Commercial Evaluation of Proposed Commercial

Shopping Centre situated along the Trans Canada

Hwy & Key Points to Consider to Minimize
Perceived Impact on Downtown Businesses,
Revelstoke, B.C.

Prepared for:
REVELSTOKE CITIZENS FOR

Submitted by: REVELSTOKE CITIZENS FOR

RESPONSIBLE DEVELOPMENT

RESPONSIBLE DEVELOPMENT

Prepared by: TREC International Inc.

November 24, 2015

Table of Contents

OBJECTIVE ................................................................................................................................1
OUTDATED INFORMATION BEING RELIED UPON.................................................................1
RISK OF LOSING EXISTING TAX DOLLARS, COMMUNITY SUPPORT & EMPLOYMENT ...2
COMPARION TO OTHER COMMUNITIES PITFALLS TO AVOID .........................................2
THE RIGHT COMMERCIAL MIX & QUALITY OF PLACE ARE KEY TO VIBRANT
COMMERCIAL DEVELOPMENTS & DISTRICTS ......................................................................3
DECREASING RETAIL OUTFLOW ..........................................................................................5
SUBJECT GATEWAY DEVELOPMENT DOES NOT MEET RECENT COUNCIL GOALS &
OBJECTIVES NOR OTHER GUIDING CITY DOCUMENTS .....................................................6
SUMMARY ..................................................................................................................................6
TREC INTERNATIONAL FIRM PROFILE & RELEVANT PROJECT EXPERIENCE .................8

Evaluation of Planned Highway Commercial in relation to Downtown Revelstoke

OBJECTIVE
The Revelstoke Citizens for Responsible Development (RCRD) has asked Mick Matheusik,
President of TREC International Inc. to provide an objective evaluation of the planned shopping
centre situated along the Trans-Canada Highway (TCH) near the entrance to downtown
Revelstoke and what the City should consider in terms of the downtown and overall commercial
development in the City prior to approving such a project. Thus, Mick has reviewed the
extensive material already submitted to the City, including TRECs 2006 Retail Strategy report
and other documents prepared for the City, to complete this brief report summarizing and
highlighting key pertinent points that Mayor and Council should consider prior to making their
decision.

OUTDATED INFORMATION BEING RELIED UPON

Both the developer, Hall Pacific, and City officials are relying upon significantly
outdated information much of which is contained in the last retail strategy prepared for
the City of Revelstoke during late 2005/beginning of 2006 and completed in August,
2006. Plus, the developer has taken facts and figures out of context and not revealed all
the information in context to those. The next several pages will highlight this
misinterpretation.

Plus, much of this information was based on 2001 Census information and projections
based from such along with previous estimates for tourism visits to both the City of
Revelstoke and the Mountain are very dated.

In order to truly evaluate the merit of any retail/commercial activity at this particular
location, an objective update of TRECs Retail Strategy prepared in 2006 is
recommended to be completed as also suggested by the APC.

The owners or stakeholders of virtually all types of shopping centres or vibrant

commercial districts typically complete such strategies or commercial market
studies every three (3) to five (5) years updating all demographics, market information,
competitive infrastructure, retail expenditure potential and the like to derive the most
optimum business retention and expansion strategies.

This is also recommended by the Integrated Community Sustainability Plan (ICSP)

recently prepared for Revelstoke which requires updating every 3 to 5 years in order to
achieve the Vision derived for the City in 1994.

In order to make informed decisions and help ensure their existing commercial tax base
is not eroded, additional studies are also typically commissioned. Municipalities when
faced with commercial developments in their communities either within their downtowns
or peripheral developments (such as what Hall Pacific is planning at the subject site),
along with commissioning updated market studies they also request an assessment of
the economic impact of such on existing businesses and to the overall
community. This is especially the case when the planned developments are comprised
of mass merchandisers and larger format stores than what exists in their communities.

Evaluation of Planned Highway Commercial in relation to Downtown Revelstoke

RISK OF LOSING EXISTING TAX DOLLARS, COMMUNITY SUPPORT &

EMPLOYMENT

Without understanding the current and projected expenditure potential within the
trade area and from visitors to the Community (including seasonal residents, tourists and
highway travelers), there can be significant financial implications to existing merchants.
This is particularly relevant as the 2006 Retail Strategy revealed that most retail
categories were oversupplied to service the Citys resident markets for the period
between 2006 to 2016.

If there are insufficient expenditures from both resident and visitor markets, then large
format stores have the risk of impacting the business of existing smaller stores by
drawing existing patrons to their larger formats, greater selections, and often cheaper
prices.

Thus, existing merchants may flounder and eventually go out business resulting in
vacancies in the downtown. These are often replaced with lower quality businesses
such as used clothing and furniture stores, dollar stores, services, and similar venues.
These stores cannot afford to pay the same rents which result in lower building values
and taxes.

With a lesser quality merchant mix, more vacancies and a stronger commercial mix at
competing developments, downtowns can rapidly deteriorate resulting in less
community support.

This would be a real detriment as the recent Business Retention & Expansion (BRE)
survey completed in the fall of 2015 reveals that about 82% of the 135 businesses
surveyed indicated that their business health is either excellent or good.

Furthermore, the BRE survey documented that depending on the characteristics of a

communitys economy, anywhere from 40 to 90 per cent of new jobs come from existing
businesses. This same study reported thatover half of respondents (56% or 74
respondents) reported that their business is in the growing life cycle stage. Another
30% (40 businesses) indicated that their business is in the maturing stage. Thus, with
supporting actions from the City and other organizations, the employment and economic
spin-offs from these existing businesses can be significant.

This finding was also reinforced in the Citys Integrated Community Sustainability Plan
(ICSP) in which one of its strategies and actions recommended more focus on small
business will be required.

COMPARION TO OTHER COMMUNITIES PITFALLS TO AVOID

While comparison to other communities is often a logical tool in evaluating whether to

allow new peripheral commercial developments, it can result in deriving misleading
information as often totally different market dynamics (i.e. larger trade areas, more
expenditure potential, competitive infrastructure, etc.) are prevalent.

Allan Masons report to council correctly made valid conclusions given the scarcity of
readily available information on which to derive accurate comparison between
Reveltstoke with communities like Squamish and Merritt.

Evaluation of Planned Highway Commercial in relation to Downtown Revelstoke

Having conducted a Retail Strategy for the District of Squamish in 2007 as well as for
developers of peripheral commercial developments along the highway prior to that date,
Mick can objectively comment on the fact that this communitys trade area is over three
times as large as that for Revelstoke. A larger trade area and penetration within it plus
the reduction of outflow of retail dollars resulted with the addition of large format stores
such as Wal-Mart and Home Depot. There are totally different market dynamics at
play in this community compared to Revelstoke. Despite these positive spin-offs,
downtown Squamish continues to struggle partially at the expense of the peripheral
developments and poor implementation of its retail strategy.

Again, the important comparison is the size of the expenditure potential from the existing
and potential markets in relation to the existing/planned supply to more accurately make
a valid comparison.

Kevin Hannas article, named Sustainable Community Development in the submissions

to Mayor and Council is a good synopsis of what peripheral development can do to
not only a downtown but social capital often resulting in other non-economic
impacts such as youth at risk, health problems, crime and human economic
hardship. He cites that Merritt ranked within the top 10 worst communities in BC a lot
of it related to peripheral development, and declining downtown environment: It states
that the town now conveys an image of decline, poor building maintainance, and empty
streets.

TRECs Retail Strategy prepared for Revelstoke in August 2006 did provide a series of
Pitfalls to Avoid based on an examination of other resort towns and communities
located throughout North America (see Section 4.3).Three lessons learned are worth
repeating here:
1. Containment vs. Retail sprawl translates to better experience management.
2. Be careful to not over build to avoid Canmore & Fernie examples with
increased vacancies
3. Big boxes and mass merchandisers can severely impact local merchants
(as per local example of Merritt as briefly described above).

Big boxes are large format stores (often more than 10,000 sq.ft. depending on the
categories offered) that typically specialize in afew main categories with a larger
selection, depth of merchandise and cheaper prices.

THE RIGHT COMMERCIAL MIX & QUALITY OF PLACE ARE KEY TO VIBRANT
COMMERCIAL DEVELOPMENTS & DISTRICTS

This lesson is summarized in TREC 2006 Retail Strategy for Revelstoke where its
important to be cognizant of the who, what, where, and why behind the placement of
commercial tenants. Downtown Revelstoke has a strong sense of place or quality of
space that City stake holders have worked hard to achieve through its past efforts
(including retaining the historic buildings, street beautifications, relatively compact
downtown vs. sprawling & diffused commercial areas, unique locally oriented
businesses, personalized architecture, etc.). Thus, it is a real jewel of BCs smaller
towns which holds even stronger potential to capture the higher paying
destination tourists than highway oriented shopping centres so prevalent in most
smaller towns in not only BC but across North America. The case studies by Kevin
Hanna, Ann Dale & Chris Ling further highlight the importance of the quality of place

Evaluation of Planned Highway Commercial in relation to Downtown Revelstoke

and how encouraging peripheral development resulted in a declining downtown with a

multitude of socio-economic impacts (see above & more on this shortly).

In the Citys ICSP, one of the key strategies is to encourage a Compact & Connected
Community which a highway located shopping centre anchored by competing
and larger food and drugstores anchors will gradually dissolve. Contrary to this
reports recommended actions, the subject shopping centre will decrease the diversity of
the downtown. This is essential to a resilient economy that is diverse and vibrant
(Section 4.3.4)

Similar to TRECs recommendations in its 2006 Retail Strategy, the more recent Fall
2015 BRE survey reveals that small to medium sized locally owned businesses are
recommended to support and improve the business climate in Revelstoke.

The planned commercial development for the subject Hall Pacific site is expected to
comprise a large format grocery and drug stores along with other merchants which
currently exist in downtown Revelstoke. Thus, unless it is successful in capturing a
significantly large share of TCH travelers (more on this later), it holds potential to
negatively impact downtown merchants in not only the same categories but also
other merchants.

The addition of health & wellness stores and services, while holding potential for a
hotel/hospitality mixed use development (MXD), would also likely impact on downtown
merchants (more on these points later).

The exception to the above is if the retail expenditure potential associated with the two
resident trade areas for Revelstoke and from tourists and highway travelers has
significantly increased since TRECs 2006 analysis which is largely based on 2001
Canada Census data.

2006 RETAIL STRATEGY RECOMMENDS A DIFFERENT & SMALLER COMMERCIAL MIX

AT THE SUBJECT GATEWAY HIGHWAY LOCATION

As Table 10.1 in TRECs 2006 Retail Strategy outlines, convenience items which include
grocery and drugstore items are recommended to comprise approximately 2,000 sq.ft. at
the subject highway or Gateway location along with about 10,000 sq.ft. In the
restaurant/takeaway category.

It is also important to note that TREC 2006 Retail Strategy revealed an oversupply of
retail floor space for most retail categories for the 2006, 2011 and 2016 periods
from resident expenditures (see Table 8.1).

However, as reported in Section 7 of TRECs report, it is the visitor markets that have
the greatest potential to support additional commercial development within the city.
While on the surface, adding grocery and drugstore floor space at the Gateway location
may tap into some of these potential expenditures, the report clearly states that a
stronger downtown and alpine commercial mix would hold the greatest potential to
capture this potential.

Furthermore, it outlines specific types of retail and other services to be added downtown
to not only strengthen it for resident shopping but also tourists many of which are
looking for a more distinctive shopping experience than another shopping centre
which are so prevalent along the TCH. Important anchors for downtown shopping are
grocery food stores and drugstores; thus, those uses proposed for the subject Gateway
or Hall Pacific shopping centre development would likely impact the downtown

Evaluation of Planned Highway Commercial in relation to Downtown Revelstoke

businesses. A caveat would be if retail expenditures have increased significantly since

those calculated in the 2006 Retail Strategy.

Again, since almost 10 years have passed since this report was completed, expenditures
from both residents and tourists would have changed along with an update on trends,
competitive infrastructure, outflow, internet spending, etc.

Ideally, the 2006 Retail Strategy should be updated to objectively and more accurately
evaluate the planned shopping centre at the subject Gateway location. Otherwise, there
is a strong likilihood that the subject shopping centre can result in the
transference of sales from existing downtown merchants and also potentially impact
the retail village evolving at Revelstoke Mountain in the future.

DECREASING RETAIL OUTFLOW

The developer repeatedly states that the subject shopping centre will decrease the
outflow of expenditures from the community from resident spending outside the City
while at the same time tapping into the tourist volumes on the TCH. As previously stated,
the City is oversupplied in virtually all the store categories that are planned for the
subject shopping centre. While it may marginally decrease outflow, most of the sales
will be at the expense of existing merchants in the downtown (unless of course
the market dynamics have significantly changed since 2006).

In addition, grocery store chains do not commit to shopping centre projects unless there
is a stable and ideally growing resident population base; highway and tourist traffic is
typically considered inflow and often represents around 5% of a grocery stores sales.
Even in the case of the much larger tourist based community of Whistler in the
1990s, (in which the President of TREC was involved in the market analysis for the food
anchor in Whistler North), most grocery store chains passed on the opportunity stating
that there was insufficient resident base and that tourist dollars were not sufficient
to warrant a similar sized store as that planned for the subject shopping centre in
Revelstoke.

It is also important to note that the grocery store size at almost 22,000 sq.ft. at the
subject TCH development Is significantly smaller than other discount grocery stores or
mass merchandisers with a grocery component (both of which offer larger selections,
lower prices, and more value to consumers) situated in larger communities along the
TCH. Both Salmon Arm and Kamloops already have these types of food stores
which also have significant drugstore categories in them. These are in a stronger
competitive situation (both in terms of size and selection as well as geographic
location) than the subject TCH shopping centre planned for Revelstoke to capture
TCH travelers.

During the last ten years, the retail industry has changed quite significantly with different
trends that were prevalent in the early part of the millenieum or during the 1990s. While
these are beyond the scope of this brief evaluation, two trends that are should be
recognized in light of the subject shopping centre on the TCH are:
1. Large format retailing is being favoured more by lifestyle retailing offering
more of a pedestrian friendly experiential setting such as what downtown
Revelstoke and the village at Revelstoke Mountain hold the foundation to
strengthen. An opportunity may exist for this type of shopping centre at the
subject site if it embraces a mixed use development (MXD) that would comprise

Evaluation of Planned Highway Commercial in relation to Downtown Revelstoke

undersupplied retail, restaurant and service niches and are different than what
currently exists in the stronger positioned food anchored shopping centres along
the TCH in other communities as mentioned above.
2. Internet spending has increased significantly since 2006 thus this holds
significant potential to decrease outflow in a community like Revelstoke. This
is supported by the BRE survey which indicated actions should assist in
addressing this for Revetstoke businesses.

To decrease resident retail outflow and capture more visitor spending, Section 10 of
TRECs Retail Strategy outlines seven specific merchandising categories for various
commercial districts within the City. While this is recommended to be updated especially
in light of the planned shopping centre, the convenience (incl. food and drugstores)
and health/wellness merchandise categories were found to be oversupplied and if
the resident base increased as projected and tourist base was effectively targeted,
any growth in these categories were recommended to be located within the
downtown and the Village at Revelstoke Mountain. See Table 10.1

In addition, the fall 2015 BRE survey indicated that almost half (48%) of the businesses
surveyed indicated they are interested in expanding within the next three years. Specific
actions were recommended to be identified to help these businesses growth and
expansion plans. Adding competing retail on the TCH would NOT necessarily be one of
those actions unless of course sufficient growth in resident and visitor expenditures.

Under Section 3.73. (Vol. 3) which entails strengthening retail opportunities, the Citys
ICSP also recommends as high action to prioritize and designate responsibility for
recommendations in the Retail Strategy.

SUBJECT GATEWAY DEVELOPMENT DOES NOT MEET RECENT COUNCIL

GOALS & OBJECTIVES NOR OTHER GUIDING CITY DOCUMENTS

Based on the information that both the developer and City officials are relying upon
including TRECs 2006 Retail Strategy, the 2015 Business Retention & Expansion
Survey, and other information in the package provided by the City, the subject TCH
shopping centre would NOT contribute to economic growth and stability and to
improving the quality of life in the community.

The subject shopping centre planned for the TCH location would also jeopardize
Revelstokes Vison (1994) as reinstated in the recent ICSP by compromising being a
leader in achieving a sustainable community.

SUMMARY

It appears that neither the developer nor the City has not fully completed its due
diligence to objectively evaluate the full impacts (both positive and negative social and
economic) of the subject planned TCH shopping centre. Both are relying upon
significantly outdated information and the developer has taken facts and figures from
TRECs 2006 Retail Strategy out of context and misinterpreted them

The subject planned shopping centre is planned to comprise at least two retail
categories (both food and drugstores) that appear to be oversupplied (according to the
TREC Retail Strategy 2006 report). Thus it holds potential to significantly negatively

Evaluation of Planned Highway Commercial in relation to Downtown Revelstoke

impact merchants likely resulting in declining tax dollars, community support and
employment.

Nevertheless, the subject TCH or Gateway location represents a strong commercial,

shopping centre and Mixed Use Development (MXD) opportunity. The greatest
opportunity and benefit to both the City and downtown merchants including
tourism operators would be to complement and fill retail, restaurant, and service
niches that are undersupplied in the City versus adding to what appears to be
(based on 2006 analysis) oversupplied categories of food and drug stores. This
development and merchandising strategy would not transfer sales from existing
downtown merchants but hold stronger potential to decrease outflow and strengthen
tourim expenditures for both downtown merchants and the subject planned TCH
commercial development.

Accordingly, the end result is to continue to strengthen the tremendous jewel of a

historic mountain town that City stakeholders worked hard to achieve. Very few of
these authentic downtowns remain in Canada let alone North America due to illconceived development and merchandising strategies for their peripheral highway
locations and resulting impacts on their downtowns.

Evaluation of Planned Highway Commercial in relation to Downtown Revelstoke

TREC INTERNATIONAL FIRM PROFILE & RELEVANT

PROJECT EXPERIENCE

Mick Matheusik, B.E.S., M.Sc., CMC

Mick Matheusik is the founding Principal and President of TREC International Inc., a
management and development consulting company based in West Vancouver, B.C.(1997).
Building upon his career as a professional land planner for the City of Edmonton, other
government organizations, and a major developer (Genstar Land Development), Mick became
a Certified Management Consultant (CMC) in 1991 specializing in retail, hotel/hospitality and
mixed use developments (MXD). Given his over 30 years of management and development
consulting experience, he has worked with numerous developers, government organizations
(Municipalities, Regional Districts, Provincial agencies, etc.), resorts and downtown
organisations as well as many of the major commercial developers in the Province plus many
MXDs and resorts in the U.S. and overseas.
Mick Matheusik has personally conducted or managed hundreds of market studies, retail
strategies, economic impact and commercial evaluations for downtowns, new town centres,
shopping centres, retailers, hoteliers, spas, resorts, and hospitality operators as well as mixed
use developments (MXD) situated throughout western Canada, the US and internationally. He
has extensive experience and worked on many similar projects in Western Canada. To name a
few in the region: Retail Strategy for Revelstoke (2006), Market study and Commercial Master
Plan for Kicking Horse Mountain Resort; Concept and merchandising plan for the General Store
at KHMR; Concept Plan and Visioning for Downtown Vernon Association; Market Study,
Development and Merchandising Strategies as well as a Business recruitment Package for
Downtown Vernon Association. Non-regional projects include: Retail Strategy for the District of
Squamish, Development and Merchandising strategy for Squamish Station a commercial
development at the Gateway location to downtown Squamish, Development & Merchandising
Strategy for Garibaldi Village (shopping centre along the Sea to Sky highway) in Squamish; and
assessing the impact and timing for Pemberton Station on merchants situated in the downtown
of Pemberton. retail village assessments at Whistler, Big White; Mt Washington; commercial
evaluation in Fernie; Vision/Concept Plan and Market Study/Merchandising Plan (incl. consumer
research) for the Gastown Business Improvement Society; as well as market evalutions and
economic impact analyses for large multi-faceted events and developments such as the Pacific
National Exhibition and the four major amusement/recreation and leisure facilities at West
Edmonton Mall in Alberta. During the last decade, he has also worked on several general
stores, spa retail venues and other specialty retailers which included examining key ingredients
for profitable retailing as well as working with architects and interior designers to ensure
expenditures are translated in the appropriate store environments.
Examples of relevant US and International projects include:

Valley Valley Center. Highest & best use 'market driven' development strategy and master
plan for a 180 acre parcel situated at the foot of Beaver Creek along Interstate Highway 20,
the sister resort of Vail: positioned to serve Vail Valley residents and visitors, and act as the
valley's town center; uses that were found to have sufficient market demand and were
financially viable were over 500,000 sq. ft of retail (both pedestrian oriented and a power
center (incl. big boxes) along the highway, a number and cross section of hotels,
office/business park, medical uses, educational and sports uses as well as a diversity of
housing types.

Market studies (inc. consumer research) and merchandising strategy for the expansion and
revitalization of Beaver Creek Downtown, CO

Evaluation of Planned Highway Commercial in relation to Downtown Revelstoke

Urban entertainment centers in Phoenix, AZ, Orlando, FL and highest & best use
development strategies (incl. market studies for retail, office and hotel) for an extensive tract
of industrial lands situated at the edge of a mid sized university oriented town of
Bloomington, ID

Market & merchandising strategies plus business recruitment for the revitalization of a
historic 28 block area repositioned as an urban entertainment City, named the Power & Light
City, Kansas City, MO;

Revitalization of a historic area named the Rocks at the City's most prominent waterfront
and cultural precinct, Sydney, NSW;

Mixed use/commercial waterfront development for Newcastle, NSW;

Resort retail at Port Lincoln, S. Australia;

Festival/ entertainment oriented public market at the edge of downtown Cairns, Qld;

Evaluation of retail village at Sanctuary Cove, Qld, the countrys first integrated resort
community anchored by a Hyatt Regency hotel and two signature golf courses;

Concept/master plan and market studies (variety of land uses) for a $1.5 billion mixed use
master planned town center development at the center of the Gold Coast situated near the
country's first private university;

Market studies (incl. consumer research), merchandising strategies and economic impact
assessments for various resort downtowns and shopping centers situated throughout QLD,
NSW and S. Australia;

Highest & best use development strategies for light industrial and waterfront lands in both
Wellington and Auckland, NZ;

Market studies and highest & best use development strategies for existing regional shopping
centers and how they can be turned into regional town centers for two areas situated along
the outer suburbs of Santiago, Chile;

Resort due diligence and highest & best use commercial development options for several
land holdings in the resort communities of Vina Del Mar and Conception, Chile;

For further information, see www.trecinternational.com

Micks academic credentials include a Bachelor of Environmental Studies (B.E.S.) in Urban &
Regional Geography and Planning from the University of Waterloo and a M.Sc. from Texas
A&M in Real Estate Development & Marketing with a specialty in Tourism & Commercial
Recreation Development. Mick Matheusiks work in strategic planning and design has been
acknowledged by the Urban Land Institute, ULI, a world renowned think tank organization based
in Washington, D.C. Some of his work has been published in their Shopping Center & Resort
Development Handbooks providing strategic advice to developers, government organizations,
builders, planners, finance companies and other professionals.

Evaluation of Planned Highway Commercial in relation to Downtown Revelstoke