BANGOR, Maine — While the closing of a local L.L. Bean call center runs counter to otherwise positive trends in Maine call center employment, some Bangor leaders are concerned the reasons behind the closure signal a larger, negative shift for brick-and-mortar businesses and tax revenue.
Ben Sprague, chairman of the Bangor City Council, said on Thursday the L.L. Bean closure, which will occur in 2016, raises concerns about the city’s base of property tax revenue, which is dependent on retail sites and successful retailers.
“As more people shop online, it reduces the commercial viability of brick-and-mortar retail buildings,” Sprague said. “Cities like Bangor get a significant amount of property tax revenue from these buildings. If Internet shopping continues to expand, and there is no reason to think it won’t, the entire retail economy will change and it could have a negative impact on our revenue.”
The decision to close the Bangor call center eliminates overhead for L.L. Bean and allows the company to move workers to other call center locations or have them work remotely from home, according to the company.
In addition to overhead costs, L.L. Bean cited increased online shopping — and the resulting reduction in telephone orders — as a leading reason for the closure.
Maine officials have estimated the state loses up to $28 million annually from uncollected sales taxes stemming from online purchases. (It should be noted that Maine residents pay sales tax on online orders from L.L. Bean.)
State law requires anyone who buys goods online to report those purchases annually and pay the equivalent of Maine’s 5 percent sales tax, known as a use tax.
But that often doesn’t happen. Sprague said cities like Bangor must be thinking ahead about how shopping trends could affect tax revenue.
“We need to really think long-term about how these societal changes will impact people’s spending habits and with it, our municipal and state revenue streams,” Sprague said.
The roughly 220 workers at the L.L. Bean call center in Bangor will have the option of working at other L.L. Bean facilities in Portland or Lewiston, work from their homes, or take a severance package, according to the company.
Those that take severance could find themselves in demand. According to data from the U.S. Bureau of Labor Statistics, the number of call centers and call center jobs have been on the rise recently across the state and in Penobscot County.
There were 12 call center employers in the county in 2013, up from nine in 2012 and three in 2009. Collectively, call centers employed about 700 people in the county and 5,500 people across the state at the end of 2013.
Wages to workers across all call centers in Penobscot County were about $4 million for the fourth quarter of 2013, just less than 1 percent of the total $538.2 million in wages paid in the county for that time.
Yet the average weekly wage for call center employees was $466 in Penobscot County, lower than both the statewide call center average of $625 and the overall average private sector wage of $784 across the state.
Call center employment across the state rose by about 300 from 2012 to 2013, with jobs added at businesses like NexxLinx, formerly Microdyne, in Orono. That company employs a total of more than 500 people, according to figures from Bangor’s Community and Economic Development department produced earlier this year.
NexxLinx and others in the state aren’t affected in the same way by retail industry changes that contributed to L.L. Bean’s decision to close its call center. The call center that was purchased by Atlanta-based NexxLinx in 2011 serves clients like video game company Electronic Arts, Time Warner Cable, Reader’s Digest and The Golf Channel.
Elsewhere in Maine, Argo Marketing Group last year invested about $2.4 million in its call center in Lewiston and former EnvisioNet CEO Heather Blease re-entered the call center industry last year by opening SaviLinx at Brunswick Landing.
That company is looking to government contracts for programs like Medicare and other services.
In Bangor, L.L. Bean’s lease with the city for its 30,000-square-foot call center at Maine Avenue and Godfrey Boulevard was set to expire in July 2015. The company paid the city approximately $20,000 per month for rent and maintenance.
Last week, L.L. Bean officials contacted the city to ask for a one-year extension and revealed their plans to shutter the call center, said Tanya Emery, Bangor’s Director of Community and Economic Development. The council is expected to vote on the extension on Sept. 8.
Emery said plans for marketing the call center to new tenants are already in the works.
“The city will be identifying potential target industries, developing a marketing package, and I expect we will do both some print and online advertising for the site,” she said. “We will also work with our network of commercial brokers, site selectors, and partners such as Maine and Company to identify potential tenants.”
Sprague commended L.L. Bean for giving its employees and the city more than 1½ years notice. “I wish every business were so thoughtful of their workers,” he said.
Follow Nick McCrea on Twitter at @nmccrea213.