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2008-10-15
Avon, CO. Town Sues District Over Sales Losses Due to Wal-Mart Superstore

Wal-Mart has a way of draining sales out of small towns. Elected officials in Avon, Colorado understood that -- but now they are locked in a legal battle to recoup lost revenues from their Wal-Mart store that closed. The only problem is, Wal-Mart is not part of the lawsut. The small town of Avon, Colorado calls itself the "Heart of the Valley" for its geographic location as well as its strong sense of community and family-friendly atmosphere. Avon says it's a great place for both residents and visitors. The town is eight miles west of world-famous Vail. Avon touts its mix of local and national shops and restaurants -- which happens to include Wal-Mart. Or, it used to include Wal-Mart. Yesterday, town officials put an unusual press release on their website, announcing that Avon had "filed suit against Traer Creek Metropolitan District for non-payment of sales tax shortfall and its capital improvement payment. The District presently owes the Town approximately $650,000 in unpaid sales taxes and capital improvement payments." According to Avon, money is also owed to the Town for municipal services. The Town has issued a thirty day default notice on municipal services owed the Town. The District has not paid the Town for any municipal services, excluding police services, since January, 2008. "It is an unfortunate situation and one which the Town would very much have liked to resolve without legal action," said Town Manager Larry Brooks, "but the money owed to the Town has reached such significant levels that we have no other recourse." The legal fuss here is all about a Wal-Mart. Under an Annexation and Development Agreement, the District must reimburse Avon for any shortfall in the Town's sales tax receipts resulting from the relocation of Wal-Mart from its former location within the Town to its present location within the District. Traer Creek has skipped the last eleven monthly payments, and the Town has consistently provided notice of the District's default. The total sales tax shortfall owed by the District to the Town through the month of September is approximately $450,000. The Agreement also requires the District to remit to the Town $2 million in payment of costs to be incurred by the Town for development and construction of various capital improvements. The $2 million is to be paid in ten annual installments of $200,000 each, payable on September 1 each year. The District failed to make its required September 1, 2008 payment. The Town issued a thirty day default notice to the District, but has not received payment. In addition, under the Agreement Avon provides municipal services, such as police service, snow removal and roadway maintenance within the boundaries of the District and the District pays the Town for these services. In November of 2007, the District disputed the billing of certain services within the municipal services bill. "Since that time," Avon claims, "the Town has tried to resolve the issue with the District and has conceded that it may have billed incorrectly for some services, but has been unable to come to a reasonable agreement with the District and has been asked to agree to a number of other concessions for which the Town believes there is no basis. At this time, the amount owed to the Town for municipal services is greater than the total disputed amount; hence, there is no question that the District owes money to the Town for past due municipal service invoices." Avon's town manager is quoted as saying, "We cannot continue to provide services to the District without payment indefinitely. Doing so is unreasonable and certainly unfair to taxpayers." Under the Annexation and Development Agreement Avon can withhold the provision of municipal services while the District is in default of its payment obligations. Although the Town intends to continue providing municipal services during the short term, the cost of providing municipal services without the payments required in the Annexation and Development Agreement will negatively impact other public programs in Avon. The Town may need to suspend the provision of non emergency municipal services within the District in the future. "Hopefully, we can resolve the issue before we are forced to suspend services," the town manager says. Meanwhile, Wal-Mart supercenter #1199 on Yoder Avenue remains open for business, and is raking in the profits.

What you can do: Today there are three dead Wal-Marts in Colorado: in LaJunta, in LaFayette, and in Sterling. Whatever the town of Avon is doing with its empty Wal-Mart, its not generating the same kind of sales activity as when Wal-Mart was there. On the plus side, Avon was smart enough to join other towns like Lodi, California and the city of St. Albans, Vermont in recognizing that when a new superstore arrives -- especially one that replaces an existing Wal-Mart discount store -- that there is going to be some financial damage. In this case, Avon insisted that Traer Creek must reimburse Avon for any shortfall in the Town's sales tax receipts resulting from the relocation of Wal-Mart from its former location within the Town to its present location within the District. Clearly local officials knew they were going to get the short end of the revenue stick if the "old" Wal-Mart shut down. At least Avon did not suffer the same fate as LaJunta, Colorado, which saw its 69,471 s.f. Wal-Mart discount store on Frontage Road, built in 1989, shut down in 2002 -- and it has remained empty for six years now. Instead, Avon's only problem is that its not being paid for the revenue hit it took when Wal-Mart shut down. There was no need in the first place for the "old" store to be closed, and Avon made a bad deal when it agreed to take money in return for an empty Wal-Mart. But that decision is now history. The town would have done better to get the District to agree to force Wal-Mart to make payments for damage to Avon's sales tax revenue from shutting down. Readers are urged to contact Mayor Ron Wolfe at avoncouncil@avon.org with the following message: "Dear Mayor Wolfe, It's too bad that Avon has to sue Traer Creek for your loss of sales tax revenues after Wal-Mart shut down. I'm not sure why Avon made such a deal in the first place, since the larger supercenter only gave Wal-Mart more market share -- but did little good for Avon. Looking forward, you should insist that any big box retailer who wants to come to Avon should put money in escrow to cover the cost of tearing down their store if its remains empty and not used for active retailing for 12 consecutive months. You are fortunate not to be like LaJunta -- which has had an empty Wal-Mart store for 6 years now -- but the deal you made with the district should have been made with Wal-Mart itself. If the company failed to make timely revenue payments to compensate Avon for the damage done to its retailing sector and downtown -- you revoke their building permit. Instead, you are suing a District for the money you are owed, and Wal-Mart continues to operate unaffected. Next time, get the money right from Wal-Mart -- the true source of your financial losses."










 
 
"Norman has become the guru of the anti-Wal-Mart movement" ~ 60 Minutes

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