Scio joins cities that have rejected Dollar General's expansion into rural communities

Where derelict buildings once stood on city blocks in small towns across Oregon, dollar stores have rapidly sprung up in the past decade.

Dollar General, a Tennessee-based chain of small retail stores, has aggressively expanded to 60 stores in Oregon, including rural locations like Jefferson, Aumsville and Mill City, but also in distant locales such as Drain, Winston and Shady Cove.

Scio, however, will not have one.

After significant opposition by community members and small business owners, the Scio City Council voted unanimously at its Sept. 9 meeting to deny a requested zoning change that would have allowed Dollar General to build a location in Scio.

Developer Hix Snedeker Companies of Daphne, Alabama asked the city to change the zoning on a lot at 38848 Highway 226, which is in the southernmost part of Scio, and amend its comprehensive plan so it could build a 9,000 square foot retail space for a new Dollar General.

Dozens of residents and business owners in Scio voiced strong opposition about the impact such a store could have on its community.

"It was a sort of an awakening of the community," said Roger Gaither, an opponent of the proposal.

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Scio likes its independence

Scio exudes small-town charm.

The city of 983 has maintained its place in the world along Highway 226, secluded enough to keep its small-town charm, but close enough to Interstate 5 – 15 miles to the east – to be a bedroom community for those who work in Salem, Albany and Stayton.

“Scio also has a geographic situation that it’s truly not on the way to anywhere,” Gaither said.

“It’s sort of stuck in the middle between the two branches of the Santiam River, and you’ve got to cross bridges to get here.”

To the outside world, Scio is known for its covered bridges and its successful high school football team that runs the ball nearly every down.

Less seen is its high rate of volunteers in community groups like the Scio Community Improvement Organization board, the Friends of the Scio Public Library and the Linn County Lamb & Wool Fair Association.

According to the Oregon Employment Department, 335 residents of Scio were employed, but there were 425 jobs in the Scio city limits.

The Scio School District (159 employees), Scio Mutual Telephone Association and small businesses like Covered Bridge Coffee House, Santiam RV, Ennis Heating and Macro Solutions are among the primary employers in the city.

There are no chain stores or restaurants in town and most of its retail businesses are clustered along the main drag in the north part of town.

Many of its residents drive 10 minutes to Stayton or 30 minutes to Albany or Salem for much of their shopping.

Dollar stores grow in small towns

Dollar General started small as J.L. Turner and Sons in Scottsville, Kentucky, but has become a huge player in the retail marketplace.

The Tennessee-based company was ranked 119 on the Fortune 500 in 2019 with $25 billion in sales in the 2018 fiscal year, 15,597 retail locations and 135,000 employees.

Most products at the store cost more than $1, but the chain has large buying power and keeps prices low.

The growth in its segment of the market has been remarkable, propelled by moving into areas where there few retail options exist and residents’ other choice is to drive long distances to purchase essentials.

Dollar General spokesperson Crystal Ghassemi said the company brings economic growth to communities it moves into with job creation. 

"The company looks for places where we can offer customers an easy and convenient shopping choice as we generally serve customers within a three to five mile radius, or 10-minute drive," Ghassemi said.

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But the stores coming to town can cause unintended consequences, according to a report by the Institute For Local Self Reliance.

“Dollar stores are a poor substitute for grocery stores. A typical dollar store carries no fresh produce, only a limited selection of processed foods,” the report states.

In Dollar General’s application to Scio, the company says approximately 500 Oregonians are employed in the company’s 60 state stories, slightly over eight per store.

According to research from Kansas State University, small-town grocers lose as much as 30% of sales when dollar stores open nearby.

“And it’s very hard for a local business owner to compete because Dollar General has huge buying power,” Gaither said. “They import a lot of their products, and the local business owner, they just can’t compete.”

A handful of small cities like Scio have rejected Dollar General after public outcries, such as Velva, North Dakota (population 1,000), Fairport Harbor, Ohio (population 3,100), and Mount Ulla, North Carolina (2,500).

In August, Forest Grove (population 24,000) rejected a similar bid.

Dollar General wants to come to Scio

Dollar General has been eyeing Scio for a new store for some time, applying to build a location as far back as 2016.

Eventually, it settled on a 1.34-acre site on the southernmost edge of town along Highway 226, property owned by Oregon State Bridge Construction and used as a storage yard.

To build on that site, however, Hix Snedeker asked the city earlier this year to change zoning of the property to commercial from light industrial.

Opponents of Dollar General’s proposed Scio location used every argument they could think of to keep it away.

They cited flooding issues on the proposed site, economic impacts on small businesses, the developer asking for a variance to reduce the number of parking spaces to 28 from 45 and the site being too far from downtown.

But Scio City Attorney Tre Kennedy said those issues weren’t germane to the rezoning and comprehensive plan amendments.

“In this case, it’s just about the land use designation," Kennedy said. 

Scio has limited industrial-zoned land, and rezoning the proposed property could have an adverse impact on the city’s ability to grow its industrial development.

And the city’s comprehensive plan, which was updated in 2015, encourages businesses in the current downtown area north of the proposed location, and Hix Snedeker applied for a variance to it. 

“While Dollar General is a retail establishment and would hire some people, it does not support the small business aspect of the goal, which I believe is the heart of the economic development goal,” wrote Melodee Scofield, co-owner of Scio Hardware and Mercantile.

There are no other suitable sites in Scio to build such a store, project engineer Trey Jinright told the city council.

Kennedy said the city council will formally approve its decision Oct. 14 when it approves minutes of the Sept. 9 meeting. The developer will have 30 days to appeal to the state Land Use Board of Appeals.

bpoehler@StatesmanJournal.com or Twitter.com/bpoehler