'Local currency' considered by Ann Arbor DDA to fuel local shopping
The Ann Arbor Downtown Development Authority is studying the possibility of creating a local currency to promote shopping at locally owned and operated businesses.Â
DDA Executive Director Susan Pollay has authorized a $6,000 grant to research the idea. Think Local First, a Washtenaw County-based association of more than 200 independent businesses, will conduct the study and report to the DDA board early next year.
Pollay said the idea is to look at other similar programs around the country -- one group lists 12 such initiatives, including two in Michigan -- to see whether they actually boost business for local, independent companies.
"Otherwise, why do it?" she said.
The DDA board will hear a report on the status of the study at its meeting on Wednesday. Pollay said no decisions will be made on the idea at the meeting.
A recent USA Today article documented the growing number of local currency programs in the country.
Pollay said the program would be completely unrelated to the Ann Arbor Gold gift card program formerly operated by the Ann Arbor Area Chamber of Commerce, which ended when the vendor went into bankruptcy earlier this year.
That program was a gift card that customers would use at businesses, which would then redeem them for cash. Local currencies are actual printed money, known as scrip, that circulate within a community.
Pollay said the decision to look into a local currency had nothing to do with the demise of the Ann Arbor Gold program.
Pollay listed some of the main questions the study is meant to answer:
- How strong is the demand for a local currency program?
- How would a local currency program be different than gift certificate programs to local businesses (such as the former Ann Arbor Gold program run by the Ann Arbor Area Chamber of Commerce) and how are those differences articulated?
- If a local currency program were created in Ann Arbor, would it involve coordination with a local bank? If so, how would that bank be selected?
- Can a local currency program be managed by an existing organization (e.g. Think Local First) or is a separate agency needed?
- What kind of longevity are other local currency programs experiencing?
- Is it anticipated that local businesses would see revenue increases as a result of a local currency program? Are there other benefits one might see from such a program?
Pollay said she expects the report from Think Local First to be completed in early 2010.
Discussion: What should the money be called?
Freelance reporter Dan Meisler can be reached at danmeisler@gmail.com.
Comments
lefty48197
Fri, Oct 9, 2009 : 3:35 p.m.
The ArborBucks program sounds pretty nutty, but it just might work! It would be necessary to get a huge percentage of downtown businesses to accept the ArborBucks otherwise the program wouldn't succeed. Participating businesses could give customers change in ArborBucks instead of U.S. Dollars. They could give you $1.05 or even $1.10 in ArborBucks in lieu of dollars. They could even sell the ArborBucks at this same rate or maybe at the $1.05 rate, but if you wanted to redeem the ArborBucks for dollars then the exchange rate would have to be 1:1. This system would encourage people to spend even more money downtown. The 5 to 10% discount would have to be partially absorbed by the participating businesses as a marketing expense, but the increased business would certainly make that a good investment. As an added bonus, many people would collect the scrip or keep it as a souvenir of their visit to Ann Arbor. That would create an instant profit to the DDA such as when the Post Office sells stamps to collectors who never actually use them to mail letters.
CDBF
Thu, Oct 8, 2009 : 8:22 a.m.
Ed,language is a powerful tool. Instead of calling it a "granny cart", try calling it something like an "urban cart". What a difference, eh? I bet they would sell better too.
Julie
Thu, Oct 8, 2009 : 8:19 a.m.
*sigh* The negativity on these boards is becoming exhausting. There are people who seem protest just about ANY idea. I for one hate the concept of all our cool, funky shops (Liberty Street Video anyone?) going out of business to be replaced by sterile big box stores. It's not the kind of town I want to live in. If people want to shop in big box stores on the outskirts of town with giant convenient parking lots, they have lots of places they can live. I love the idea of local currency, and bartering. It represents the kind of place I want to live.
Castanza
Tue, Oct 6, 2009 : 10:33 p.m.
I could have saved the DDA $6000... this is a retarded idea. Why in the hell would you want to jump through hoops to spend $. The DDA needs to get some business minded folk on their board. If not having a mafia control on parking, this entity would be bankrupt
bunnyabbot
Tue, Oct 6, 2009 : 8:39 p.m.
cash, it's the currency everybody loves. just shop downtown and bring lots of it
C6
Tue, Oct 6, 2009 : 5:34 p.m.
@Edward Vielmetti - Well yeah... If I walk a few blocks I AM downtown, without moving any of the cars out of the drive at home. That's fine if I'm just going for a hair cut or dinner, but I'm not carrying home the spoils from a good shopping trip. Even the 'vette carries more than I'm 'gonna lug walking for very far.
CynicA2
Tue, Oct 6, 2009 : 5:16 p.m.
If downtown merchants have the goods and services residents want, at the price they want to pay, they will thrive - if not, they won't, and judging from the number of empty storefronts, they have some work to do. Aside from overpriced food, drink, and dust-catching junk - just what is there downtown that's actually necessary, useful, or cheaper somewhere else? Not to mention available online with no sales-tax and free shipping, etc... I haven't purchased much of anything other than drinks at a few different watering-holes, in many years. I would like to, but don't for the aforementioned reasons. Having some funny-money script won't change that in the least, and will probably run afoul of the Feds at some point.
C6
Tue, Oct 6, 2009 : 2:32 p.m.
DDA always seems to be looking for someone else to blame for poor business downtown and I'm sure they'd like for us to tie up big amounts of money in their "script" that's only good at member merchants. I think they ignore a couple rather obvious facts however. First, in the current economic climate it doesn't appear anyone is doing well. Even the "evil" shopping centers out on the edge of town are rather underpopulated most days, and have a growing number of vacant units. Second, for many people getting downtown and finding a place to park is just too inconvenient and/or expensive. I'll go if what I want to buy is really only available there, but otherwise I head for the abundant and free parking out near the freeway. I spent 10 days in Europe last month, and saw NOT ONE parking meter during a trip that included Barcelona, Monaco, Florence, and Rome. Of course THEY have public transportation.
OverTaxed
Tue, Oct 6, 2009 : 12:30 p.m.
You can keep your monopoly money. I'm not carrying around amother wad of worthless paper. About that $6000 spent, you would not be proposing a city income tax if you quit wasting DDA money. If other cities tried it, use their outcome. If businesses want funny money, let them fund/run it.
redeye
Tue, Oct 6, 2009 : 12:06 p.m.
Six thousand dollars? (!) If you have to give someone a good month's income just to look at it, then we can already conclude that nobody's really in favor of it.
halflight
Tue, Oct 6, 2009 : 11:01 a.m.
The problem with a system like this is that barter transactions or transactions in "local currency" are still subject to federal and state income taxes. If people regularly trade substantial amounts of goods and services using this alternate economy, the IRS will become suspicious, and participants will have to justify the value of the traded items-- unlike hard currency, which has a universally accepted value. Participants would also have to pay income tax in real dollars, not "local currency". It's much more tempting to not report or underreport your income by abusing this kind of system.
ElizabethinA2
Tue, Oct 6, 2009 : 10:45 a.m.
I grew up in Ithaca, NY where they have had a local currency, "Ithaca Hours," for years (http://www.ithacahours.com). Its a great way for folks to barter with one another for services like yard work, cleaning, child care, and home grown food and goods. A local currency enables economic activity above and beyond the cash in circulation (it increases the velocity of money by increasing the amount of money available). For those in Michigan who cannot find pay check-based employment, this is a way to still participate in the market and earn what they need. I have noticed an increase in bartering among neighbors and have participated myself. It is often difficult to figure out what each trade is worth. If you can name a "price" it allows people to trade without the awkwardness and inefficiency of figuring out how much pulled pork is earned from shoveling a driveway. In this way, it can help local folks as well as local businesses. I'm sure it will be greatly appreciated at garage sales. I'm starting a business and will offer a barter system in addition to cash payments. I would love to accept a local currency as well. We all have to do what we can to accommodate neighbors who are strapped for cash but have plenty of time, skills, and commodities or other resources to trade for the things they need.
bellhelmet
Tue, Oct 6, 2009 : 10:44 a.m.
Here is a thought, spend the $6,000 grant in local stores downtown and continue to use U.S. currency for your purchases.
AccruedInterest
Tue, Oct 6, 2009 : 10 a.m.
Counterfeiter's delight. Maybe the dormant AANews printers can ramp up AA$...First there's a report that oil won't be priced in dollars. Now, local goods. What's next?
Will Hathaway
Tue, Oct 6, 2009 : 9:01 a.m.
I am puzzled about the motivation consumers would have for using the local currency. Is it meant to be like the fundraising method used by many local schools? At our daughters' school the PTO has a program through which families purchase "scrip" for use at specific merchants (and/or register at a particular grocery store). When the families shop at those merchants, a small percentage of what they spend is returned to the school as a supplement to the budget. If the "local currency" contemplated by the DDA included a mechanism for supporting local schools, then I could see not only an incentive to use it but an existing structure for distribution.
Chuck Warpehoski
Tue, Oct 6, 2009 : 8:56 a.m.
The Ann Arbor Gold program also wasn't a local-only option. Many chain stores like JC Penny took A2 Gold, so it didn't have the local economy boosting impact. I look forward to seeing where this goes.
IAmProsperous
Tue, Oct 6, 2009 : 8:27 a.m.
Has anyone looked at the U.S. Constitution to see if this is even legal? Doesn't matter how many other communities have 'gotten away with' doing this. According to our Constitution, under 'Powers Denied to the States', Section 10, Clause 1 "No State shall...emit Bills of Credit; make any Thing but gold and silver coin a Tender in Payment of Debt;...." Just a thought...
Technojunkie
Tue, Oct 6, 2009 : 7:14 a.m.
We already have one fake currency, ever since Nixon took us off the gold standard in 1971. Now, if you want to mint silver coins that local businesses would agree to use, that would be interesting, but probably more subversive than the DDA had in mind.
Alan
Tue, Oct 6, 2009 : 6:43 a.m.
They can do as they wish as long as the local currency isnt required or someone has to pay more if they arent using it. That would just make me not want to shop downtown, I dont like my money to be locked in like that or have to deal with extra banks. I do find it pretty funny that this is coming out shortly after the Always Sunny episode where they create Pattys Bucks for the bar to try and boost sales.