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2008-05-18
Wauwatosa, WI. City's“Ghost Box” Demolition Fee Attracts Interest

At any moment in time, there are hundreds of empty big box stores that have been vacated by their owners -- often to seek larger digs. Wal-Mart, for example, has its own realty company -- not just to locate new sites -- but to dispose of the "old" ones they are discarding. These stores can be huge castoffs, often larger than 100,000 s.f. Wal-Mart, for example, has stepped up its marketing staff to get rid of what they call "dark stores." They have land and buildings for sale or rent in just about every state. They also hire regional real estate firms to sell their properties. Carrying all these dead stores can be a drain on the company's capital, and Wal-Mart has gotten plenty of bad press because of its habit of arriving in communities with its bags already packed. In the past month, Disney and Home Depot announced a series of store closings, and Linen 'n Things announced in early May that it had filed for protection under Chap. 11 in the US Bankruptcy Court for the District of Delaware, and its financial restructuring plans include closing 120 underperforming stores. This week, the Milwaukee Journal Sentinel reports that the suburb of Wauwatosa, Wisconsin, which has a population of roughly 45,000 people, has become the object of some attention because of its existing ordinance which charges developers a fee to tear down their empty stores -- or what is coming to be known as "ghost boxes." Wauwatosa's big-box ordinance, which was adopted three years ago, requires developers who own buildings 50,000 s.f. and larger to set aside 20 cents a square foot in the city's land conservation fund, which can be used to raze the building if it sits empty for more than a year. In the case of the Lowe's store in Wauwatosa, that would only come to $28,000 -- just a fraction of the full cost of tearing down and restoring such a huge site. The approach in Wauwatosa allows the city to assess developers a fee, which can be used, among other things, to demolish their empty buildings, so they don't sit for years and become vandalized eyesores. The Journal reports that other communities are looking to imitate the Wauwatosa "razing fee." "It's a policy we're going to have to discuss," the director of community development for the Village of Menomonee Falls, Wisconsin, which had a Wal-Mart discount store shut down, but were able to fill it with a J.C. Penney store. "The market took care of it" in that case, the official told the newspaper. "But that's something we
might not leave to chance in the future." When Wauswatosa passed the ordinance, developers were critical of the plan. But now the American Planning Association has cited the city for its model approach in protectding the taxpayers from a costly demolition expense. "This is exactly the climate we were anticipating when we adopted this," Wauwatosa's Community Development Director told the Journal. "The problem is the market model is to cannibalize and push out all possible competition and then close stores once they absorb the entire market," one retail analyst told the newspaper. "The market strategy is highly successful for them . . . but the result is a negative for the community." In Glendale, Wisconsin, any retail space larger than 50,000 s.f. left empty for more than a year is classified as abandoned, the Journal reports. In Saukville, Wisconsin, the community will require Wal-Mart to come up with a plan for its "old" building if their proposal to build a new supercenter is approved. As more ghost boxes appear, more communities are groping for ways to make the company pay -- not the taxpayer. In some limited cases Wal-Mart has even given its stores away to the town to avoid continuing to pay the taxes and overhead costs of the empty building.

What you can do: States like Wisconsin have good reason to fear the impact of "ghost boxes." Wal-Mart, for example, has 7 dark stores currently in the Wisconsin communities of Berlin, Black River Falls, Mukwonago, Platteville, Racine, Stevens Points, and West Allis. The Racine store and Stevens Point are 115,823 and 119,481 s.f respectively. Such stores are not easy to recycle. In total, Wal-Mart today has 556,708 s.f. of dead stores in Wisconsin. In 2006, that number was 644,495 s.f. The empty Wal-Mart stores in Mukwonago, and West Allis have been on the market for at least four years. Two of the Linen 'n Things store closings were in Milwaukee and Racine, Wisconsin, and 3 of the Home Depot stores shut down were in Beaver Dam, Fond du Lac, and Miwaukee. Communities are taking a look at other options besides demolition fees, such as prohibiting a retailer's lease from blocking a new tenant who is a competitor. This was a standard clause in Wal-Mart's lease deals during the 1990s. Readers are urged to contact their local Planning Board to determine if there is a 'demolition fee' or 'demolition bond' in your city or town zoning code. If not, give a copy of this article to the chairman of the Planning or Zoning, board, and ask them to contact the American Planning Association for more details on how to proactively deal with 'ghost boxes' where you live.










 
 
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