2020, Hingham; Warehouse/ Distribution Facility on West Street – Traffic Impact Study, CALYX Engineers & Consultants, an NV5 Company, May 6, 2020 (Hingham).
2 Institute of Transportation Engineers, Trip Generation Manual, 10th Edition, Washington, DC; 2017. 3 Institute of Transportation Engineers, Trip Generation Manual, Vol. 1: Desk Reference, p 2. 4 Quan Yuan, “Planning Matters: Institutional Perspectives on Warehousing Development and Mitigating Its Negative Impacts,” Journal of the American Planning Association, Vol. 85, No. 4, 2019.
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PLANNING MAGAZINE
What to Do When an E-Commerce Warehouse
Comes to Town
Last-mile delivery centers are popping up everywhere. Here's how to reap the economic benefits, manage the influx of trucks, and mitigate air quality impacts.
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12/1/21, 8:57 AM What to Do When an E-Commerce Warehouse Comes to Town https://www.planning.org/planning/2021/fall/what-to-do-when-an-e-commerce-warehouse-comes-to-town/ 2/8 In Revere, Massachusetts, Amazon Prime vans en route from the companyʼs “last-minute” e-commerce warehouse. Photo courtesy Metropolitan Area Planning Council.
PART OF THE DISRUPTORS SERIES (/PLANNING/SERIES/DISRUPTORS) Nov. 18, 2021
By ALISON L. FELIX, AICP; TRAVIS POLLACK, AICP
Bellingham, Massachusetts, a suburb about 30 miles from Boston, has become a warehouse hub. Dunkin' Brands, Best Buy, Snyder's Snacks, and others operate out of large industrial buildings, with delivery trucks coming and going regularly.
But a new warehouse facility in a wooded corner of the town is different. Its trucks aren't headed to retail stores. Instead, waves of blue vans with those ubiquitous Amazon smiles are loaded with packages to be delivered directly to doorsteps. The facility is a "last-mile" e-commerce delivery center, with traffic patterns very different from the other warehouses nearby.
E-commerce is a $750 billion industry in the U. S., comprising 13.6 percent of total retail sales. Ten years ago, that number was around four percent. The dramatic increase in online buying and selling doesn't just impact the brick-and-mortar stores. It's also fueling an unprecedented transformation of the industrial warehouse marketplace and having major effects on land use, transportation, air quality, and equity.
Consumers expect to receive the goods they purchase within a few days (or hours), and retailers like Amazon, Walmart, and Target are competing to tighten fulfillment times even more. Pressure to maintain dependable, rapid delivery has resulted in networks of last-mile delivery centers close to suburban and urban neighborhoods. Amazon, which controls approximately 40 percent of the e-commerce marketplace, is leading the push to build these facilities, which have become integral to the delivery process.
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12/1/21, 8:57 AM What to Do When an E-Commerce Warehouse Comes to Town https://www.planning.org/planning/2021/fall/what-to-do-when-an-e-commerce-warehouse-comes-to-town/ 3/8 As e-commerce explodes, the traditional delivery model — factory, distributor, retail store, buyer — is being upended. The new online model requires more complex supply chain logistics, including multiple levels of inventory management and a variety of modes for the picking, packing, and shipping of online orders. From Hidden and in Plain Sight: Impacts of E-Commerce in Massachusetts (https://metrocommon.mapc.org/reports/20).
The colossal and rapid expansion of the e-commerce industry shows no signs of slowing. That means regional delivery networks also will proliferate, so planners need to consider the impacts of last-mile delivery centers.
To help think through these issues, the Metropolitan Area Planning Council (MAPC), greater Boston's regional planning agency, talked to Boston-area planners from nine municipalities and, in February 2021, released Hidden and in Plain Sight: Impacts of E-Commerce in Massachusetts (https://metrocommon.mapc.org/reports/20). The report zeroes in on the impacts of e-commerce in our state, but the lessons and recommendations are applicable wherever planners and municipal officials are noticing new traffic patterns from delivery trucks, facing new demand for warehouse space, or trying to referee the fight for curb space.
Breaking the mold
Before 2014, there were no Amazon warehouses in Massachusetts. Now, there are 34 active and future facilities. In the 12 months it took to research and write Hidden and in Plain Sight, Amazon's footprint in Massachusetts doubled from 10 operational facilities to 20. And the approach varies by municipality. In Dedham, Amazon leases space in an existing warehouse (and wants to expand). A warehouse built on speculation in Bellingham sat empty for several years until Amazon arrived. Worcester's vacant mall is slated to become a delivery center, and in Revere, an abandoned candy factory and multiplex cinema were repurposed as last-mile delivery centers.
Last-mile delivery centers are noticeably different from traditional warehouses, with facilities operating 24 hours a day, seven days a week. A typical "day" begins in the middle of the night, as tractor-trailers bring packages in bulk from fulfillment centers. Orders are sorted, prepped, and loaded into delivery vans.
Each morning, employees drive to the facilities, park, and load themselves into the readied delivery vans. With their routes to customers' homes planned, they Item 2B - 155
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12/1/21, 8:57 AM What to Do When an E-Commerce Warehouse Comes to Town https://www.planning.org/planning/2021/fall/what-to-do-when-an-e-commerce-warehouse-comes-to-town/ 4/8 usually enter and leave the warehouse outside of peak traffic hours, with delivery departure times often scheduled in waves. If demand is especially high, some companies also contract with third-party delivery-service partners or use on-call drivers who make deliveries using their personal vehicles. In a typical facility, tractor-trailers, delivery vans, and on-call drivers can generate an enormous amount of activity.
A Bellingham, Massachusetts warehouse sat empty for several years before Amazon arrived. Photo by Allison Burson, Solomon Foundation.
Complicating matters, e-commerce facilities are locating near residential areas to shrink delivery times. That can add another level of noise and traffic conflicts.
That is the case in Dedham (pop. 25,000). Amazon came to town in 2015, and the company recently requested to expand from its 90,000-square-foot facility to the entire 230,000-square-foot industrial site.
"The planning board, back in 2015, didn't quite grasp all the explosive growth that was going to come," notes Dedham's planning director, Jeremy Rosenberger. "This was a use unlike we've ever seen." The planning board is currently working on these issues with Amazon and is expected to propose recommendations by year's end.
Economic benefits
As with any proposed business, the costs of e-commerce facilities, such as traffic, must be weighed against economic benefits. Delivery centers can generate significant property tax revenue, and in Massachusetts, some warehouses are revitalizing previously unused properties. "We had two industrial parks that were heading south and Amazon has revived both of them," says Bob O'Brien, director of economic development for Revere. "We think both of those sites would have been vacant without them."
There are other economic wins. All the planners we talked to require Amazon delivery vans to be registered locally to ensure collection of vehicle excise taxes.
Facilities also provide local jobs — an important consideration as the U.S. recovers from the COVID-19 pandemic — although transportation and warehousing jobs typically pay lower wages than other industrial uses like wholesale trade, manufacturing, and construction. Indeed, employee issues like low wages and worker treatment have arisen.
Some e-commerce companies do invest in communities where they have a large footprint. This spring, Amazon announced a $300 million commitment in the form of below-market loans and grants to create 3,000 new affordable homes near public transit in Washington State's Puget Sound area; Arlington, Virginia; and Nashville, Tennessee — all locations where Amazon has or expects to have at least 5,000 employees. Altogether, Amazon plans to preserve or build more Item 2B - 156
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Planning considerations
So, what do planners need to be thinking about to manage the proliferation of e-commerce delivery centers in their communities already, as well as thoughtfully plan for the future?
The first is the effect on other industries and economic development. Many delivery centers are located in areas zoned for manufacturing or industrial use, resulting in a high demand for that type of real estate. According to Cushman & Wakefield, the demand for industrial space in North America in 2019 exceeded supply for the first time since before the Great Recession. As the private sector works to meet this demand, planners must evaluate if the rapid expansion of e- commerce will overtake other industrial uses that may offer higher paying jobs, and decide whether to rezone areas to direct or prevent the development of e- commerce facilities.
Trip generation is very different. The novelty of the last-mile operations model means traditional trip generation forecasting methods do not apply. The ITE's Trip Generation Manual, the go-to guide for estimating traffic patterns, does not include a land-use type that directly applies to last-mile delivery centers.
Instead, planners should look for recent traffic data from similar e-commerce facilities as part of site-plan review and conduct traffic counts once facilities are operational to determine actual traffic patterns.
Air quality can suffer. Adding more vehicles (and the vehicle miles traveled by each) means more emissions. Planners should think about how to mitigate the air quality impacts from that influx, and especially consider whether already vulnerable groups suffer disproportionally from those impacts, as some scholars suggest. Although Amazon has pledged to achieve net-zero carbon emissions by 2040, it also reported that its emissions rose 19 percent in 2020.
California's South Coast Air Quality Management District has already taken steps to lower greenhouse gas emissions and improve air quality. Last spring, it approved the Warehouse Indirect Source Rule, which targets emissions from the trucks that service warehouses, not the warehouses themselves. The rule relies on a points-based system in which warehouse operators choose from a menu of mitigation options, like using trucks fueled by electricity or natural gas, installing charging stations or rooftop solar panels, putting air filters in nearby schools and child-care centers, or paying a mitigation fee.
What's next?
The explosion of e-commerce facilities is projected to continue. According to a recent report from CBRE Group, e-commerce will account for 26 percent of all retail sales in the U.S. by 2025. To keep pace, an additional 330 million square feet of distribution space will be needed.
But there's still a lot we don't know, so we are developing an online playbook to help municipalities implement development standards and review facility proposals through a lens of equity, sustainability, and municipal finance. We are also tracking technological innovations that will likely continue to disrupt e- commerce. Many companies are exploring the use of drones and autonomous vehicle deliveries. New twists on the old-fashioned bicycle could serve as nimble, carbon-neutral, last-mile delivery solutions.
Jeremy Rosenberger, the Dedham planner, said it best: "Who knows what else they're going to come up with that we're not even aware of and aren't able to plan for?"
14 Ways to Prepare for an E-Commerce Center
Integrating warehouse and distribution centers requires deliberate design, mitigation, and management, especially near higher density residential areas. Here are actions to take whenever an e-commerce warehouse or distribution center is proposed.
Further impacts: E-Commerce
Demand for brick-and-mortar retail space is decreasing, meaning smaller multiplier effects from retail sales in local economies. Illustration by Jason Schneider.
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1. Conduct traffic impact studies.
2. Generate trip forecasting data.
3. Undertake a comprehensive site plan review and approval process.
4. Negotiate traffic mitigation agreements.
5. Create truck and van restriction zones.
6. Prohibit off-site parking of delivery vehicles.
7. Implement a traffic demand management program.
8. Establish rules for where and when to refuel.
9. Require delivery vehicles to be registered in the same municipality as the facility to capture excise taxes.
10. Ensure appropriate signage on delivery vehicles and the facility.
11. Ban on- and off-site idling for facility-related vehicles.
12. Require insurance and background checks for the facility's truck and van drivers.
13. Be informed of truck- and van-driver protocols like training, discipline, and incident (e.g., speeding) management procedures.
14. Monitor the facility post-occupancy and take corrective actions as needed.
SOURCE: Hidden and in Plain Sight: Impacts of E-Commerce in Massachusetts.
Alison Felix, AICP (mailto:[email protected]), is a principal planner with MAPC, and Travis Pollack, AICP (mailto:[email protected]), is a senior transportation planner with MAPC. They coauthored the 2021 report, Hidden and in Plain Sight: Impacts of E-Commerce in Massachusetts (https://metrocommon.mapc.org/reports/20).
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Unfulfilled promises
Amazon fulfillment centers do not generate
broad-based employment growth
Report • By Janelle Jones and Ben Zipperer • February 1, 2018 • Washington, DC View this report at epi.org/138921
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SECTIONS
1. Introduction and key
findings • 1
2. Amazon fulfillment
centers • 4
3. Empirical
methodology • 5
4. Results • 7
5. Conclusion • 12
Appendix • 13
Endnotes • 25
What this report finds: When Amazon opens a new
fulfillment center, the host county gains roughly 30 percent more warehousing and storage jobs but no new net jobs
overall, as the jobs created in warehousing and storage are likely offset by job losses in other industries.
Why it matters: State and local governments give away
millions in tax abatements, credits, exemptions, and
infrastructure assistance to lure Amazon warehouses but don’t get a commensurate “return” on that investment.
What we can do about it: Rather than spending public
resources on an ineffective strategy to boost local
employment (luring Amazon fulfillment centers), state and local governments should invest in public services
(particularly in early-childhood education and
infrastructure) that are proven to spur long-term economic development.
Update as of March 1, 2018: Since we ran our original
analysis, additional data on fulfillment center openings has become available. We re-ran our analysis and found that the updated data confirm our previous results. See the
Appendix for more information.
Introduction and key
findings
Since its founding in 1994, Amazon’s network of fulfillment centers has grown to nearly 100 across the country. In
2017, publicly available data identified 95 Amazon
fulfillment centers in 25 states. Current estimates suggest that fulfillment centers occupy over three-fourths of the total square footage of Amazon’s entire U.S. distribution infrastructure. (See Appendix Table 3 and methodology
for data sources).
The expansion of Amazon’s physical distribution network has coincided with a strategic business plan of negotiating millions in tax abatements, credits, exemptions, and
infrastructure assistance from state and local governments in the name of regional economic development. By the end of 2016, Amazon had likely received over $1 billion in state and local subsidies for its facilities, which would include not 1 Item 2B - 162Economic Policy Institute
only fulfillment centers but “sortation” centers that only sort packages, mailing centers, and other facilities.1 In return for the incentives each of the fulfillment centers receives, Amazon claims to create hundreds of jobs with competitive pay and benefits.2 An analysis of these claims is timely. As Amazon looks to open a second headquarters in 2018, it is employing a similar strategy, on a much larger scale, exchanging tens of thousands of jobs for massive incentives in return. For example, the District of Columbia reportedly offered Amazon a permanent corporate tax rate cut as well as sales tax exemptions. According to The Washington Post, the announcement of the finalists in the running for hosting the new headquarters “also raised more difficult questions about the influence of large tech giants on cities and the possible unintended consequences of giving tax breaks and other benefits to an already successful corporate titan.”3 Using tax and other incentives to lure businesses to state and local areas is a long-running economic development strategy pursued by subnational governments. In nearly every state, businesses can receive a significantly lighter tax burden for constructing a sports stadium, filming a movie, or building a manufacturing assembly plant. The results on whether these types of community development strategies have a positive impact on job creation and growth is highly debated in popular news outlets and among researchers.
And as Amazon has grown, the debate in some cases has specifically focused on Amazon.4
Studying the employment effects of opening Amazon fulfillment centers is an excellent opportunity to provide evidence for this debate. Using publicly available data on the opening of these fulfillment centers, we undertook a rigorous statistical assessment of claims that the opening of an Amazon fulfillment center in a specific county will provide broad employment gains to that local area.
Our key findings show that luring Amazon
fulfillment centers is an ineffective strategy for
boosting overall local employment
The opening of an Amazon fulfillment center leads to an increase in warehousing and storage employment in the surrounding county. Two years after an Amazon fulfillment center opens in a county, warehousing employment in the county is approximately 30 percent greater. This effect is robust to numerous statistical controls.
The opening of an Amazon fulfillment center does not lead to an increase in county-wide employment. Two years after an Amazon fulfillment center opens in a county, overall private-sector employment in the county has not increased. It is possible that the jobs created in the warehousing and storage sector are offset by job losses in other industries, or that the employment growth generated by Amazon is too small to meaningfully detect in the data. This finding of no effect is also robust to a series of statistical controls.
2 Item 2B - 163
•
•
Economic Policy Institute
The fact that some of our specifications show small reductions in county-wide employment—albeit not statistically robust—reinforces just how completely ineffective Amazon fulfillment center openings have been to providing any boost to overall local employment. The exact sign of the overall employment effect of opening an Amazon fulfillment center in a county is actually negative in some of our specifications, indicating that small reductions in county-wide employment follow these openings. Because this effect is not statistically robust across all statistical specifications, we do not claim reductions in county-wide employment but do assert that this effect supports the finding of no job growth.
State and local policymakers seeking maximum
long-term benefits should reconsider extending
tax incentives to lure businesses
The promise of luring jobs is nearly always and everywhere a very hard one for policymakers to ignore. The jobs gained by one locality that lures an establishment from another locality may be zero-sum, but they’re very visible and easy to point to. Jobs that are displaced by luring an establishment are more diffuse. And the specific jobs that could have been gained in the long-term by instead investing in education or other public goods are harder to celebrate—local officials can’t easily organize a ribbon-cutting ceremony around those kinds of jobs. Nevertheless, our findings support other research suggesting that state and local policymakers should consider the following points when debating whether to extend incentives to lure businesses:
Tax incentives likely constitute an unneeded giveaway
At an intuitive level, offering tax incentives for firms to move businesses to particular locales may strike some as sensible. All else being equal, firms likely would prefer to locate in a particular area if doing so lowered tax costs and hence increased profits.
However, there are other considerations that significantly influence location decisions, including access to customers, the quality of public services needed to run businesses (for example, the existence of reliable electricity and high-quality roads) and access to a pool of qualified workers.5
Research has shown that state and local taxes are on average less than 2 percent of the cost of doing business. This means that simply offering to cut taxes won’t do that much to sway firms’ location decisions. In short these incentives are likely ineffective or, at best, an inefficient use of resources. These incentives are largely a windfall to firms that were going to locate in that spot even without the incentives, all while sacrificing revenue that areas need to invest in public goods.6
Tax incentives may do little to boost overall employment While luring an establishment of an existing national employer to a specific state will create jobs at that establishment, it will not necessarily create more jobs overall. If, for 3 Item 2B - 164
•
Economic Policy Institute
example, labor supply in a particular locale is limited, job gains in the newly lured establishment could be offset by job losses among competitors. This is what happens when luring a Walmart into a county leads to shutdowns of local grocery stores—overall employment and economic activity is unaffected. Measuring the extent of this type of employment displacement is key to assessing the overall economic benefits of luring establishments of existing national chains. Our findings of the lack of overall job growth from opening an Amazon fulfillment center suggest that some sort of employment displacement is taking place, or that the growth in warehousing jobs is too limited to spill over into broad-based employment gains for the overall local economy. This is in keeping with a robust body of evidence indicating that reducing public services to provide tax cuts does not actually spur economic growth and job creation.7 Investments in public services are more effective than tax incentives at generating long-term economic growth
Another key downside of tax incentives is that they deprive states and localities of resources needed to invest in public goods, such as transportation or education. The research literature indicates that public spending and the expansion of public services increases local economic activity—and that such public investment is obviously hamstrung by policies (like offering tax incentives) that reduce resources available to state and local governments. Investments in public services (particularly in early-childhood education) and infrastructure are a much stronger recipe for spurring long-term economic development than providing tax increases to existing national employers.8 Amazon fulfillment centers
The expansive network of centers that store, pack, ship, and provide customer service for products is crucial to Amazon’s business model, which requires quick delivery throughout the country. As displayed inFigure A, construction of Amazon fulfillment centers in the United States increased significantly around 2008. Amazon had under 10 centers through the mid-2000s and had nearly one hundred by the end of 2017.9 The sharp rise in fulfillment centers corresponds with the 2005 introduction of Amazon Prime, in which subscribers pay an annual fee for two-day shipping and other benefits, and the 2006 launch of Fulfillment by Amazon, in which participating sellers have their items stored, packed, and shipped by Amazon.
In 2017, these centers were in 25 states across the country, from California to New Hampshire. According to consulting firm MWPVL International, fulfillment centers account for over three-quarters of the square footage of Amazon’s entire distribution infrastructure.10 (In addition to fulfillment centers, Amazon operates sortation centers that handle only already-packaged goods.)
Because these openings are spread widely across geography and time, they provide a potentially powerful statistical tool to assess their effect on regional employment growth.
Creating more jobs is a key reason why state and local governments often try to entice 4 Item 2B - 165Economic Policy Institute
Figure A Total number of Amazon fulfillment centers
Cumulative openings, 1997—2017
Source: Fulfillment center opening dates compiled from Avalara (“Amazon Fulfillment Center Locations,” accessed October 2017), Guided Imports (“The Complete List of Every Amazon Warehouse and Distribu- tion Center in the World,” last updated April 2017) and MWPVL International (“Amazon Global Fulfillment Center Network,” accessed October 2017).
2000 2005 2010 2015
0 25
50 75
100 Amazon
Prime
launches
Fulfillment by
Amazon launches
firms to open operations in their regions, and the history of Amazon fulfillment center openings provides a very good case study of whether job creation benefits really do emerge.
Empirical methodology
In this report, we look at the effect of opening an Amazon fulfillment center in a county on that county’s warehousing industry employment as well as overall private-sector employment. For fulfillment center locations and opening dates, we use the publicly downloadable database from Guided Imports, a part of Procu International LLC, a sourcing company headquartered in Shenzhen, China. This database was cross referenced with available data from Avalara, a Seattle-based company providing tax compliance advice to businesses, and consulting firm MWPVL International.11 The sample contains all fulfillment centers listed in each of the three sources during our reference period.
For employment, we use data from the Quarterly Census of Employment and Wages (QCEW), a program of the Bureau of Labor Statistics.12 Because it is based on employment data that state unemployment insurance programs are required to maintain, the QCEW is perhaps the best source of local area employment statistics, covering approximately 95 percent of all employment in the United States and available every quarter.
In addition to overall private-sector employment, the QCEW contains data on the 5 Item 2B - 166
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warehousing and storage industry. We limit our sample to the 1,161 counties for which we have warehousing employment information for the entire 2001–2015 period.13 By 2015, there were 69 Amazon fulfillment centers open across the United States in a total of 45 counties. Our balanced sample of 1,161 counties includes 54 fulfillment centers in 34 counties, meaning that it applies to more than three-fourths of the known fulfilment center locations overall in 2015.
To estimate the employment effect of opening a fulfillment center, we examine whether employment rose in a county after it opens a fulfillment center, relative to employment trends in counties that did not receive a fulfillment center. We focus specifically on warehousing employment and total private-sector employment in each county. To account for population changes, we calculate county-level employment-to-population ratios for warehousing and total private-sector employment from Census Bureau estimates of county population, and we use these employment-to-population ratios as our outcomes of interest.14
For robustness, we also control for multiple factors that may be correlated with employment outcomes and fulfillment center openings. For example, counties that open fulfillment centers may have higher warehousing employment in general (regardless of the opening). In addition, warehousing employment and employment overall around the time of a fulfillment center opening may also be affected by national events such as a national recession, or regional or state-specific economic changes or “shocks” to local employment, due to changes in regional labor demand or specific policies that affect employment.
When we estimate the effects of opening a fulfillment center, we use a variety of specifications to control for these permanent differences in employment between counties, and to control for time-varying economic shocks that may occur when fulfillment centers are being opened. Specifically we control for national, regional, and state-specific shocks with three different statistical models: a common time fixed effects model, a Census division–specific time fixed effects model, and a state-specific time fixed effects model. All regressions also include controls for permanent differences in county employment (county fixed effects). Depending on the specification, we also control for a measure of predicted private-sector employment (based on industry shares in the 1996–2000 period), and for different employment trends among counties (county-specific linear time trends).
We also want to make sure that we account for any employment effects that take time to develop after a fulfillment center opening, and that any changes in warehousing and overall employment we see are not simply continuations of existing trends. Therefore we also include lagged indicators of openings in order to capture up to two years of lagged employment effects that may develop after an opening, and directly control for differences in employment up to two years prior to the opening of a fulfillment center.15 Warehousing employment is a larger share of private-sector employment in counties that opened a fulfillment center. In counties that never opened a fulfillment center, warehousing employment was about 0.5 percent of total private-sector employment. In 6 Item 2B - 167Economic Policy Institute
counties that opened a fulfillment center, county warehousing employment averaged about 1.0 percent of total private-sector employment prior to opening a center and 1.4 percent after opening a center. We use county fixed effects to control for persistent differences in the level of warehousing employment between counties that did or did not open a fulfillment center.
Results
We find that warehousing employment rises substantially in counties after an Amazon fulfillment center opens. At the same time, total private sector employment generally does not change after an Amazon fulfillment center opens. In some specifications we find that private-sector employment falls significantly after a center opens but these negative employment findings are not robust across most specifications or time periods. The increases in warehousing employment after a fulfillment center opens do not seem to generate any employment benefits beyond the warehousing and storage sector.
First we examine how warehousing employment changes after a fulfillment center opens in a county. For brevity, the top panel of Figure B reports, for the model using state- specific time fixed effects and county-specific linear trends, the cumulative percent change in warehousing employment due to the opening of a fulfillment center over a period of four years, beginning two years prior to the opening and continuing through two years after the opening. Appendix Figure A reports the cumulative change in warehousing employment for three models: the top panel controls for common national shocks, the middle panel controls for Census division–specific time shocks, and the bottom panel controls for state-and-time-specific shocks. All of the models in the appendix figures (A, showing warehousing employment, and B, showing overall employment) control for county fixed effects and county-specific linear time trends.
The solid line in Figure B shows our estimate of the cumulative effect of Amazon fulfillment center openings, with the shaded area around this solid line showing the 95 percent confidence interval of this estimate (The confidence interval reflects our uncertainty around this estimate: we cannot statistically distinguish the estimate in the solid line from any estimate between the two dotted lines forming the confidence interval). This solid line shows that warehousing employment is relatively flat in the two years prior to the opening of a fulfillment center—the solid line is close to zero and zero is always included in the confidence interval. This is obviously reassuring, as it would be odd to pick up an effect of fulfillment centers on employment before they were constructed. However, we show the two years prior precisely to insure we’re not merely attributing the effect of a preexisting trend to the opening of a fulfillment center.
At the time of a fulfillment center opening (t=0), warehousing employment begins to grow substantially. The solid line pulls up from zero, and zero is generally no longer part of the confidence interval.
Averaging the findings from our three specifications, we find that by two years after an opening, county warehousing employment has grown by more than 30 percent. Based on 7 Item 2B - 168Economic Policy Institute
Figure B Amazon fulfillment centers increase county
warehousing employment
Change in county warehousing employment before and after opening an Amazon fulfillment center, using state-specific time fixed effects model Notes: Cumulative employment effects are from a regression of warehousing county employment per capita on leads and lags of a count of fulfillment centers in that county, in which the other controls are county fixed effects, state-specific time fixed effects, and county-specific linear time trends. See the Ap- pendix for results from other specifications. Regressions are weighted by mean county population, stan- dard errors are clustered at the county level, and the figure shows 95 percent confidence intervals. We convert the marginal effects and standard errors into percent changes in employment by dividing coeffi- cients by the sample mean employment-to-population ratio.
Sources: Authors' calculations from Quarterly Census of Employment and Wages employment data, Cen- sus population counts, and fulfillment center openings data described in the text. Percent change in employment Y ears since opening
Confidence interval, high
Confidence interval, low
0 50
100%
-2.5 -2 -1.5 -1 -0.5 0 0.5 1 1.5 2
Before After
average warehousing employment in counties before they open an Amazon fulfillment center, that percentage growth in employment translates to an addition of roughly 1,300 jobs in the warehousing sector. This large gain in warehousing employment seems plausible given that our source data indicate that several fulfillment centers employ 1,000 or more workers.16
Theoretically, Amazon could open a fulfillment center in a county without increasing warehousing employment in the county. For example, the new fulfillment center may simply replace other warehouses that have gone out of business. However, if we had found no effect of fulfillment centers on warehousing employment over all counties we analyzed, it would have meant either that this sort of displacement effect was occurring, or that the statistical tools we are using are simply incapable of capturing the economic effect of opening a fulfillment center. Given the latter possibility, it is reassuring that we find growth in warehousing employment after an opening, as this provides additional confidence that our statistical tools are able to identify a clear signal from these openings.
We also investigated how a fulfillment center opening affected the earnings of 8 Item 2B - 169
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•••• • ••• •••••
••••• • •• •• ••
••
•••• •• • • •• ••
··············· ············
warehousing workers, but we found an opening led to little to no change in these workers’ average wages. Estimates varied depending on the specification, but for the most credible specifications that had the smallest preexisting trends (using county-specific linear time trends) the effect of Amazon on warehousing workers’ earnings ranged from negative 1.7 percent to positive 0.5 percent (Appendix Table 1 shows the results for all specifications).
None of these preferred estimates was distinguishable from zero at conventional levels of statistical significance.
These results differ from the findings reported in The Economist, which found that the earnings of warehousing workers rose prior to the opening of a fulfillment center and fell afterward, and that warehousing workers in counties with fulfillment centers in December 2017 earned 10 percent less than warehousing workers in counties without centers.17 While both our study and the analysis in The Economist investigate what happened to employment and wages in counties that opened fulfillment centers, our study actually estimates the counterfactual outcome of what would have happened to the labor market in counties with an Amazon presence had Amazon not opened a fulfillment center. We do this by controlling for economic factors (like regional economic shocks or different wage trends among counties) that may affect wage trends in counties that opened a fulfillment center even if that county had never opened a fulfillment center. For this reason, the Economist’s figure simply comparing wages between counties with and without fulfillment centers in December 2017 does not definitively show the effect of opening fulfillment centers.
For example, many of the counties that had fulfillment centers in December 2017 may have only had them for a short time, and may even have seen different wage growth trends in the periods before attracting Amazon warehouses. We account more precisely for these preexisting differences by using the precise timing of a fulfillment center opening, comparing outcomes in counties with and without fulfillment centers around the time of an opening, and by accounting for regional shocks and county-specific trends, as described in the “Empirical methodology” section. The limited wage effect we find in our analysis suggests that some of the wage differences found by The Economist would have occurred regardless of the opening of a fulfillment center.
Additionally, both our wage analysis and the analysis conducted by The Economist use wage data based on total quarterly earnings per worker, as opposed to hourly wages. Our estimates are consistent with reports that Amazon fulfillment centers reduce the hourly wages of warehousing workers, if these employees earning lower hourly wages were to work longer hours, producing a minimal net effect on total quarterly earnings per worker.18 Although we find consistent evidence that fulfillment centers lead to substantial gains in warehousing employment, the new centers do not clearly increase total private-sector employment in the county, as shown in Figure C. Instead, after the fulfillment center opens, private-sector employment remains at relatively the same level, with none of the changes in employment statistically distinguishable from no change in employment at all.
Appendix Figure B reports the cumulative change in private-sector employment for three models: the top panel controls for common national shocks, the middle panel controls for 9 Item 2B - 170Economic Policy Institute
Figure C Amazon fulfillment centers do not increase overall county employment
Change in overall county employment before and after opening an Amazon fulfillment center, using state-specific time fixed effects model Notes: Cumulative employment effects are from a regression of county private-sector employment per capita on leads and lags of a count of fulfillment centers in that county, in which the other controls are county fixed effects, state-specific time fixed effects, and county-specific linear time trends. See the Ap- pendix for results from other specifications. Regressions are weighted by mean county population, stan- dard errors are clustered at the county level, and the figure shows 95 percent confidence intervals. We convert the marginal effects and standard errors into percent changes in employment by dividing coeffi- cients by the sample mean employment-to-population ratio.
Sources: Authors' calculations from Quarterly Census of Employment and Wages employment data, Cen- sus population counts, and fulfillment center openings data described in the text. Percent change in employment Y ears since opening
Confidence interval, high
Confidence interval, low-2.5
0 2.5%
5 -2.5 -2 -1.5 -1 -0.5 0 0.5 1 1.5 2
Before After
Census division–specific time shocks, and the bottom panel controls for state-specific time shocks. All of the models in Appendix Figure B show similar results.
In general, we do not find any evidence that the warehousing employment gains a county experiences after an Amazon fulfillment center opens translate into economically meaningful increases in the total number of jobs in the overall private sector.
One concern with the timing of the estimates in Figure B and the appendix figures is that total private-sector employment is already abnormally high in counties about to open a fulfillment center, relative to areas where fulfillment centers are not about to open.
We adopt three strategies to account for this potential problem and report the results in Table 1 and Appendix Table 2. First, instead of just the three models we discussed above, we examine a total of nine statistical models, which differ depending on whether they control for common national, Census division-specific, or state-specific time shocks; whether they include a control for industry-share predicted employment; and whether they include county-specific linear time trends. Second, for robustness and in case employment 10 Item 2B - 171
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Table 1 Change in county private-sector employment before and after opening an Amazon fulfillment center
Percent employment changes in the two years before and the two years after an opening
2001–2015 sample 2008–2015 sample
(1) (2) (3) (4) (5) (6)
Cumulative percent change two
years before the opening
0.1% 0.4% 0.4% 0.3% 0.0% 0.0%
(0.4%) (0.6%) (0.5%) (0.3%) (0.3%) (0.3%)
Cumulative percent change two
years after the opening
-1.4%*** -1.3%*** -0.2% -0.0% 0.2% 0.3%
(0.4%) (0.5%) (0.4%) (0.4%) (0.4%) (0.4%)
Controls
County fixed effects Y Y Y Y Y Y
Common time fixed effects Y Y
Division-specific time fixed
effects
Y Y
State-specific time fixed effects Y Y
Predicted employment Y Y
County-specific linear time
trends
Y Y
Notes: This table shows the three models from the 2001–2015 and 2008–2015 sample periods that have the smallest pre-treatment effects. The results from all models are shown in Appendix Table 2. Each col- umn shows cumulative employment effects in the pre-opening or post-opening time period from a regres- sion of county private-sector employment per capita on leads and lags of a count of fulfillment centers in that county as well as county fixed effects. Other controls are indicated at the bottom of the table. See the Appendix for results from other specifications. Regressions are weighted by mean county population, stan- dard errors are clustered at the county level, and the figure shows 95 percent confidence intervals. We convert the marginal effects and standard errors into percent changes in employment by dividing coeffi- cients by the sample mean employment-to-population ratio.
Sources: Authors' calculations from Quarterly Census of Employment and Wages employment data, Cen- sus population counts, and fulfillment center openings data described in the text. trends changed dramatically in some areas after the recession beginning in 2008, we present results for both the full 2001–2015 time period, as well as the 2008–2015 period.
Third, we directly control for preexisting trends by subtracting them from the cumulative effect of the fulfillment center opening; and in Table 1, we present the three models for each sample for which the preexisting trend was smallest in magnitude. (Appendix Table 2 shows the results for all models.)
Overall we continue to fail to find robust evidence that fulfillment centers increase private- sector employment. This lack of increase in overall employment may be due to such a small increase that it is not accounted for, or that there is a shift away from other jobs outside of warehousing as these non-warehousing jobs are displaced by the introduction 11 Item 2B - 172
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of a fulfillment center. Reassuringly, the first row of Table 1 shows that for our selection of best-performing models, we do not find significant preexisting trends in employment prior to a county opening a fulfillment center. The second row shows the cumulative effects of opening a fulfillment center on private-sector employment, and we confirm that there is no significant evidence that private-sector employment rises after an opening. The lack of a significant positive employment response is true in both the full 2001–2015 time period and the shorter 2008–2015 period.
Conclusion
State and local governments have many tools and strategies to spur economic growth.
One tool proven particularly effective by research is public investment that increases the efficiency and attractiveness of local amenities such as transportation and the quality of local education. Public investment opportunities are obviously curtailed if state and local governments willingly forfeit revenue in the name of attracting businesses. Given this sharp trade-off with public goods provision, the benefits of tax incentives should be exceedingly strong to be pursued as good development policy. So far, the best research has not identified such strong benefits.
This paper bolsters these findings for the most politically salient economic indicators used to assess state and local development policies: the total number of jobs in a locality. We use a high-quality dataset that provides cross-locale variation to assess the effect of opening an Amazon fulfillment center on county-level employment. We find that opening an Amazon fulfillment center does lead to gains in warehouse jobs in a county, but does not lead to gains in overall county-level employment. These findings are consistent with theories arguing that luring establishments from existing national employers to a particular locale may just displace incumbent jobs. This seems to add evidence to an already-strong research base indicating that the zero-sum strategy of attracting existing employers away from other regions does not guarantee good economic outcomes.
It is this lack of broader development benefits that has led to many advocacy organizations, including Good Jobs First, to call for “turning the tables.” Specifically, they argue that firms themselves, not taxpayers, should foot the bill of locating in a community and beginning to draw on the community’s infrastructure. Instead of committing to giving away public funds to attract existing employers from other regions in a zero-sum contest, communities should demand concrete actions that ensure that an employer’s arrival will make their region a more prosperous place—or that at least offset some of the harms the arrival could create.
Good Jobs First lays out what such concrete demonstrations from Amazon (and by extension other employers) could include: an impact fee to offset lost tax revenues if existing retailers lose business or close and a Community Benefits Agreement (CBA) that ensures a range of benefits. The CBA could require that the employer provide jobs with living wages and benefits, hire disadvantaged workers, evaluate the environmental impact of the facility, and provide other benefits.19 Good Jobs First has also weighed in on what Amazon should offer to cities bidding to become the home of Amazon’s next 12 Item 2B - 173Economic Policy Institute
headquarters. In an open letter, Good Jobs First calls on Amazon president Jeff Bezos to provide affordable housing supports, transit investments, and a commitment to strengthen small business.20
Appendix
Update as of March 1, 2018: Since we ran our original analysis, additional data on fulfillment center openings has become available. Using the same analysis with updated data confirms our previous findings that fulfillment center openings in a county do not significantly add to overall private sector employment in that area. Details of our analysis of the updated data are described below.
As of February 28, 2018, the list of MWPVL fulfillment center openings contains some openings that we did not include in our original estimates.21 The openings data we use in the original study indicate 69, 91, and 95 fulfillment center openings by the end of 2015, 2016, and 2017, respectively. After we incorporate all additional fulfillment center openings reported in the updated MWPVL data that contained quarterly or monthly dates of opening, the number of fulfillment center openings increases to 75, 100, and 120 openings by 2015, 2016, and 2017, respectively.
These additional openings do not meaningfully affect our results. Using nine models over two sample periods, for a total of 18 specifications, we previously found that a fulfillment center opening affected total private-sector employment by somewhere between -1.5 percent and +0.3 percent (see Appendix Table 2). Running the same analysis but with the new, updated data, we find that the effect on private-sector employment ranges between -1.4 percent and +0.2 percent. In both cases, most results are not statistically distinguishable from zero. In no case do we find positive overall employment effects that are statistically significant.
The current paper and the appendix tables and figures continue to report the estimates that we originally published.
13 Item 2B - 174Economic Policy Institute
Appendix
Figure A
Effect of opening an Amazon fulfillment center on
county warehousing employment
Percent change in employment two years before and after the opening Common time fixed effects
Division-specific time fixed effects
Percent change in employment
Y ears since opening
Confidence interval, high
Confidence interval, low
0 50
100%
-2.5 -2 -1.5 -1 -0.5 0 0.5 1 1.5 2
Before After
Percent change in employment
Y ears since opening
Confidence interval, high
Confidence interval, low
0 50
100%
-2.5 -2 -1.5 -1 -0.5 0 0.5 1 1.5 2
Before After
14 Item 2B - 175Economic Policy Institute
••• .. • ...
•• •• ········
•• •••• ••••• ......
•••• •• ... .. ··-··· •••········• ~ ........ __ ~
•• ••
••••
• •• •• • •••
····· ... •
.-.. ••'
Appendix
Figure A
(cont.)
Notes: Cumulative employment effects are from a regression of county warehousing employment per capita on leads and lags of a count of fulfillment centers in that county as well as county fixed effects and county-specific linear time trends. The top, middle, and bottom panels, respectively, show specifications with common, Census division–specific, and state-specific time fixed effects. See the Appendix tables for results from other specifications. Regressions are weighted by mean county population, standard errors are clustered at the county level, and the figure shows 95 percent confidence intervals. We convert the marginal effects and standard errors into percent changes in employment by dividing coefficients by the sample mean employment-to-population ratio.
Sources: Authors' calculations from Quarterly Census of Employment and Wages employment data, Cen- sus population counts, and fulfillment center openings data described in the text.
State-specific fixed effects
Percent change in employment
Y ears since opening
Confidence interval, high
Confidence interval, low
0 50
100%
-2.5 -2 -1.5 -1 -0.5 0 0.5 1 1.5 2
Before After
15 Item 2B - 176
····· • ••
•••• •• • • • • •• ••
....... ····· ••• ••• ••••
•• ••
•• • • .. •·········· ·•········ •••
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················ ··········
Appendix
Figure B
Effect of opening an Amazon fulfillment center on
county private-sector employment
Percent change in employment two years before and after the opening Common time effects
Division-specific time fixed effects
Percent change in employment
Y ears since opening
Confidence interval, high
Confidence interval, low
-2.5
0 2.5%
5 -2.5 -2 -1.5 -1 -0.5 0 0.5 1 1.5 2
Before After
Percent change in employment
Y ears since opening
Confidence interval, high
Confidence interval, low
-2.5
0 2.5%
5 -2.5 -2 -1.5 -1 -0.5 0 0.5 1 1.5 2
Before After
16 Item 2B - 177Economic Policy Institute
•• ...... • • •• ••••••••••••• •• •• •••• •• .. . •• • ••• • • ••• •• .. . ························· ~ ·········· • ••• •
.. •···~-------- : •• •• ••• ••
~ :............__ •••••••
::...: .•--~. '- -.__/ ••• • •• ••• • ••••• = •••••••••• ··········· .. •••••••••
Appendix
Figure B
(cont.)
Notes: Cumulative employment effects are from a regression of county private-sector employment per capita on leads and lags of a count of fulfillment centers in that county as well as county fixed effects and county-specific linear time trends. The top, middle, and bottom panels, respectively, show specifications with common, Census division–specific, and state-specific time fixed effects. See the Appendix tables for results from other specifications. Regressions are weighted by mean county population, standard errors are clustered at the county level, and the figure shows 95 percent confidence intervals. We convert the marginal effects and standard errors into percent changes in employment by dividing coefficients by the sample mean employment-to-population ratio.
Sources: Authors' calculations from Quarterly Census of Employment and Wages employment data, Cen- sus population counts, and fulfillment center openings data described in the text.
State-specific time fixed effects
Percent change in employment
Y ears since opening
Confidence interval, high
Confidence interval, low
-2.5
0 2.5%
5 -2.5 -2 -1.5 -1 -0.5 0 0.5 1 1.5 2
Before After
17 Item 2B - 178
. . ...... ... •••••••• ••• ••• •••••••••••••• ••
······· .. . ... ······ ..... •• t.. ,.,,,-,-... ········· ...... : .. . ········ ······· .. ····· ••• • • • • •• •• ••• ·• ....... ·
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Appendix
Table 1
Change in county warehousing earnings before and
after opening an Amazon fulfillment center
Percent earnings changes in the two years before and the two years after an opening
Common time fixed
effects
Division-specific fixed
effects
State-specific time fixed
effects
(1) (2) (3) (4) (5) (6) (7) (8) (9)
2001–2015
Cumulative
percent
change two
years before
the opening
-3.1%*** -3.2%*** -0.5% -3.3%** -3.4%** -0.0% -4.0%*** -4.2%*** -0.3% (1.1%) (1.1%) (1.2%) (1.4%) (1.4%) (1.4%) (1.2%) (1.2%) (1.6%) Cumulative
percent
change two
years after the
opening
-1.0% -1.1% -1.4% 2.5% 2.5% -0.9% 5.8%*** 5.5%** -1.7%
(1.1%) (1.0%) (1.4%) (1.7%) (1.7%) (1.5%) (2.1%) (2.1%) (1.9%) 2008–2015
Cumulative
percent
change two
years before
the opening
-2.4%* -2.5%* -1.3% -2.9%** -2.8%** -0.9% -3.1%** -3.0%** -0.8% (1.3%) (1.3%) (1.5%) (1.3%) (1.3%) (1.6%) (1.3%) (1.4%) (2.0%) Cumulative
percent
change two
years after the
opening
-1.8%* -2.0%** -1.4% 0.7% 0.7% 0.4% 3.0% 2.7% 0.5%
(1.0%) (1.0%) (1.5%) (1.5%) (1.5%) (1.8%) (2.3%) (2.3%) (1.5%) Controls
County fixed
effects
Y Y Y Y Y Y Y Y Y
Predicted
employment
Y Y Y
County-specific
linear time
trends
Y Y Y
Notes: Each column shows cumulative earnings effects in the pre-opening or post-opening time period from a regression of county warehousing quarterly earnings per worker on leads and lags of a count of fulfillment cen- ters in that county as well as county fixed effects. Other controls are indicated at the bottom of the table. Re- gressions are weighted by mean county population, standard errors are clustered at the county level, and the figure shows 95 percent confidence intervals. We convert the marginal effects and standard errors into percent 18 Item 2B - 179Economic Policy Institute
Appendix
Table 1
(cont.)
changes in earnings by dividing coefficients by the sample mean quarterly earnings per worker. 19 Item 2B - 180
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Appendix
Table 2
Change in county private-sector employment before
and after opening an Amazon fulfillment center
Percent change in employment two years before and after opening Common time fixed effects
Division-specific fixed
effects
State-specific time fixed
effects
(1) (2) (3) (4) (5) (6) (7) (8) (9)
2001–2015
Cumulative
percent
change two
years before
the opening
-0.5% 0.1% 0.4% -0.8%* -0.5% 0.4% -0.8%* -0.6% 0.5%
(0.4%) (0.4%) (0.6%) (0.4%) (0.3%) (0.5%) (0.5%) (0.4%) (0.6%) Cumulative
percent
change two
years after the
opening
-1.5%*** -1.4%*** -1.3%*** -0.2% -0.0% -0.2% -0.4% 0.1% -0.2% (0.5%) (0.4%) (0.5%) (0.5%) (0.4%) (0.4%) (0.5%) (0.5%) (0.5%) 2008–2015
Cumulative
percent
change two
years before
the opening
0.7%* 0.7%** 0.9% 0.3% 0.3% 0.9% 0.0% 0.0% 0.7%
(0.4%) (0.4%) (0.7%) (0.3%) (0.3%) (0.6%) (0.3%) (0.3%) (0.7%) Cumulative
percent
change two
years after the
opening
-1.1%*** -1.1** -0.8% -0.0% -0.0% -0.2% 0.2% 0.3% -0.2% (0.4%) (0.4%) (0.9%) (0.4%) (0.4%) (0.6%) (0.4%) (0.4%) (0.7%) Controls
County fixed
effects
Y Y Y Y Y Y Y Y Y
Predicted
employment
Y Y Y
County-specific
linear time
trends
Y Y Y
Notes: Each column shows cumulative employment effects in the pre-opening or post-opening time period from a regression of county private-sector employment per capita on leads and lags of a count of fulfillment centers in that county as well as county fixed effects. Other controls are indicated at the bottom of the table.
Regressions are weighted by mean county population, standard errors are clustered at the county level, and the figure shows 95 percent confidence intervals. We convert the marginal effects and standard errors into percent changes in employment by dividing coefficients by the sample mean employment-to-popula- tion ratio.
20 Item 2B - 181Economic Policy Institute
Appendix
Table 2
(cont.)
Sources: Authors' calculations from Quarterly Census of Employment and Wages employment data, Census population counts, and fulfillment center openings data described in the text. 21 Item 2B - 182
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Appendix
Table 3
Amazon fulfillment centers by state and county
State County Y ear opened
Arizona Maricopa County Third quarter 2007
Arizona Maricopa County Second quarter 2008
Arizona Maricopa County Fourth quarter 2010
Arizona Maricopa County Third quarter 2011
California Riverside County Third quarter 2014
California Riverside County Third quarter 2014
California Riverside County Fourth quarter 2016
California San Bernardino County Fourth quarter 2012
California San Bernardino County Fourth quarter 2014
California San Bernardino County Third quarter 2016
California San Bernardino County Fourth quarter 2015
California San Joaquin County Fourth quarter 2013
California San Joaquin County Fourth quarter 2016
California San Joaquin County Fourth quarter 2013
California Stanislaus County Fourth quarter 2013
Connecticut Hartford County Second quarter 2015
Delaware New Castle County Fourth quarter 1997
Delaware New Castle County Fourth quarter 2012
Florida Duval County Fourth quarter 2017
Florida Hillsborough County Fourth quarter 2014
Florida Miami-Dade County Fourth quarter 2017
Florida Polk County Third quarter 2014
Georgia Douglas County Fourth quarter 2015
Georgia Fulton County First quarter 2015
Georgia Jackson County Fourth quarter 2016
Illinois Madison County Third quarter 2016
Illinois Madison County Third quarter 2016
Illinois Will County Fourth quarter 2015
Illinois Will County Fourth quarter 2016
Illinois Will County Fourth quarter 2016
Illinois Will County Fourth quarter 2017
Indiana Boone County Third quarter 2008
22 Item 2B - 183Economic Policy Institute
Appendix
Table 3
(cont.)
State County Y ear opened
Indiana Boone County Fourth quarter 2013
Indiana Clark County Fourth quarter 2012
Indiana Hendricks County Fourth quarter 2008
Indiana Hendricks County Third quarter 2011
Indiana Marion County Second quarter 2011
Indiana Marion County Third quarter 2016
Kansas Johnson County Fourth quarter 2016
Kansas Johnson County Fourth quarter 2016
Kentucky Boone County Third quarter 2015
Kentucky Boone County Second quarter 2005
Kentucky Boone County Fourth quarter 2005
Kentucky Boone County Third quarter 2007
Kentucky Bullitt County Third quarter 2005
Kentucky Bullitt County Second quarter 2012
Kentucky Bullitt County Second quarter 2012
Kentucky Bullitt County Fourth quarter 2013
Kentucky Fayette County Fourth quarter 2000
Kentucky Fayette County Second quarter 2006
Kentucky Jefferson County Third quarter 2005
Kentucky Taylor County Second quarter 1999
Maryland Baltimore County First quarter 2015
Massachusetts Bristol County Fourth quarter 2016
Michigan Wayne County Fourth quarter 2014
Minnesota Scott County Third quarter 2016
Nevada Clark County Fourth quarter 2008
Nevada Storey County Fourth quarter 2010
Nevada Washoe County First quarter 2015
New Hampshire Hillsborough County Third quarter 2007
New Jersey Burlington County Third quarter 2016
New Jersey Mercer County Third quarter 2014
North Carolina Mecklenburg County Fourth quarter 2016
Ohio Franklin County Third quarter 2016
Ohio Licking County Third quarter 2016
Pennsylvania Cumberland County Third quarter 2010
23 Item 2B - 184Economic Policy Institute
Appendix
Table 3
(cont.)
State County Y ear opened
Pennsylvania Cumberland County Third quarter 2010
Pennsylvania Cumberland County Second quarter 2013
Pennsylvania Cumberland County First quarter 2015
Pennsylvania Lackawanna County Fourth quarter 2010
Pennsylvania Lehigh County Third quarter 2010
Pennsylvania Lehigh County Second quarter 2011
Pennsylvania Luzerne County Third quarter 2008
Pennsylvania Luzerne County Fourth quarter 2016
Pennsylvania Northampton County Fourth quarter 2016
Pennsylvania Y ork County Third quarter 2010
South Carolina Lexington County Fourth quarter 2011
South Carolina Lexington County Second quarter 2017
South Carolina Spartanburg County Third quarter 2012
Tennessee Bradley County Third quarter 2011
Tennessee Hamilton County Third quarter 2011
Tennessee Rutherford County Third quarter 2012
Tennessee Wilson County Third quarter 2011
Tennessee Wilson County First quarter 2013
Texas Dallas County Fourth quarter 2015
Texas Dallas County Fourth quarter 2016
Texas Denton County Fourth quarter 2013
Texas Hays County Third quarter 2016
Texas Tarrant County Fourth quarter 2013
Texas Tarrant County Third quarter 2014
Virginia Chesterfield County Fourth quarter 2012
Virginia Dinwiddie County Fourth quarter 2012
Washington King County First quarter 2016
Washington Pierce County Second quarter 2011
Washington Pierce County First quarter 2015
Source: Avalara (“Amazon Fulfillment Center Locations,” accessed October 2017), Guided Imports (“The Complete List of Every Amazon Warehouse and Distribution Center in the World,” last updated April 2017) and MWPVL International (“Amazon Global Fulfillment Center Network,” accessed October 2017). 24 Item 2B - 185
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Endnotes
1. A December 2016 report from Good Jobs First counts “at least $241 million in subsidies to Amazon facilities” since the start of 2015 on top of “some $600 million in subsidies during the previous decade, a substantial portion of which was tied to deals involving sales tax collection.” And “there are likely more subsidies that can’t be quantified here due to lack of disclosure,” the report said. A March 2017 article in Bloomberg Daily Tax Reportsaid that Amazon “is expected to vault past a record for state and local tax subsidies held for many years by Wal-Mart Stores Inc.” which has “captured more than $1.2 billion in tax abatements, credits, exemptions, infrastructure assistance and financing deals during four decades of rapid expansion.” See Thomas Cafcas and Greg LeRoy, Will Amazon Fool Us Twice? Why State and Local Governments Should Stop Subsidizing the Online Giant’s Growing Distribution Network, Good Jobs First, December 2016 and Michael J.
Bologna, “Amazon Close to Breaking Wal-Mart Record for Subsidies,”Bloomberg Daily Tax Report, March 20, 2017.
2. Jessica Bruder, “With 6,000 New Warehouse Jobs, What Is Amazon Really Delivering?” Reuters, June 17, 2015; Chris Isidore, “Amazon Hiring 7,000 Workers”CNN Money, July 29, 2013; “We’re Hiring: Amazon Creating 120,000 Seasonal Jobs in Customer Fulfillment and Customer Service This Holiday Season,” Amazon Press Release, October 13, 2016; “Amazon Announces Ninth Fulfillment Center in Texas; New Robotics Site Will Create 1,000-Plus Full-Time Jobs,” Amazon Press Release, January 18, 2017.
3. See Brian Fung, “Amazon Releases List of Metro Areas Being Considered for Its Second HQ,” The Washington Post, January 18, 2018, which links to the District of Columbia bidding proposal.
4. Los Angeles Times Editorial Board, “Do Tax Incentives Really Create Jobs?”Los Angeles Times, September 10, 2014; Carl Davis, Tax Incentives: Costly for States, Drag on the Nation, Institute on Taxation and Economic Policy, 2013; David Seiden, “Do State Tax Incentives Really Work?” Huffpost, November 22, 2013. For the pro and con debate about Amazon specifically see Mark Vandevelde, “Amazon Is Creating More Jobs than It Destroys,”Financial Times, July 29, 2017, and Jon Swartz, “Amazon Is Creating 100,000 U.S. Jobs, But at What Cost?” USA TODAY, January 13, 2017.
5. Robert G. Lynch, Rethinking Growth Strategies: How State and Local Taxes and Services Affect Economic Development. Economic Policy Institute, 2004.
6. Davis, Tax Incentives, 2013.
7. Lynch, Rethinking Growth Strategies, 2004.
8. Lynch, 2004 and Timothy J. Bartik, The Economic Development Benefits of Universal Preschool Education Compared to Traditional Economic Development Programs, W.E. Upjohn Institute for Employment Research, 2006. Recent research also finds state economic development incentives have little correlation with unemployment levels, income levels, or future economic growth. See Timothy J. Bartik, A New Panel Database on Business Incentives for Economic Development Offered by State and Local Governments in the United States, W.E. Upjohn Institute for Employment Research, 2017.
9. Our data on Amazon fulfillment centers comes from publically available sources described in the “Empirical methodology” section.
25 Item 2B - 186Economic Policy Institute
10. Estimates from MWPVL tabulations find that fulfillment centers account for 92.8 million out of 121.6 million square feet in Amazon’s distribution network. See “Amazon Global Fulfillment Center Network,” MWPVL, updated January 2018.
11. See “Amazon Fulfillment Center Locations,” Avalara TrustFile, accessed October 2017; “The Complete List of Every Amazon Warehouse and Distribution Center in the World,” [downloadable Excel files], Guided Imports, last updated April 2017; MWPVL International, http://www.mwpvl.com/ html/amazon_com.html, accessed October 2017.
12. QCEW data are available at https://www.bls.gov/cew/datatoc.htm.
13. The public-use QCEW data suppresses some county-industry-level aggregations in order to protect employer identities. Our sample begins in 2001 because prior to that date it is not possible to distinguish between whether county-industry employment was truly zero or suppressed. Our sample ends in 2015 because our regressions specifications require two years of data after fulfillment center openings, and openings data were only available through 2017 when we conducted our analyses. We identify the warehousing industry as NAICS (North American Industry Classification System of the Census Bureau) 493. QCEW data are available at https://www.bls.gov/ cew/datatoc.htm.
14. County population data that we accessed are available at United States Census Bureau, “County Population Totals and Components of Change: 2010–2016,” [online data tables] and https://www2.census.gov/programs-surveys/popest/tables/2000-2010/intercensal/county/
15. We regress the industry-level employment-per-capita on an indicator for presence of a fulfillment center in that quarter. In addition to the contemporaneous fulfillment center indicator, we include eight quarters of leads and eight quarters of lags of the indicator. All regressions include county fixed effects. In the table and some of the figures described in the text, we include several additional controls, depending on the specification: common time fixed effects, Census division–specific time fixed effects, or state-specific time fixed effects; a predicted employment-to- population ratio; and county-specific linear trends. For specifications with a control for predicted employment-to-population, predicted employment is an industrial shift-share prediction from the sum of mean 1996–2000 county-level 3-digit NAICS shares of national employment multiplied by contemporaneous national industry-level employment. All regressions are weighted by the mean population in the county and standard errors are clustered at the county level. We convert the percentage-point employment-to-population ratio marginal effect and standard errors into a percent change in employment by dividing coefficients by the sample mean employment-to- population ratio.
16. For the three specifications shown in Appendix Figure A, the average cumulative effect over the two-year post-treatment period is 26.0, 28.4, and 40.0 percent (these values are the difference between the cumulative effect in the post-treatment period minus the pre-treatment period). A simple average of these estimates is a 31.5 percent increase in warehousing employment growth.
The average warehousing employment in counties that open fulfillment centers, prior to the opening, is about 4,200 jobs.
17. See The Economist, “Unfulfillment Centres: What Amazon Does to Wages,” January 20, 2018.
18. Olivia LaVecchia and Stacy Mitchell, “Amazon’s Stranglehold: How the Company’s Tightening Grip Is Stifling Competition, Eroding Jobs, and Threatening Communities,” Institute for Local Self- Reliance, November 2016.
19. Greg LeRoy, “Memo to Politicians: Bargaining for an Amazon Warehouse? Turn the Tables!” 26 Item 2B - 187Economic Policy Institute
Bloomberg BNA Daily Tax Report, July 25, 2017.
20. “‘Not Y our Grandparents’ Deal’: Good Jobs First Issues Statement on Amazon HQ2 “Short List” Announcement,” press release, Good Jobs First, January 19, 2018.
21. “Amazon Global Fulfillment Network,” MWPVL, accessed February 28, 2018. 27 Item 2B - 188Economic Policy Institute
THE
SUSTAINABLE
LAST MILE.
FASTER. CHEAPER. GREENER.
Item 2B - 189
> accenture
~--~· \_
\. ·\._,.. ___ _
THE SUSTAINABLE LAST MILE
2 Something unexpected happened to last-
mile delivery during the pandemic—
it got greener. With many people stuck at
home, e-commerce sales skyrocketed.1
When supply chains started moving again,
the ecosystem adapted fast, as people
purchased more and different products
online. Stores became fulfilment centres.
Ship from store and curbside pickup
emerged. Parcel drop density rose.
Out of sheer necessity, new consumer
behaviours and retailers’ responses to them
changed last mile delivery’s carbon footprint,
making it more sustainable. But these
sustainability gains are only the beginning of
a whole new opportunity for collaboration.
One that could produce a remarkably more
sustainable last mile. But only with action and
smart investment.
Item 2B - 190
THE SUSTAINABLE LAST MILE
3 So what
happens
next?
The carbon footprint of the last mile has long been an environmental and societal challenge. The sustainability gains that came from the pandemic were unintentional. Yet they happened at an ideal time.
Now it’s time to get intentional and make the last mile more efficient, less expensive and more eco-friendly. The imperative to act is clear.
Last-mile delivery accounts for 53% of the total cost of shipping—and 41% of total supply chain costs.2 With no interventions, we can expect a 32% jump in carbon emissions from urban delivery traffic by 2030.3 Consumers are watching. They have a tall order: convenience, speed and sustainability at the right price.
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4 A tipping
point
Lasting change will require bold moves such as incentivising greener choices among consumers and businesses, rethinking asset use, and harnessing data and analytics. The whole last-mile ecosystem—post and parcel organisations, retailers, delivery companies, governments and consumers—is at a tipping point. Go one way, and it can create a truly sustainable last mile— faster, cheaper and greener. Go the other way, and things worsen unchecked.
No single entity can solve this problem alone. It will take all ecosystem players working together in ways they never have before.
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5 The acceleration of local or market-based fulfilment is one stand-out impact of the pandemic.
Amazon is a pioneer here. The company’s ability to meet its Prime delivery promises has always hinged on its innovative local fulfilment strategy. And in March 2020, the e-commerce giant doubled down on its local delivery strategy, investing in a network of new micro-fulfilment centres located even closer to its customers that stock “need it today” items. The goal was to offer more speed and convenience with a lower carbon footprint.4
To respond to Amazon’s delivery speed and cost, brick-and-mortar retailers had already been developing capabilities for omnichannel fulfilment using their stores or other local inventory options. The pandemic radically accelerated fulfil-from-store investments by about three to five years,
5 permanently altering supply chains where inventory is placed closer to customers than ever before.
Retailers accelerated these investments as they scrambled to adapt. But these investments won’t be rolled back post-pandemic. Now, many more items will come from market-based inventory, which creates an opportunity for new experiences around local fulfilment for consumers and exciting potential for post and parcel and logistics organisations to create a more sustainable last mile.
The model estimates the impact on outputs such as
emissions and traffic congestion, based on inputs
including local fulfilment centre prevalence, population density, average distance travelled per parcel, delivery vehicle mix and consumer demand projections.
To understand this potential,
in 2020 Accenture and Frontier
Economics developed a robust
economic model of the impact
of local fulfilment centres for
e-commerce using data from
London, Chicago, and Sydney.
6 The potential
of local fulfilment
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6 This improvement is broadly consistent across all three cities. Using local fulfilment for even half of e-commerce orders between 2020 and 2025 could lead to significant
impacts:
decrease in delivery
traffic, saving
68k tonnes in carbon
emissions (approximately
20% of delivery van
emissions)
Chicago London
13 decrease in delivery
traffic, saving
144k tonnes in carbon
emissions (approximately
17% of delivery van
emissions)
13 decrease in delivery
traffic, saving
52k tonnes in carbon
emissions (approximately
16% of delivery van
emissions)
Sydney
2 The analysis is revealing.
The last-mile supply chain made
possible by local fulfilment centres
could lower last-mile emissions
between 17 and 26% by 2025.
% % %
The potential
of local fulfilment
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THE SUSTAINABLE LAST MILE
7 Local fulfilment: Same distance. Smaller footprint.
The last-mile supply chain made possible by local fulfilment centres could lower last-mile emissions between 17 and 26% by 2025. Using local fulfilment for even half of ecommerce orders between 2020 and 2025 could lead to significant impacts.
Central distribution centre
Item 2B - 195
Direct delivery to households
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THE SUSTAINABLE LAST MILE
8 Going the
extra mile
for a greener
last mile
This is about thinking outside the box to deliver the box. It’s critical to work across the ecosystem to understand the unseen costs of last-mile delivery and pursue change. This means investing smartly in innovative technologies and balancing high- and low-impact opportunities. Three fundamentals are key to any plan, and success involves coordinated investment and creative—even unconventional—ecosystem cooperation.
The last mile is not going to get greener with more investments in traditional processing and distribution infrastructure and delivery fleets.
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THE SUSTAINABLE LAST MILE
9 01 02 03
Incentivise
greener
choices
Rethink
asset
use
Harness
data and
analytics
3 fundamentals
for the last-mile
ecosystem to create
a more sustainable
last mile
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THE SUSTAINABLE LAST MILE
10 01
Incentivise
greener
choices
Develop incentives and “choice
architectures” that encourage
consumers to receive deliveries in more
sustainable—yet convenient—ways,
and ecosystem players to make green
investments.
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11 Incentivise
greener choices
Making purchases online can be as easy as clicking a button and finding the package at your front door an hour later. It’s so easy that people don’t think about how the shipping option they select, the size of their basket or where, when and how their order is fulfilled impacts the environment.
The root issue here is lack of buyer awareness. It’s why the last-mile ecosystem must make consumers more aware of the environmental impact of delivery options and be more transparent by offering greener delivery choices at checkout. Many people would choose these greener options—43% of consumers are more likely to choose retailers that offer more sustainable delivery options.9 These “choice architectures” run the gamut from green shipping buttons to GHG calculators to consolidating multiple individual deliveries into one. There are also options to incentivise consumers to pick up parcels at local fulfilment centres by offering value-add experiences or discounts.
In our model, if all customers within 1 kilometer of a fulfilment centre were to collect their deliveries on foot, 14% of London’s deliveries would have a zero- emission last mile. The message is clear: sustainability doesn’t have to come at the cost of customer experience, or with a
higher price tag.
01 Shopify’ s Carbon
Checkout App
allows consumers to make choices based on their values. They can balance the carbon footprint of their orders by rounding up purchases to the nearest dollar. The difference is pooled to fund projects that reduce global carbon emissions. It happens seamlessly at checkout—for every dollar contributed, 245 lbs. of carbon emissions are offset.7
Cainiao Smart
Logistics Network
— which is Alibaba Group’s logistics unit—is locating 30,000 new postal stations in convenient spots across 100 cities in China. The posts support easy, contactless mailing and parcel collection, have services for consumers to track their packages in real time, and use autonomous vehicles to bring parcels to the door step.8
Getting to green
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12 Incentivise
greener choices
Incentivising greener choices
doesn’t just extend to consumers.
City and national governments
and planners must weigh the
trade-offs they can make to
incentivise delivery companies
to invest in greener fleets, enable
the circular economy and develop
greener route management
practices. In our model, the
use of low-emissions vehicles
accounted for 51% of the total
decrease in London’s delivery
van emissions from 2020 to
2025.
Delivery companies are already
investing in electric vehicles.
Cities can incentivise further
01 action by investing in electric
vehicle charging infrastructure,
making them convenient for
delivery companies. They can
also offer GOV (green occupancy
vehicle) driving lanes, express
parking, ticketing and toll
exemptions, or carbon credits for
green vehicles.
All of these are appealing
because in a delivery company’s
calculus, the inherent efficiency
gains of fast, easy access to
urban addresses could offset the
incremental cost increases of
investing in green vehicles.
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13 0202
Rethink
asset
use
Repurpose, retrofit and share
assets like stores, infrastructure
and fleets—while investing in
green technology and evolving
regulations to support these
innovative approaches.
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14 Rethink
asset use
Assets have a fixed role in the traditional last mile. Warehouses and fulfilment centres store the inventory. Delivery fleets run the routes. Every delivery organisation invests in its own infrastructure, technology, people and vehicles.
But as the context of the last mile changes—more volume, more velocity and new consumer expectations—it’s time to stop building redundant networks and start repurposing assets with sustainability as a priority.
Retailers have been reinventing their best asset—the physical store—for years amid the e-commerce boom. Pandemic lockdowns that kept shoppers at home created new challenges, closing stores. But retailers have and continue to repurpose stores into local fulfilment centres, transforming them into omnichannel fulfilment hubs.
These are hybrid spaces for shopping, collecting and returning deliveries. In a shared use model, dying shopping malls—and other unused or underused urban spaces—can become multi-tenant fulfilment hubs. Bringing new life to such spaces can generate income for towns, cities and local authorities while enabling the sustainable last mile. Making it a reality demands supportive zoning, tax incentives and creative city planning.
The 2020 holiday season looked
very different for US retailer Target.
The retail giant had already reconfigured its entire supply chain to focus on store fulfilment pre-pandemic, but when it hit, the same-day services that this model enabled became essential for consumers. In fact, 95% of Target’s sales in November and December were fulfilled through its brick-and-mortar store network thanks to sales originated in stores, same-day order and ship-from-store options.
10 The City of London is set to launch
its first last-mile logistics hub.
The plan is to repurpose under-used spaces at the London Wall Car Park with Amazon Logistics as the operator.
Delivering packages from the hub using pedestrian porters and bikes is projected to take 85 delivery vehicles off London’s streets each day. That’s 23,000 trips eliminated in central London annually.11
Getting to green
02 Item 2B - 202
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15 Rethink
asset use
Delivery companies can also
enhance co-operation and
move to share assets in new
ways. Providing access to each
other’s networks can eliminate
costly redundancies and reduce
emissions. The United States
Postal Services (USPS) is already
doing this through its Parcel
Select® Service. Other delivery
companies—including USPS
competitors—can use this ground
delivery service to get sorted
packages to their final stop at less
cost.
12 Delivery companies and
post and parcel organisations
02 can embrace greener practices
more economically by sharing
delivery infrastructure, including
fulfilment and open locker and
PickUp DropOff networks that
support interoperability.
At the same time, cities and
regulators can encourage asset
sharing. One way to do this is by
creating points at the outskirts
of cities where deliveries are
concentrated for all carriers.
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16 0303
Harness
data and
analytics
Act on real-time insights into
consumer preferences and
purchasing patterns to innovate
and optimise inventory and
route management for a lower
last-mile carbon footprint.
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17 Harness data
and analytics
The more that the ecosystem knows about who will buy what, where and when, the more successful local fulfilment can be—and the more that delivery companies can plan greener routes. While local fulfilment makes a bigger impact on the last mile than route optimisation alone, together, they can further reduce emissions between 7 and 9% in the cities we studied.
Developing this insight goes beyond traditional customer segmentation and inventory optimisation. It is highly targeted. With contextual insights into what specific customer groups in specific geographic areas need, retailers can stock the right SKUs locally. Doing this well involves analysing a mix of internal and third-party data, social listening and monitoring local trends and events.
Greenplan
—a startup company funded by DHL—has developed an
algorithm that supports green route planning. The algorithm accounts for inputs like carbon emissions of each vehicle type and range limits of electric vehicles. The focus is on creating efficient routes that are aligned with traffic flow so that planned tours and stop sequences make sense to drivers.13 Freight planners in the
District of Columbia
are using data to understand what’s happening at the curb and change their approach to loading zones to accommo-
date the rise in on-demand deliveries. They are now allo- cating curb usage differently depending on the time of day, and exploring the optimal location for bikeshare stations and micromobility hubs.14
Getting to green
0303
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18 Such deep customer insight enables delivery
companies to pursue more proactive
delivery approaches that are kinder to the
environment. Take anticipatory shipping, for
example. Delivery companies use customer
and geolocation data to ensure a package is
delivered the first time. By using geolocation
to see that a customer isn’t home, the delivery
company can automatically leave the package
in an alternative location per the recipient’s
known preference. This eliminates exceptions
that add cost—and extra trips that increase
the carbon footprint. Considering that every
failed delivery costs about $5—and that 5 to
10% of all last-mile deliveries fail
15 —this is a
much-needed improvement. One that is good
for business and good for the planet.
Data insight can also help delivery companies
get more value out of route optimisation
on top of the 7 to 15% efficiency gains they
03 Harness data
and analytics
typically see from traditional strategies.16 In
fact, our model shows that when route
optimisation is applied with local fulfilment,
delivery vehicles drive 140 million
kilometers less. With more data, delivery
companies can make routes more efficient,
accounting for traffic and other real-time
conditions. They can personalise service
level commitments, using longer timelines
to accommodate greener routes. They can
assess local traffic and weather patterns in
real time. They can integrate route planning
with the availability of smart charging stations.
All of these data inputs can optimise routes
with extraordinary precision, maximising
drop density and reducing complexity and
downtime. Cross-ecosystem data sharing via
the cloud is key to making it happen.
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19 Driving the
sustainable
last mile
Delivery companies GovernmentsRetailers Consumers
• Entice consumers
to choose in-store
fulfilment.
• Transform supply
chains and store
networks to include
dark stores, partial dark
stores, and/or market
fulfilment centres.
• Educate consumers
on the value of
consolidating
deliveries.
• Put data at the
heart of operations
to prioritise new
green practices.
• Explore
partnerships and
ways to invest in
shared assets.
• Electrify the
delivery fleet with
purpose-built, last-
mile vehicles.
• Align sustainable
last-mile strategy with
economic stimulus
and jobs.
• Support and promote
green transport
initiatives.
• Encourage the
repurposing of urban
spaces for local
fulfilment.
• Choose the greenest
delivery option when
possible.
• Take advantage of
incentives to bundle
deliveries.
• Consolidate trips to
pick up parcels at local
fulfilment centres.
Real change toward a
more sustainable last mile
takes coordination and
collaboration across the
ecosystem.
Every player can start to
make a difference with
these priority actions.
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20 The ecosystem accelerated sustainable last mile practices during the pandemic out of necessity. Now is the time to drive more meaningful and lasting change by design. There’s no turning back from the changes that the pandemic made to the last mile. Consumers’ shopping habits are different. Supply chains are different.
Retail footprints are different. The last mile can be different too—much, much greener—if the ecosystem comes together to act on sustainable last-mile practices. Now is the time to take advantage of the momentum we’re seeing today and make it more meaningful and lasting.
IN A WORLD FOREVER CHANGED BY THE PANDEMIC, THE
OPPORTUNITY FOR A SUSTAINABLE LAST MILE HAS NEVER
BEEN GREATER—OR MORE URGENT . EVERYONE HAS
A PART TO PLAY . WHAT WILL YOURS BE?
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21 Contact
André Pharand
Managing Director – Consulting, Post and Parcel
[email protected] With thanks to Sarah Banks, Gemma Baker, Henry Cartwright, Pierre-Olivier Desmurs, Alexander Holst,
Marius Peters, Juergen Reers, Simen Strøm Nordnes and
Sean Whitehouse for their contribution to this report.André Pharand is the Managing Director for Accenture’s Post and Parcel Industry. André has over 25 years of experience in the postal, express, logistics, retail, ecommerce and fulfillment industries. He has worked with over 20 postal and parcel players globally to develop new strategies, drive innovation, implement change and manage costs. André leads our thought leadership and monitors trends and disruptions impacting the industry.
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22 About
the research
Accenture modeled the impact of fulfilling 50% of e-commerce orders via micro-fulfilment centres, from a baseline of 0 now (based on our analysis of the market) in three cities—London, Sydney and Chicago. These micro-fulfilment centres are used to make “fast” deliveries, defined as same or next day. Model outputs included decreases in congestion (measured as kilometers travelled by motor vehicles) and decreases in emissions (CO2, NOx and PM10). Model estimates depend on five main drivers:
• The prevalence of micro-fulfilment currently, and the assumed increase • Estimates of the number of deliveries through each delivery channel • The average distance travelled for each stage of package delivery • The assumed vehicles mix for each channel, and the associated emission rates
• The demand and substitution effects which result from free, fast delivery Outcomes were then calculated based on available data as well as estimated values for number of deliveries, average distance per delivery, and impacts per kilometer travelled (i.e. emissions rates for vehicle type). To estimate distance, the model assumes that central dispatch warehouses are located near airports and micro-fulfilment centres are evenly spread throughout the city. The distance from the micro-fulfilment centres to household varies by city due to population density.
Meghan Yurchisin
[email protected]
Alexa Jaeger
[email protected]
For information about
the research, contact:
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23 About
Accenture
Accenture is a global professional services company with leading capabilities in digital, cloud and security. Combining unmatched experience and specialised skills across more than 40 industries,
we offer Strategy and Consulting, Interactive, Technology and Operations services—all powered by the world’s largest network of Advanced Technology and Intelligent Operations centres. Our 514,000 people deliver on the promise of technology and human ingenuity every day, serving clients in more than 120 countries. We embrace the power of change to create value and shared success for our clients, people, shareholders, partners and communities.
Visit us at www.accenture.com.
Disclaimer: This document refers to marks owned by third parties. All such third-party marks are the property of their respective owners. No sponsorship, endorsement or approval of this content by the owners of such marks is intended, expressed or implied__
This content is provided for general information purposes and is not intended to be used in place of consultation with our professional advisors __
Copyright © 2021 Accenture. All rights reserved. Accenture and its logo are registered trademarks
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24 1 Accenture, “Decoding Organizational DNA,” https:/ /www.accenture.com/gb-en/insights/future-workforce/workforce- data-organizational-dna
2 Accenture, “Human Resilience: What Your People Need During COVID-19,” https:/ /www.accenture.com/gb-en/about/ company/leadership-during-coronavirus
3 Aternity, “The Global Remote Work Productivity Tracker,” 2020, at https:/ /www.aternity.com/wp-content/uploads/2020/04/ Global-Remote-Work-Productivity-Tracker-Vol-1.pdf
4 Pew Research, “Americans remain concerned that states will lift restrictions too quickly, but partisan differences widen,” 2020, at https:/ /www.pewresearch.org/fact-tank/2020/05/07/americans-remain-concerned-that-states-will-lift-restrictions- too-quickly-but-partisan-differences-widen/
5 Accenture, “Productivity in Uncertain Times Through an Elastic Digital Workplace,” https:/ /www.accenture.com/us-en/ about/company/coronavirus-solution-elastic-digital-workplace 6 E-Estonia, “Business and Finance,” at https:/ /e-estonia.com/solutions/business-and-finance/e-tax/ 7 Buffer and Angel List, “The 2020 State of Remote Work,” at https:/ /lp.buffer.com/state-of-remote-work-2020 8 Accenture, “Municipality Kate: More Than a Chatbot,” at https:/ /www.accenture.com/gb-en/case-studies/public-service/ municipality-kate
9 Accenture, “Accenture Technology Vision 2020,” https:/ /www.accenture.com/us-en/insights/technology/technology- trends-2020
10 Cho Mu-Hyun, “South Korea Launches Mask Inventory to Address Shortages from COVID-19,” March 11, 2020 at https:/ /www. zdnet.com/article/south-korea-launches-mask-inventory-apps-to-address-shortages-from-covid-19/ REFERENCES References
1Accenture, “COVID-19: New Habits are Here to Stay for Retail Consumers,” at https://www.accenture.com/us-en/insights/retail/coronavirus-consumer-habits 2World Economic Forum, “The Future of the Last-Mile Ecosystem,” January 2020 at https://www.weforum.org/reports/the-future-of-the-last-mile-ecosystem 3World Economic Forum, “The Future of the Last-Mile Ecosystem,” January 2020 at https://www.weforum.org/reports/the-future-of-the-last-mile-ecosystem 4Amazon, “Same-Day Delivery Just Got Faster,” March 3, 2020 at https://www.aboutamazon.com/news/operations/same-day-delivery-just-got-faster 5Accenture analysis
6Accenture and Frontier Economics, “Last-Mile Delivery Modeling: Estimating the Impact of Micro-Fulfillment,” 2020. See Research Methodology for more information on how the analysis was done. 7Balance by Carbon Checkout at https://apps.shopify.com/carbon-checkout-1 8Christine Chou, “Cainiao’s Global Logistics Push Ratchets Up,” June 24, 2020 at https://www.alizila.com/cainiaos-global-logistics-push-ratchets-up/ 9Thomas Barrett, “Consumers More Likely to Shop Somewhere with Sustainable Delivery,” April 24, 2019 at https://airqualitynews.com/2019/04/24/consumers-more-likely-to-shop-somewhere-with- green-delivery-options/
10Marian Zboraj,“Target Celebrates Strong Performance During Holiday Season,” January 13, 2021 at https://progressivegrocer.com/target-celebrates-strong-performance-during-holiday-season 11Liza Helps, “Amazon Logistics Chosen to Run City of London’s First Last Mile Logistics Hub,” December 9, 2020 at https://www.logisticsmanager.com/amazon-logistics-chosen-to-run-city-of- londons-first-last-mile-logistics-hub/
12USPS, Parcel Select FAQ at https://faq.usps.com/s/article/Parcel-Select 13Helen Norman, “DHL Outlines a Plan to Shake Up the Last-Mile Space with new ‘Green’ Route Planning Algorithm,” December 2, 2020 at https://www.parcelandpostaltechnologyinternational.com/features/dhl-outlines-plan-to-shake-up-the-last-mile-space-with-new-green-route-planning-algorithm.html
14Travis Fried, Ben Welle and Sergio Avelleda, “80% of Goods Start or End in Cities. It’s Time We Started Taking Urban Freight Seriously,” September 14, 2020 at https://thecityfix.com/blog/80-of- goods-start-or-end-in-cities-its-time-we-start-taking-urban-freight-seriously/
15Industry average, Accenture research
16Accenture client experience
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Final Mile Delivery
CCJ
CCJ
12/31/21, 1:40 PM Last Mile Logistics Trends – a mid-2020 update: Fulfillment, Logistics and last mile delivery - Leigh-David Logistics https://leighdavid.com/last-mile-logistics-trends-a-mid-2020-update-fulfillment-logistics-and-last-mile-delivery/ 2/6 Even before the current crisis, e-commerce was already becoming a primary sales channel and was changing the warehouse, fulfillment, and last mile delivery landscape. The current pandemic and resulting stay-at-home economy are accelerating that shift and remaking retail supply chains. This has lent both urgency and opportunity to the search for creative fulfillment solutions. Solutions for getting products to consumers, quickly, safely, and profitably.
Here are a few of the shifting patterns that are happening in fulfillment logistics and final mile delivery.
A quick snapshot of the e-fulfillment landscape
“Distribution in the US is a $6 trillion business.”
E-commerce sales grew faster in the first four months of 2020 than in the entire past decade and e-commerce requires 3x the logistics fulfillment space of brick-and-mortar sales, according to logistics real estate company Prologis.
Because of e-commerce growth, industrial real estate space demand could reach an additional 1 billion square feet by 2025, according to commercial real estate services firm JLL.
Retail accounts for 40% of the demand for warehouse space with 40% of that driven by e-commerce. The need for B2B fulfillment logistics space is also growing.
Leasing deals for warehouse space that used to take 9 months to close are closing much faster, some in 30 days or less.
JLL predicts total e-commerce sales could hit $1.5 trillion by 2025.
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12/31/21, 1:40 PM Last Mile Logistics Trends – a mid-2020 update: Fulfillment, Logistics and last mile delivery - Leigh-David Logistics https://leighdavid.com/last-mile-logistics-trends-a-mid-2020-update-fulfillment-logistics-and-last-mile-delivery/ 3/6 U.S. e-commerce sales jumped almost 93% in May 2020, making up 22% of all retail sales—twice the percentage from one year earlier.
Last-mile delivery driver jobs in the US grew 6.7% between February and June of 2020 and are up nearly 12% year-over-year as of June.
<10% of all food sales were online before Covid-19. By June 2020 online food sales had risen to 45%.
Last mile real estate, local inventory, and repurposed spaces To deliver orders faster and reduce costs, retailers and logistics companies are moving more inventory closer to customers. The goal is to be less dependent on large centralized warehouses by creating smaller local and regional distribution hubs for greater efficiency. Creating what is essentially an omnichannel fulfillment and supply chain.
These retailers, manufacturers, fulfillment centers, warehouses, and 3PLs are getting creative in their search for additional distribution space closer to customers. In addition to delivery, this local fulfillment model must also handle returns.
Some retailers are using excess square footage in their brick-and-mortar stores to create mini-fulfillment centers and other retailers are using ‘dark stores’ for fulfillment. These are closed retail locations they still hold leases on.
Demand for small, local warehouse space has surged, driving the search for creative micro-fulfillment options.
Underused space in a multi-story Chicago parking facility is being converted into a last mile distribution hub.
Developers and mall owners are converting dying shopping malls into last mile distribution centers and failing brick and mortar stores are also being sought after for conversion into fulfillment centers.
A third of US shopping malls are predicted to vanish by 2021.
Interest in on-demand warehousing is growing. This form of short-term leasing could help retailers adapt to supply chain uncertainties now and in the future.
From 50-70 percent of all e-commerce purchases will be delivered from ‘local’ inventory by 2023.
The increased need for last mile delivery is driving the development of new urban warehouse space on the outskirts of cities and the creation of multi-story warehouses by adding floors to existing buildings in urban settings.
Last mile service providers
Retailers have a variety of options for their last mile operations and today’s omnichannel world lends itself to a mix of solutions. Some insource, like Target who purchased Shipt for managing local delivery from stores, while a majority continue to use the large parcel delivery companies like FedEx and UPS. Other retailers choose to work with third- party logistics providers (3PLs) and regional last mile delivery services that are often less costly and offer more control.
Third-party logistics providers (3PLs) are by far the top occupiers of industrial fulfillment and distribution space in the U.S.
83% of companies surveyed by ARC Advisory Group surveyed report using FedEx and UPS for last mile deliveries.
51% of companies also report using Last Mile and 3PL delivery partners to get their products to the customer.
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12/31/21, 1:40 PM Last Mile Logistics Trends – a mid-2020 update: Fulfillment, Logistics and last mile delivery - Leigh-David Logistics https://leighdavid.com/last-mile-logistics-trends-a-mid-2020-update-fulfillment-logistics-and-last-mile-delivery/ 4/6 Fulfillment from stores
While not a new idea, in-stores and curbside pickup are easy and convenient fulfillment options that have seen tremendous growth as a result of Covid-19 – becoming one segment of an evolving omnichannel fulfillment model.
Retailers saw a 195% increase in click and collect order dollars.
Buy Online and Pickup In-Store (BOPIS) shopping has increased 62%. 20% of online shoppers picked up online orders in a store in June 2020, compared with 13.1% of shoppers in June 2019.
Almost 60% of customers surveyed would continue to adopt ‘Safe Delivery Modes’ long after the elimination of the COVID 19 threat.
Some retailers fulfilling orders from stores are seeing greater profitability for those orders than they are for orders fulfilled from centralized warehouses.
10% of all sales are predicted to be fulfilled by Click and Collect by 2025.
Crowdsource delivery trying to expand
Some crowdsourcing companies that originally transported people have shifted focus during the pandemic to add delivery services of foods and other essential goods. Others that started as food delivery companies are taking the opportunity to expand their services into a wider range of goods.
Uber, a ride-hailing service, has branched out into final mile food delivery with their Uber Eats service. Uber is also purchasing Postmates, an on-demand delivery company, with plans to expand beyond food delivery.
DoorDash has branched out from restaurant delivery to offer last mile delivery of essential items, opening distribution centers in US cities for a new service called DashMart. In addition to grocery delivery, DashMart will allow customers to order from convenience and drug store partners such as 7-Eleven, Walgreens, and CVS, among others.
Smart lockers, last mile drop-off
We are all used to seeing and using secure storage lockers in public places like museums, trains stations, gyms, and offices. Smart parcel lockers are an extension of that concept. Convenience and security are critical. Smart lockers are most effective in secure locations where customers are concentrated, such as on college campuses, in retail stores and multifamily dwellings, and anywhere that is ‘on the way’ in the customer’s daily travels. Of course, the Covid-19 pandemic has closed many college campuses and shifted employment to work-from-home. This reduces the convenience of this model somewhat, at least until the current crisis passes.
The 2020 global Smart Parcel Locker market is valued near $569 million and projected to reach S1.8 billion USD in 2026.
Application market segments for smart lockers include family, retail, university, office, and others. Retail made up about 57% of the global market in 2018 and e-commerce growth since then will undoubtedly have boosted adoption. A new global market report is now available.
Shortening the fulfillment cycle
Consumers have come to expect fast, flexible, and, for the most part, free home delivery, and retailers are looking for innovative ways to satisfy the customer. Regional last mile shippers like Leigh-David are helping retailers meet the rising demand for efficient and cost-effective last mile logistics and shorter fulfillment cycles.
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12/31/21, 1:40 PM Last Mile Logistics Trends – a mid-2020 update: Fulfillment, Logistics and last mile delivery - Leigh-David Logistics https://leighdavid.com/last-mile-logistics-trends-a-mid-2020-update-fulfillment-logistics-and-last-mile-delivery/ 5/6 To learn more about last mile delivery and omni-channel fulfillment, contact a Leigh-David expert today at final- [email protected] or tell us what you need using our contact form.
Read the previous articles in the Last Mile Logistics Trends series:
A mid-2020 update: Autonomous start-ups and last mile delivery A mid-2020 update: New shopping patterns and last mile delivery Share 2
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August 4
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August 3
Last Mile Logistics Trends – a
mid-2020 update: New
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April 3
Be in the Know: 2018 Final
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12/31/21, 1:31 PM 11 Ecommerce Fulfillment Center Layout Design Principles – Multichannel Merchant https://multichannelmerchant.com/blog/11-ecommerce-fulfillment-center-layout-design-principles/ 1/6
11 Ecommerce Ful llment Center Layout Design Principles Brian Barry November 12, 2019
There are several basic principles that apply to warehouse layout and design, and operating an e icient ecommerce fulfillment center. Without them, no matter the square footage, you will face capacity issues, decreased productivity and storage inadequacies.
In this blog, weʼll discuss 11 key principles that you should consider for FC layout design and productivity.
Trends in Facility Design
Whether youʼre looking to acquire an existing center or build a new one, itʼs important to understand how trends in warehouse design have changed. New centers built in the last ten years or so typically have a clear span – the vertical distance of usable space throughout the facility – of 24-34 feet. Larger, automated centers with very narrow aisles and picking systems are now built up to 54 feet of clear span.
Older centers o en have less than 24 feet of clear span. The tradeo is that they have larger footprints but lower ceiling clearance vs. larger clear span and higher clearance for storage space in newer facilities.
As real estate becomes more expensive and the existing warehouse market remains at capacity, itʼs important to calculate total storage capacity, and the racking, automation and material handling equipment needed to take advantage of the higher clearance.
Item 2B - 218
ULTICHANNELMERCHANT
12/31/21, 1:31 PM 11 Ecommerce Fulfillment Center Layout Design Principles – Multichannel Merchant https://multichannelmerchant.com/blog/11-ecommerce-fulfillment-center-layout-design-principles/ 2/6 Ecommerce Fulfillment Center Facility Costs
In our consulting with ecommerce fulfillment center operators, total facility costs generally range between 15% and 20% of the total cost per order. Costs include leases or building ownership, total occupancy, material handling and depreciation and amortization of systems. As far as systems and automation are considered, how will increased asset depreciation and amortization reduce labor expenses, increase capacity and order throughput?
The Cost of Labor
An e icient building layout can dramatically increase labor productivity. Direct and indirect labor is more than 50% of the cost per order, excluding outbound shipping. The minimum wage in many states is slated to reach $15 per hour in the next five years; we have several clients already at $20 per hour.
One of your key design considerations should be how labor hours can be saved by the e ective use of layout and design, as well as systems and process improvements.
Storage Space and Cube
Make sure youʼre utilizing the potential storage space/cube of your fulfillment center. Ensure that vertical space, as well as individual location cubic capacity, is fully utilized. Maximize cube and ground-level square footage.
Square foot requirements for storage are directly impacted by racking design and aisle width. Most ecommerce fulfillment centers operate with one of the following racking designs:
12-foot standard aisle width utilizes a traditional sit down/counterbalanced li truck 8-9-foot narrow aisle width utilizes a narrow aisle reach truck and may yield up to a 33% improvement in pallet storage capacity over 12-foot aisles
6-foot very narrow aisle width utilizes a turret truck or swing arm truck design, and may yield up to a 66% improvement in pallet storage capacity over 12-foot aisles.
The rack configuration and layout a ect these potential improvements.
One way that ecommerce fulfillment centers can make better use of the total cube is by installing mezzanines over work areas and departments that do not require higher clearance. In larger centers, picking modules can be installed on upper levels.
Flexibility in Operations and Layout
From your company
ʼs strategic planning process, understanding potential future changes to the business or fulfillment model is vital to avoiding unnecessary costs associated with unplanned changes. These include product mix changes which make certain automation solutions ine ective, unit sales volume and Item 2B - 219
12/31/21, 1:31 PM 11 Ecommerce Fulfillment Center Layout Design Principles – Multichannel Merchant https://multichannelmerchant.com/blog/11-ecommerce-fulfillment-center-layout-design-principles/ 3/6 inventory on hand requirements, company acquisitions being discussed and consolidation or expansion of centers. Donʼt develop a layout or process that is inflexible or canʼt scale.
Location Storage Media
Use a variety of location storage media for slotting and reserve as dictated by item cubic velocity. The “one size fits all” approach rarely works to maximize e iciency in space and labor performance.
Slotting Procedures
Some clients have shown pickers can walk 14 miles per day in a large ecommerce fulfillment center, representing up to 75% of their working hours. Maintaining slotting procedures are critical to an e icient center.
Try to provide primary pick space for one weekʼs average unit sales for each SKU. Focus on the top 10% of fast selling SKUs to ensure they are properly slotted. Make sure slotting is maintained as a dynamic, ongoing process.
Conveyors for Horizontal Product Transport
Using a simple transfer conveyor system can improve operating e iciency by reducing handlings and walk time. Make sure the equipment is cost justified. Conveyor selection should be based on product size and weight and your throughput volume. The accumulation line for packages has to be planned for in any conveyor design.
Number of Dock Doors
The expense of providing enough inbound/outbound dock doors, docks and staging areas is relatively small in the initial building design and construction. However, the impact of not having enough doors is huge because cartons on docks and staging areas create congestion and flow problems. Itʼs a reoccurring issue every time your center is at shipping and receiving capacity, which might be half the year.
Available Space
Keep 10% of your locations open and available. This may not be possible all the time, but having space available to store inventory in picking and reserve locations is a key factor.
Product Volume
Move as much product as possible at one time. Maximizing the product transported per trip will reduce total trips and time required. Applications of this principle can be applied in picking, put-away and replenishment functions.
Summary
Item 2B - 220
12/31/21, 1:31 PM 11 Ecommerce Fulfillment Center Layout Design Principles – Multichannel Merchant https://multichannelmerchant.com/blog/11-ecommerce-fulfillment-center-layout-design-principles/ 4/6 Powered by
When designing an ecommerce fulfillment center layout, the physical characteristics are only one aspect.
Workflow, processes and how labor will be used are all important considerations in getting to an e icient design.
Brian Barry is president of F. Curtis Barry & Co.
RELATED TAGS: Distribution Center, Ful llment Centers, Operations And Ful llment, Warehouse, Warehouse Management
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Item 2B - 222
Fritz Noble
Kevin McKenna
Greg Merrill
Bo Smith
Community Benefits of E-Commerce
• Surging online sales are driving a growing need for industrial real estate. Retailers are looking for warehouses to store inventory, as well as fulfillment centers and sortation centers from which to send orders directly to consumers. Retail sales have shifted away from retail centers due to higher rents in metropolitan areas to ecommerce sales from warehouses, to accommodate the storage of products and direct shipment to consumers.
Total Ecommerce sales in 2020 reached $759 Billion nationally, a 31% year over year increase from 2019.
• Sales and property taxes generated by e-commerce-related industrial buildings can help buoy local budgets by replacing lost tax revenue from closed brick-and-mortar retail locations.
o The component of California Sales Tax that goes to cities/counties totaled $1.15 Billion in 2019 and is increasing rapidly.
Source: cdtfa.ca.gov
o The recently completed Amazon 680,000 square foot fulfillment center in Beaumont with over 1,000 employees has an assessed value of $313,000,000 and an annual property tax bill of $4.3 Million. We do not have the data on the sales tax for this facility, but it is clearly significant.
Source: 2020 Riverside County Treasurer; APN #424-050-020 (https://www.countytreasurer.org/)
o K-Mart owned a 1.6 Million square foot building in Ontario valued at $247 Million which recently sold to Costco for $345 Million, with an approximate annual tax bill of $3.5 Million Source: 2020 San Bernardino County Treasurer; APN #0238-081-45 (https://www.mytaxcollector.com/)
o A 1.8 Million square foot new business park in Cherry Valley with two empty buildings is in escrow at +/-$340 Million, with an approximate annual tax bill of $3.5 Million.
Item 2B - 223
800
600
400
200
0 *On ly Q1 & Q2 figures
Source: Census.gov
US Ecommerce Sales From 2011 to 2021 (In Billions)
769.47
Colliers
IN TERNATIONAL
OBERLO
• Wages for logistics-related jobs are growing quickly and have surpassed those for retail jobs, with a 15+% wage premium over retail jobs.
o Average Retail Wages: $14.79/hour
o Average Warehouse Wages: $17.08/hour
Source: Indeed.com
• Transportation and Warehousing jobs in Riverside County have increased from 92,600 jobs in 2015 to 165,500 jobs in 2020
Source: EDD.CA.gov
• Major ecommerce companies have started the transition to electric vehicles, with significant investments from Amazon, Fedex, and UPS. Amazon ordered 100,000 electric delivery vans from Rivian in 2020. 20% of DHL delivery vehicles are zero-emission. UPS recently placed an order for 10,000 electric vehicles.
Source: https://www.npr.org/2021/03/17/976152350/from-amazon-to-fedex-the-delivery- truck-is-going-electric
https://www.aboutamazon.com/news/transportation/amazons-custom-electric-delivery- vehicles-are-starting-to-hit-the-road
https://www.fedex.com/en-us/sustainability/electric-vehicles.html
Item 2B - 224
Karen Avenue
E‐I
E‐I
E‐I
M‐2
M‐2
M‐2
Proposed Site
≈ 60 acres
Proposed Site
≈ 60 acres
Proposed Site
≈ 80 acres
Cannabis
Cultivation
Likely Cannabis
Cultivation
Long term wind
energy lease
Long term wind
energy lease
Long term wind
energy leases
Long term wind and
solar energy lease
Owned by Southern
California Edison
1000’ from I‐10
1000’ from I‐10
Item 2B - 225
January 6, 2022
Mayor Middleton
Mayor Pro Tem Garner
Councilmembers,
I strongly urge you to keep the current height limit of 30 feet for the proposed Logistics Center Overlay Zone.
Massive fulfillment centers may be a 21st century reality but Palm Springs should not be the city to encourage such grossly oversized boxes in our beautiful desert. They’re just too large.
While the recommended CUP allows more in-depth review, an outcome of a grossly out-of-scale 60-foot building remains possible. If warehouses are to be built in the Overlay Zone then let the current 30-foot height limit prevail. That will prevent the most visually disturbing buildings from being constructed while allowing development of that area.
Anticipated tax dollars, while needed for key services, are not an appropriate tradeoff for 60-foot tall fulfillment centers that permanently scar the landscape.
Note that the Arrowhead bottling plant in Cabazon is far from I-10 yet its distance doesn't mitigate its visual disruption of the desert environment. Similarly, when driving the 60 freeway one sees massive fulfillment centers that would be completely inappropriate in our desert setting.
Windmills, while very tall, do not significantly obstruct desert views or greatly disturb the surrounding environment.
Just because “it’s going to happen anyway” doesn’t mean it has to happen in our city.
Thirty feet tall is tall enough.
Thank you
Item 2B - 226
Item 2B - 227
CITY COUNCIL STAFF REPORT
01/13/2022 2. C.
City Clerk -
SUBJECT
REQUEST BY THE CITY OF PALM SPRINGS FOR A ZONE TEXT AMENDMENT TO PALM SPRINGS ZONING CODE SECTION 93.23.01 RELATIVE TO THE
DEVELOPMENT STANDARDS FOR AUTOMOBILE SERVICE STATION (CASE
5.1546 ZTA). (This item has been removed from the agenda at the request of Staff, and will be rescheduled for a later date.)
CITY COUNCIL STAFF REPORT
01/13/2022 3. A.
City Clerk -
SUBJECT
REQUEST BY THE CITY OF PALM SPRINGS FOR ADOPTION OF AN URGENCY ORDINANCE TO IMPLEMENT SENATE BILL 9 REQUIREMENTS FOR URBAN LOT SPLITS AND TWO-UNIT RESIDENTIAL DEVELOPMENTS, CASE 5.1548 ZTA (4/5ths VOTE REQUIRED)
RECOMMENDATION:
Waive the reading of the Ordinance text in its entirety, read by title only, and adopt an urgency Ordinance entitled, “AN URGENCY ORDINANCE OF THE CITY COUNCIL OF THE CITY OF PALM SPRINGS, CALIFORNIA, AMENDING CHAPTER 9.62 OF THE PALM SPRINGS MUNICIPAL CODE AND CHAPTER 93.00 OF THE PALM SPRINGS ZONING CODE RELATING TO URBAN LOT SPLITS AND TWO-UNIT PROJECTS AND DETERMINING THE ORDINANCE TO BE EXEMPT FROM CEQA.” (4/5ths Vote Required.)
Attachments
Item 3A
CITY COUNCIL STAFF REPORT
DATE: JANUARY 13, 2022 LEGISLATIVE
SUBJECT: REQUEST BY THE CITY OF PALM SPRINGS FOR ADOPTION OF AN URGENCY ORDINANCE TO IMPLEMENT SENATE BILL 9
REQUIREMENTS FOR URBAN LOT SPLITS AND TWO -UNIT
RESIDENTIAL DEVELOPMENTS, CASE 5.1548 ZTA (4/5ths VOTE
REQUIRED)
FROM: Justin Clifton, City Manager
BY: Development Services Department
SUMMARY:
This is a request for the City Council to approve an urgency ordinance adopting regulations relative to urban lot splits and two- unit residential development pursuant to the recent adoption of Senate Bill 9 (SB 9). SB 9 requires urban lot split applications and two-unit residential applications to be approved ministerially, and applies to all cities and counties, including charter cities. Failure to adopt local standards will result in applications being approved subject only to the limited criteria contained in State law. The urgency ordinance requires a four-fifths (4/5ths) vote of the City Council to pass.
RECOMMENDATION:
Waive the reading of the Ordinance text in its entirety, read by title only, and adopt urgency Ordinance No. ____, “AN URGENCY ORDINANCE OF THE CITY COUNCIL OF THE CITY OF PALM SPRINGS, CALIFORNIA, AMENDING CHAPTER 9.62 OF THE PALM SPRINGS MUNICIPAL CODE AND CHAPTER 93.00 OF THE PALM SPRINGS
ZONING CODE RELATING TO URBAN LOT SPLITS AND TWO-UNIT PROJECTS AND DETERMINING THE ORDINANCE TO BE EXEMPT FROM CEQA. ” (4/5ths Vote
Required.)
BACKGROUND:
SB 9 was signed into law by Governor Newsom on September 16, 2021 and became effective on January 1, 2022. The bill requires that City’s all urban lot split s and two-unit housing development s within single -family residential zones to be approved administratively by staff, without discretionary review or public hearing. The bill outlines a number of minimum requirements, including the following:
• The proposed urban lot split cannot be located in high-hazard areas, flood zones, fault zones, conservation areas, or similar protected areas; Item 3A - 1
City Council Staff Report
January 13, 2022 – Page 2
Case 5.1548 ZTA, Urgency Ordinance to Implement SB 9
• The urban lot split must not involve the demolition or alteration of protected housing (such as rent -controlled housing, affordable housing, tenant -occupied hous ing, and similar housing);
• The lot must not be a historic landmark or within a designated historic district; • The urban lot split must result in two new lots that are approximately equal in size (60/40 split maximum);
• The urban lot split or two-unit development must result in the development of two units that are a minimum of 800 square feet in area;
• Side and rear yard setbacks may be reduced to as little as four feet to accommodate a minimum of two units on the resulting lots; • Parking requirements are limited to one space per unit, and no parking spaces are required when the site is within one-half mile of certain transit lines or stops; • Applicants must reside in one of the housing units as their principal residence for a minimum of three years from the date of the lot split; • Short-term rentals are prohibited in dwellings that are developed under SB 9 requirements.
While SB 9 applies to all cities and counties, including charter cities, local agencies may adopt objective zoning, design, and subdivision standards unless those standards would have the effect of preventing the development of two residential units on either of the resulting parcels or preventing the development of two units from being at least 800 square feet in floor area.
STAFF ANALYSIS:
To implement the requirements of SB 9, staff from the City Attorney ’s office has drafted an urgency ordinance that permits urban lot splits and two- unit residential development in all single-family residential zones. The proposed ordinance will modify Chapter 9.62 of the Palm Springs Municipal Code relative to subdivision mapping requirements and will modify Chapter 93.00 of the Palm Springs Zoning Code to establish standards for two- unit residential development. The proposed ordinance includes limited objective standards relating to lot configuration and architectural design, as is permissible under State law.
The urgency ordinance establishes that urban lot splits may be proposed for existing lots of record as small as 2,400 square feet, with the new resulting lots no smaller than 1,200 square feet in area in accordance with State law. The term “urban lot” means an existing lot of record within a n urbanized area, which encompasses all single-family residential zones in Palm Springs. Each lot that is created under the ordinance must have direct street frontage; however, the frontage can be as little as 12.5 feet in width, which is the minimum for a residential driveway . This will allow for either a side -by-side lot configuration, or front-back configuration with the rear lot being a “flag lot.” Demolition of an existing residence in order to create the lot split is limited to a maximum of 25%, unless the unit has not been occupied for more than three years. Please note that the City cannot require the dedication of right-of-way or the construction of off -site improvements (such Item 3A - 2
City Council Staff Report
January 13, 2022 – Page 3
Case 5.1548 ZTA, Urgency Ordinance to Implement SB 9
as sidewalks or street curbing) in conjunction with the creation of new lots under SB 9, as would typically be the case for standard subdivisions.
The proposed ordinance will apply objective development standards for two -unit residential development as permissible under SB 9. Objective standards are defined as standards that require no exercise of judgment, such as numeric limits relative to square footage, height, setbacks, etc. As the intent of SB 9 is to foster the development of affordable housing, the maximum square footage permissible for residential units created under the ordinance is 800 square feet. The City may choose to adjust this maximum square footage requirement at a later date based on further study and public input.
Pursuant to SB 9, minimum setbacks of four feet are established for side and rear property lines; however, the front yard setback requirement will remain at 25 feet as is the current standard so as to maintain a consistent appearance along street frontages. Height limits for any lot larger than 2,000 square feet is established at one story and 16 feet. Height limits for any lot smaller than 2,000 square feet may be up to two stories and 22 feet, but only when reduced setbacks and increased lot coverage will not result in two units of 800 square feet each. Architectural standards require that the units developed on the resulting split lot must be consistent in terms of materials, architectural details, and roof pitch. In order to protect privacy of abutting homes, landscaping requirements are established to screen the new units, and window placement will be reviewed for impacts to neighbors.
Per the requirements of SB 9, urban lot split and two-unit housing developments must be approved by staff as an administrative process, and local agencies cannot require discretionary review by P lanning Commission or architectural review boards. Specific application fees have yet to be established for these applications; an amendment to the fee schedule will be brought forward to City Council once application fees and impact fees have been determined.
Due to the relatively short period between the bill being signed into law and its effective date, Staff was unable to prepare a standard ordinance and meet all public notic e requirements prior to January 1, 2022. Consequently, Staff has prepared an urgency ordinance for adoption by City Council, with a regular ordinance to follow on January 27, 2022. The urgency ordinance will take effect immediately upon adoption and will r emain in place until the regular ordinance becomes effective. As there may be a need for further adjustment to the initial objective development and architectural standards, it is intended that Staff will work with the Planning Commission over the next several months to review the ordinance in detail and assess any modifications that may be necessary.
ENVIRONMENTAL ASSESSMENT
:
Under California Government Code sections 65852.21, subdivision (j), and 66411.7, subdivision (n), the adoption of an ordinance by a city or county implementing the provisions of Government Code sections 66411.7 and 65852.21 and regulating urban lot splits and two-unit projects is statutorily exempt from the requirements of the California Environmental Quality Act (“CEQA”). Therefore, the proposed ordinance is statutorily Item 3A - 3
City Council Staff Report
January 13, 2022 – Page 4
Case 5.1548 ZTA, Urgency Ordinance to Implement SB 9
exempt from CEQA in that the proposed ordinance implements these new laws enacted by SB 9.
In addition to being statutorily exempt from CEQA, the proposed ordinance is also categorically exempt from CEQA under the Class 15 exemption set forth in State CEQA Guidelines section 15315. The Class 15 exemption categorically exempts from CEQA, among other things, the division of property in urbanized areas zoned for residential use into four or fewer parcels. Here, the ordinance is categorically exempt under Class 15 exemption because the ordinance regulates a single urban lot split of one parcel into two separate lots between 60 percent and 40 percent of the original lot area in a residential zone.
Further, the proposed ordinance is also categorically exempt from CEQA under the Class 3 exemption set forth in State CEQA Guidelines section 15303. The Class 3 exemption categorically exempts from CEQA, among other things, the construction and location of new, small structures and the conversion of existing small structures from one use to another. Section 15303 specifically lists the construction of a second dwelling unit in a residential zone and a duplex or similar multi-family residential structure totaling no more than four dwelling units as examples of activity that expressly falls within this exemption.
Here, the ordinance is categorically exempt under the Class 3 exemption because the ordinance regulates the construction of two primary dwelling units or, if there is already a primary dwelling unit on the lot, the development of a second primary dwelling unit, in a residential zone. Moreover, the City Council finds that none of the “exceptions” to the use of the Class 3 exemption, set forth in State CEQA Guidelines section 15300.2, apply here.
Specifically, the City Council finds that the ordinance will:
(1) Not result in a potentially significant cumulative impact as the development allowable under this ordinance will only be established in developed areas where environmental analysis and assessment has occurred, and the scope of allowable development will not result in impacts that signif icantly exceed that of the existing development;
(2) Not result in a reasonable possibility that the activity will have a significant effect on the environment due to unusual circumstances as the development allowable under this ordinance will only be per mitted in developed areas and poses no impacts that differ from existing development;
(3) Not result in damage to scenic resources, including but not limited to, trees, historic buildings, rock outcroppings, or similar resources, within a highway officially designated as a state scenic highway as the development allowable under this ordinance is not permitted in areas with scenic area overlay protections as identified in the General Plan and Zoning Code;
Item 3A - 4
City Council Staff Report
January 13, 2022 – Page 5
Case 5.1548 ZTA, Urgency Ordinance to Implement SB 9
(4) Not be located on a hazardous waste site included on any list compiled pursuant to § 65962.5 of the Government Code as no areas eligible for the development allowable under this ordinance are located on a listed hazardous waste site; or
(5) Not result in a substantial adverse change in the significance of a historical resource as alterations to historic resources are governed by the procedures listed in Chapter 8.05 of the Palm Springs Municipal Code and are subject to review and approval by the Historic Preservation Officer and/or the Historic Site Preservation Board.
Each of the foregoing exemptions is asserted in the alternative and each is independently sufficient to fully exempt the whole of the project.
REVIEWED BY:
Department Director: Flinn Fagg
City Manager: Justin Clifton
ATTACHMENTS:
A. Urgency Ordinance and Exhibits.
B. SB 9 Bill Text.
Item 3A - 5
URGENCY ORDINANCE NO. ____
AN URGENCY ORDINANCE OF THE CITY
COUNCIL OF THE CITY OF PALM SPRINGS ,
CALIFORNIA, AMENDING CHAPTER 9.62 OF THE
PALM SPRINGS MUNICIPAL CODE AND
CHAPTER 93.00 OF THE PALM SPRINGS ZONING
CODE RELATING TO URBAN LOT SPLITS AND
TWO-UNIT PROJECTS AND DETERMINING THE
ORDINANCE TO BE EXEMPT FROM CEQA.
THE CITY COUNCIL FINDS AND DETERMINES AS FOLLOWS:
A. The City of Palm Springs is a charter city organized pursuant to Article XI of the California Constitution and pursuant to the authority granted the City by Sections 5 and 7 of Article XI, the City has the power to make and enforce within its limits all ordinances and regulations in respect to municipal affairs not in conflict with general laws and its own charter. Such police powers include without limitation the ability to adopt comprehensive zoning regulations and regulations upon the use of land and property within the City; and
B. In 2021, the California Legislature approved, and the Governor signed into law Senate Bill 9 (“SB 9”), which, among other things, adds Government Code Section 65852.21 and 66411.7 to impose new limits on local authority to regulate urban lot splits and two-units projects; and
C. SB 9 allows local agencies to adopt objective design, development, and subdivision standards for urban lot splits and two-unit projects; and
D. SB 9 takes effect on January 1, 2022, and preempts any conflicting city ordinance; and
E. T he City desires to amend its local regulatory scheme to comply with Government Code Sections 66411.7 and 65852.21 and to appropriately regulate projects under SB 9; and
F. There is a current and immediate threat to the public health, safety, or welfare based on the passage of the new SB 9 Law because if the City does not adopt appropriate objective standards for urban lot splits and two- unit projects under SB 9, the City would thereafter be limited to applying the few objective standards that are already in its code, which did not anticipate and were not enacted with urban lot splits and ministerial two-unit projects in mind; and
G. The approval of urban lot splits and two-unit projects based solely on the City’s default standards, without appropriate regulations governing lot configuration, unit size, height, setback, landscape, architectural review, among other things, would threaten the character of existing neighborhoods, and negatively impact property values, personal privacy, and fire safety. These threats Item 3A - 6
Ordinance No. _____