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1998-11-14
Everywhere, USA: Wal-Math, Voo-Doo Economics

Wal-Math is not taught in your local school system. It's a form of mathematics employed by developers and big box retailers who want to impress local officials with financial promises of tax nirvana. Companies like Wal-Mart, Home Depot and Target use Wal-Math to make outlandish claims about their economic impact on the local economy. This form of voo-doo economics only enumerates the gross number of new jobs, property tax revenues, or sales taxes that a development will pay -- never adjusting the figures for the real, net impact on a community. Jobs lost, sales lost, property devalued -- these impacts are not calculated by the Wal-Mathematicians. Case in point: Concord, New Hampshire. According to Richard Gsottschneider, the president of RKG Associates, a multi-disciplinary economic, planning and real estate consulting firm, Concord, NH in the last dozen years added more than 2.8 million square feet of new commercial and industrial development, including stores like Home Depot, but during that period the city's overall assessed valuation dropped by -19%, from $1.9 billion in 1990, to $1.5 billion today. Gsottschneider explains that his research shows that "the much-touted new retail development was a mixed blessing. While retail property values were relatively high in the major development corridors, they were stagnant in the older areas, in part because of the new competition." So Peter got paid, while Paul suffered. "Commercial and industrial encroachment into some residential neighborhoods had a negative impact on residential property values," Gsottschneider notes. In Concord, the state capital, residential property was 57% of the municipal tax base, and so the impact was substantial. "Because Concord was so focused on economic development," RKG says, "it was inadvertantly undercutting the private sector and harming property values." Gsottschneider warns local officials that they must understand how different land uses contribute to the tax base. In Concord, residential values were declining faster than the city could add new commercial and industrial values. Concord needed a residential neighborhood revitalization strategy rather than more big boxes. "A shopping center may be a boon for the community at large," he writes, "but it may also have an adverse impact on other shopping areas. As a result, the community may gain tax base in one location, only to see values decline in another." Gsottschneider recommends that communities should involve their tax assessor in any development decisions. Poor tax base management has led many communities to misread what a Wal-Mart or a Home Depot really contribute to their bottom line.

What you can do: For further information, see the November, 1998 issue of the American Planning Association, or you can contact Gsottschneider directly at: RKG, 277 Mast Road, Durham, NH 03824-4712. Email: rkg@rkg1.com. This firm says they have handled over 1,000 projects since 1981. One of their clients has been Wal-Mart stores, Inc. RKG performed the economic impact study for a Wal-Mart project in Greenfield, MA, and was involved in a controversial report on Wal-Mart's impact in Ithaca, NY. In the latter, citizens claimed that the RKG study understated the true impact of a Wal-Mart on that community. In both towns, Wal-Mart was defeated.










 
 
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