Atlanta Vending

Introduction

Vending is an American institution:  It is a classic way for entrepreneurs of modest means to take their first step up the economic ladder.  It doesn’t require a lot of money or formal education, just a drive to succeed and a willingness to work hard.  And through that work, countless American consumers have enjoyed the benefits of vending: convenience, a wide variety of inexpensive goods, and a familiar face who helps make their day a bit brighter.

With all of this, one would think that cities would be doing everything they can to encourage vending.  Unfortunately, as the Institute for Justice notes in its most recent strategic research report, Streets of Dreams, too often local governments erect roadblocks to these small-scale entrepreneurs.

Atlanta is one of the worst cities for vending in America. For decades, Atlanta’s street vendors offered snacks, soda, and souvenirs to visitors and residents alike. But two years ago, Atlanta took the unprecedented step of handing over all vending on public property to a single private company. As this monopoly puts up vending kiosks in various areas of the city, existing vendors must either quit or rent a kiosk at a cost of up to $20,000 per year.

This monopoly is bad for entrepreneurs and bad for consumers.  The high rents that the monopoly charges and the strict controls that it puts on what products vendors may sell threaten to turn vending into a career that is out of reach for any businessman of modest means.  And the vendors’ loss is the consumers’ loss as well: these restrictions force consumers to pay more and receive less than they would in a free market.

To protect the right to earn an honest living, the Institute for Justice launched its National Street Vending Initiative earlier in 2011.  In the initiative’s first case, the Institute for Justice sued the City of El Paso, which had blocked food trucks from operating within 1,000 feet of a brick and mortar restaurant.  That lawsuit led El Paso to remove that and many other unconstitutional restrictions from its code.

Now the Institute for Justice’s fight on behalf of street vendors brings it to Atlanta.  The city’s vending monopoly stifles economic opportunity and gives a single company the power to decide who may work and who may not.  Together with Larry Miller and Stanley Hambrick—two long-time entrepreneurs who vend outside the Atlanta Braves baseball stadium—the Institute for Justice has challenged the city’s vending monopoly.  When Larry and Stanley prevail, they will have not just saved their livelihoods.  They will have saved their liberty.

Vending: An American Success Story

Street vending has been a part of the American economy since as early as the 17th century. ¹   Today’s vendors are a diverse group of businesspeople, selling both from mobile and fixed locations.  They are immigrants, minorities, ex-professionals, men, women, retirees and young entrepreneurs building new businesses. ²

In 2007, there were over 760,000 ³ vending businesses nationwide with revenues in excess of $40 billion. ⁴   In the Atlanta metropolitan area alone there were 11,074 ⁵ non-food vending businesses that contributed over $248 million to the local economy. ⁶

Street vendors offer many benefits to their communities.  Vending is a potential solution for unemployment.  Individuals who cannot find work can become self-sufficient by selling goods in public areas. ⁷   Chicago, for instance, once stated that if financial requirements on street vending were loosened it would be a good way to ease high unemployment. ⁸   Vending also gives people on the first rung of the economic ladder— who often cannot start other businesses due to costly and complicated government regulations—a chance to succeed. ⁹

In addition to improving their own quality of life, vendors improve the lives of their customers.  Vendors provide goods and services to areas underserved by traditional retail outlets. ¹⁰  As a result, they significantly increase the variety of goods available in poor and minority communities. ¹¹   Street vendors also sell specialty products; in Washington, D.C., for instance, food trucks sell lobster rolls, Korean bulgogi, and gourmet macaroni and cheese, products that are likely too “niche” to sell at a traditional brick and mortar restaurant.

Furthermore, vendors help keep the streets safe.  In New York City, two eagle-eyed vendors alerted police to a suspicious vehicle that turned out to contain a car bomb. ¹²   And as Jane Jacobs, the famous author and activist, wrote, “A well-used street is apt to be a safe street.” ¹³   By enticing consumers to come out, vendors turn empty streets into vibrant marketplaces.

America’s Largest Cities Put Up Roadblocks on the Streets of Dreams

With all of the benefits that vendors provide their communities, cities should be encouraging more people to become vendors.  But far too often, local governments have made street vending next to impossible.  In its recent report on street vending entitled Streets of Dreams: How Cities Can Create Economic Opportunity by Knocking Down Protectionist Barriers to Street Vending, the Institute for Justice analyzed the vending laws in America’s 50 largest cities.

What that survey uncovered was dismaying.  Of the 50 largest U.S. cities, 45 have in place one or the five major types of vending restrictions: public property bans, restricted zones, proximity bans, stop-and-wait restrictions and duration restrictions. These restrictions limit vendors’ ability to be successful or to even enter the trade in the first place.  Thirty-one of those cities have two or more of these restrictions in place.

These laws are blatantly unconstitutional.  As mentioned above, earlier this year the Institute for Justice’s National Street Vending Initiative challenged a similar law in El Paso, Texas that prohibited mobile food trucks from selling their wares within 1,000 feet of any business that sold food.  This rule, which the head of the El Paso restaurant association freely admitted was to suppress competition, effectively turned El Paso into a no-vending zone.  Three months after the Institute for Justice filed suit, El Paso threw in the towel and removed that law and a host of other anticompetitive rules from its code book.  In so doing, a city official admitted that “there’s not a health reason or a Texas food rule that I can find that justifies [the 1,000-foot ban].” ¹⁴

But while El Paso corrected its errors, too many cities still unfairly restrict where street vendors may work, what products they may sell, and even how long they may stay in one place.  To vindicate the economic liberty of vendors and all Americans, the Institute for Justice’s National Street Vending Initiative continues to challenge these ill-conceived and anticompetitive laws.

“Hotlanta” Gives Vendors the Cold Shoulder

The City of Atlanta has some of the most onerous vending laws in the country.  Atlanta’s troubled relationship with vending is mostly due to the constant meddling and interference of government officials.  During the 1996 Olympics, for instance, the City pushed existing vendors out of their spots and gave an associate of then Mayor Bill Campbell (who was later convicted of tax evasion) the right to sublease spots throughout the City. ¹⁵   The result was a boondoggle, with thousands of vendors from across the country losing their life savings.

Atlanta officials have still not learned their lesson.  Some Atlantans have complained in the past that some licensed vendors sold knockoff goods and did not have aesthetically pleasing displays.  Rather than dealing with these isolated problems on an individual basis, the City’s solution was to drive most current vendors out of the market.  And so, in 2009, Mayor Shirley Franklin signed an exclusive twenty-year contract that handed over all public-property vending in Atlanta to General Growth Properties, a Chicago-based shopping mall management company.  Although some cities have let private groups manage vending on a particular street (such as Fremont Street in Las Vegas), never before has a city given a single company the “exclusive right to occupy and use all public property vending sites . . . including without limitation those vending sites currently occupied by public property vendors.” ¹⁶

As a monopoly, GGP builds vending kiosks on public property in various areas of Atlanta, including areas where public-property vendors already work.  As the kiosks go up, the existing vendors must either leave or rent a kiosk for anywhere from $500 to $1,600 a month.  This means that a vendor who was paying only $250 annually for a vending site must now pay up to $19,200 in rent.  This makes public-property unaffordable and close to impossible for many low-income entrepreneurs.

In exchange for thousands of dollars in rent, vendors get a cramped, leaky kiosk that is covered with advertising on three of its four sides.  These kiosks, which are more designed for advertising than selling, limit vendors’ visibility and make it extremely difficult for consumers to tell if a vendor is open for business.

But it gets worse:  The City of Atlanta, like so many other cities, wants to manipulate the rules to favor its preferred businesses. And so, as part of handing over control of all vending in the city, Atlanta asked that GGP keep the remaining vendors from competing with nearby bricks-and-mortar businesses.  In its contract with General Growth, Atlanta stated that the company should control its lessees so that they only sell products that “complement and not compete with existing ‘bricks & mortar’ retailers in the areas of the vending units.” ¹⁷   Given these high prices and unreasonable restrictions, it is no surprise that an estimated sixteen vendors got thrown out of their jobs during the first phase of the program.

By most accounts, the program has been an unmitigated disaster.  Many of the kiosks sit empty and many lessees are having a hard time making ends meet.  But still the program pushes on:  “Phase II” of the program, which was set to begin in 2010, includes the area around Turner Field (the home of the Atlanta Braves).  Although Phase II is behind schedule, the mayor’s representative recently told the city council that GGP wants to start construction on the Turner Field kiosks late this season. ¹⁸   This means that most vendors who currently vend at Turner Field will soon be pushed out of business—and onto the unemployment rolls.  Indeed, on July 15, 2011, Larry Miller discovered a spray-painted outline of a kiosk next to his vending location, indicating that GGP would commence with Phase II in the very near future.

Baseball Vendors Just Want a Chance to Compete

Rather than just letting the powers-that-be take away their livelihoods, two Turner Field-area vendors have chosen to stand up and protect their right to earn an honest living.  These entrepreneurs, who have served baseball fans for decades, run professional businesses that are fixtures at every Braves home game.

Larry Miller has been fighting for the rights of Atlanta’s vendors for the past twenty-five years.  Larry sat on the Atlanta Vending Review Board in the early to mid-1990’s and was previously the president of the Atlanta Black Vendors Association.  His business, which sells fully licensed sports apparel and “parody” shirts, pays all necessary sales and business taxes to the city and state.  Forcing Larry’s business into a kiosk, he says, “would mean destruction.  It would destroy my business.” He simply wants the right to continue vending, something he has done for years.

Stanley Hambrick is another Turner Field-area vendor who sells apparel and souvenirs.  Having vended outside of Turner Field since 1987, Stanley employs multiple employees, has a multi-year contract with a credit-card processing company, and maintains a large inventory of legal and licensed merchandise.  Vending has allowed Stanley to send three of his children to college and he is currently teaching his youngest son how to handle the family business.  When asked what he is fighting for, Stanley simply responded, “I’m fighting for the American Dream.”

Open Markets, Open Opportunities: Legal Claims

Larry and Stanley’s fight is not just about their particular businesses.  Instead, it’s about the right of all vendors, both in Atlanta and nationwide, to earn an honest living without the government pushing them aside in favor of politically powerful insiders.  Vending is a benign and common occupation that harms no one, yet local governments frequently pass restrictions that hurt vendors at the behest of their brick and mortar competitors.  It is the role of the courts to step in and declare that a free market means that everyone, not just the well-connected, get to compete.

One important check on municipal overreach is the fact that cities like Atlanta cannot just do whatever they wish.  Atlanta did not, and does not, have the power to monopolize all public-property vending.  The General Assembly never gave Atlanta permission to grant an exclusive franchise in vending, nor does the City’s charter give it this kind of authority.  Because the City of Atlanta did not have the authority to grant a monopoly to GGP, the contract is void and is treated like it was never signed.

Atlanta’s exclusive deal with GGP also violates the Georgia constitution.  Local governments may not authorize “any contract or agreement which may have the effect of or which is intended to have the effect of defeating or lessening competition, or encouraging a monopoly.” ¹⁹   The Georgia Supreme Court has used this provision in the past to strike down laws that established exclusive franchises in printing or that let auto dealers create exclusive sales areas.

This deal also violates Larry and Stanley’s right to earn an honest living free from unreasonable governmental restrictions. ²⁰   As the Georgia Supreme Court has stated, “the more benign the private activity, the narrower the government power to control it.” ²¹   Larry and Stanley’s vending businesses are about as benign as businesses can be; they offer great benefits to the community and pose no danger to public health or safety.  Forcing Larry and Stanley to close the businesses they have painstakingly grown for decades is not just bad policy, it’s unconstitutional.

The Litigation Team

The Institute for Justice filed its complaint in this case, Miller v. City of Atlanta, on July 28, 2011.  The litigation team for the Institute for Justice in this case is IJ Staff Attorney Robert Frommer and IJ Senior Attorneys Bert Gall and Dana Berliner.

The Institute for Justice: A History of Protecting Economic Liberty

As the nation’s leading libertarian public interest law firm, the Institute for Justice engages in cutting-edge litigation and advocacy nationwide to defend individual rights from overreaching government:

Castaneda v. City of El Paso—In January 2011, the Institute for Justice brought suit against the City of El Paso, which stopped mobile food vendors from operating within 1,000 feet of a restaurant or convenience store, and prohibited them from stopping to await customers anywhere in the city.  Three month later, the city passed a new ordinance that eliminated these and other protectionist restrictions.

Chauvin v. Strain—In July 2010, as a result of IJ’s civil rights lawsuit, the Louisiana legislature abolished the demonstration portion of the florist licensing exam, while leaving in place (for now) a short written exam that presents no serious obstacle to would-be florists.  The bill passed both houses of the Louisiana legislature by wide margins.

LA Caskets—In August 2010, the Institute for Justice teamed up with the monks of the Saint Joseph Abbey in a federal lawsuit challenging the constitutionality of Louisiana’s requirement that the monks must be licensed as funeral directors and convert their monastery into a licensed funeral home in order to sell their handmade wooden caskets.

Swedenburg v. Kelly—The Institute for Justice struck a blow for economic liberty before the nation’s highest court on May 16, 2005, when the U.S. Supreme Court struck down discriminatory laws that existed only to protect the monopoly power of large, politically connected liquor wholesalers.

Uqdah v. D.C. Board of Cosmetology—In 1993, an Institute for Justice lawsuit led the District of Columbia to eliminate a 1938 Jim Crow-era licensing law against African hairbraiders.  This case demonstrated that there is no one who is so removed from the need to earn money that economic liberty doesn’t matter to them.