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2008-04-30
Greenport, NY. Wal-Mart Developer Denied Tax Subsidy

It's more than unseemly that Wal-Mart, the #1 company on the Fortune 500 list, would involve itself in welfare subsidies to build its stores. But that's become commonplace across the nation, as the world's largest retailer breaks records for the largest welfare recipient as well. For its store construction program, and its distribution centers, Wal-Mart often tells local officials that unless they get special tax breaks, or financial assistance with infrastructure costs, they will have to take their project to the town next door. That's why it's surprising this week that a Wal-Mart developer put his hand out for a welfare payment in Greenport, New York, only to get it slapped. Wal-Mart already has a discount store in Greenport on Fairview Avenue. That store will close down if the new development happens, and literally move across the street to become a supercenter. But the Columbia County Industrial Development Agency (IDA) turned down a request from the developer Widewaters, a company that often tangles with the public over its choice of locations for superstore malls. Widewaters is promoting the inappropriately named "Greenport Commons" shopping plaza, and tried to get away with several tax breaks, according to the Hudson Register-Star newspaper. The Greenport Commons is a $73 million project with 565,000 square feet of retail space off Route 9 in northern Greenport. The IDA unanimously turned down the welfare request. "For me, the determining factor was the need for the project to be unique," one IDA member told the newspaper. "I don't think they proved that it will be unique." Widewaters Group had asked for a property tax break, known as Payment in Lieu of Taxes (PILOT). Under PILOT, the developer's taxes are "structured" to start low and scale up at the end of a time period to full freight. They also requested an exemption from paying sales tax on construction materials, as well as mortgage recording taxes. The IDA law in New York state was meant for industrial and manufacturing projects, but the law prohibiting the consideration of retail projects has expired. The IDA said that it had received letters from members of the public asking that Greenport Commons not get tax breaks. The only retailer confirmed for the site is a Wal-Mart supercenter. The newspaper said that Wal-Mart owns its parcel of land, and will be paying for its own construction, so the property tax break would not directly apply to them. But anything that makes the project more financially attractive to Widewaters, helps Wal-Mart's supercenter. "We may be the first IDA in the state to be dealing with a retail outlet," the IDA said. The agency seemed concerned that there were no other tenants committed to mall except Wal-Mart. Widewaters said it was willing to accept the PILOT benefits on the condition that the developer brought in national chain stores not currently in the county. Ironically, only national and region chain stores would get the tax breaks -- the big players. Any local retailer moving to the mall would get no break. The developer also said it was willing to cut its PILOT benefits from 10 years to 5 years. Widewaters said the exemption on sales tax for construction equipment would cut down their construction costs -- and that this exemption would also give the retailers, including Wal-Mart, an incentive to build. Widewaters was forced to admit that if the PILOT tax breaks did not happen, the developer would not abandon the project. "If the leasing moves forward, we will move forward," they noted. In other words, we have the funds to do this project, whether we get a break or not. In the end, the IDA did not close the door shut on Widewaters. The board said it was willing to review the request again, especially if more leases were signed. If Widewater had proof that the project would have some uniqueness in terms of its stores and offerings, "we can take another look," the IDA said. "The door is open, and hopefully we made that clear."



What you can do: This welfare subsidy does not deserve another look. Widewaters said for many months that they would need a tax break. Now they want the tax incentives "to keep this market on the radar for tenants who may be deciding to look elsewhere." The Widewaters contingent was "visibly disappointed" after the meeting, according to the Register-Star. "We tried to accommodate them at every turn, a spokesman said. "We will go forward, but we're not going to have an important selling point." "Some people are philosophically against any incentives being offered, and some feel it would be a competitive threat," said another Widewaters spokesman. "The bottom line is, the county town and school district are losing out on a lot of revenue. 100% of nothing is still nothing." The Hillsdale Independent newspaper editorialized against this "deal that would lower its property tax payments substantially over the next decade." The paper said Widewaters "wants a holiday from paying sales tax on construction materials and no bill from the county for its mortgage tax. In effect, the company has asked town and the county taxpayers, through the county Industrial Development Agency (IDA), to become partners in this enterprise." New York law allows Widewaters to have its tax burden start about half of the normal amount, with the payment gradually increasing to the full cost after 10 years. Widewaters wants to get a tax break for bringing in a Lowe's home improvement, while local stores like Dunn's, just down Route 9, get nothing. County taxpayers end up subsidizing Widewaters to bring in a chain store that kills off local firms that did not get -- or ask for -- any tax break. "If Lowe's sees an opportunity, let it open a store here and compete. But why should government intervene in the marketplace to favor one competitor?" the Independent newspaper asked. "Widewaters started Greenport Commons because it thinks it can make money here. If the company calls it quits, the economy will be the culprit, not a lack of tax abatements. If the project succeeds, taxpayers should reap the full benefit rather than surrender revenue to more tax breaks." The Greenport Town Board and the Chamber of Commerce came out against this tax giveway to the rich. Readers are urged to contact the Greenport, New York supervisor, John Rutkey at rutkey@hotmail.com. With this message: "Please congratulate the town board for opposing all tax breaks for Greenport Commons. These big box stores and developers should stand on their own feet financially, and not look for taxpayer handouts, especially when this project will bring no added value to the county, and reduce jobs and revenues at other local businesses. Keep applying pressure on the IDA, and don't let them open the door again to corporate welfare."










 
 
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