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2009-03-29
Rochelle, IL. City Considers $4 Million Bail Out For Wal-Mart Developer

Net sales at Wal-Mart for the fiscal year were approximately $401.2 billion, an increase of 7.2% over fiscal year 2008. But even with all this wealth, the company still welcomes public subsidies at every turn. The Rochelle, Illinois News-Leader reported March 27th that the City Council in Rochelle is considering creation of a Tax Increment Financing (TIF) district along Route 38 to help a financially struggling developer finish his Wal-Mart supercenter project. The subsidy recipient would be the Spring Creek Development Group, which told the City Council that "significant infrastructure improvements" remain uncompleted. A sewer extension and some flood plain improvements have yet to be completed. Tough economic times have reportedly left Spring Creek Development unable to see the improvements through. Rather than turn to Wal-Mart for private sector financing, the developer is looking for public funding, in the form of a TIF district to help the project along. The Rochelle City Council was only too happy to respond, and passed a resolution to begin setting up the TIF area. The city's Manager told the News-Leader that this district will be the first of its kind in Rochelle. TIF districts are supposed to be used in areas where redevelopment or infrastructure costs make private development unlikely. The city issues bonds to pay for the improvements. The property taxes that are paid once the project opens, are used to pay off the bondholders. Spring Creek reportedly told city officials that $12 million in enhancements remain to be done, and the developer only has $7.5 million to put towards the work. The city is therefore going to issue bonds for roughly $4 million. The city manager warned the Council that if they don't come up with the front end financing, the Wal-Mart superstore might not happen. "In these difficult financial times," the city manager said, "development groups, even successful and reputable ones such as Spring Creek, cannot get the financial resources they need." The city feels apparently that it can't turn back on the project now, having approved the plan at the end of October. Rochelle Mayor Chet Olson considers the superstore "vital" to the Route 38 retail corridor. "This development is important to our retail market," Mayor Olson told the News-Leader. "We are too far down the road to just turn back. We can't just leave a big, empty hole in the ground."

What you can do: This TIF district is not a done deal. The city still has to write up the ordinance, and hold a public hearing to let Rochelle taxpayers weigh in. The City Council is expected to take up the TIF district again on April 13th. Rochelle taxpayers might wonder what the imperative is for this project, given the fact that the city already has a Wal-Mart discount store on North 7th Street. If Spring Creek gets its financing, the current store will be shut down, leaving the city with a 'ghost box' waiting for a tenant or a wrecking ball. The Mayor could end up with a "big empty hole in the ground" -- just in a different place than he expected. There are Wal-Mart superstores in Dixon, Rockford and Belvidere, Illinois, but those are more than 20 miles away. But the city of Rochelle as of 2007 only had 9,854 residents, so this store is clearly not something the city needs for its residents. Rochelle promotes itself as "a growing community where quality of life is the primary concern." Readers are urged to email Mayor Chet Olson at themayor@rochelle.net with the following message: "Dear Mayor Olson, You are in the telecommunications business. You know the importance of local businesses to job creation in your community. I'm not sure why the city feels it needs to be in the business of propping up the private sector, but if Spring Creek Development can't finance the Wal-Mart supercenter deal themselves, why don't they ask Wal-Mart to help underwrite the cost, and repay Wal-Mart over time -- rather than ask the taxpayers of Rochelle to bail them out with a TIF district? When the superstore starts paying property taxes, instead of having that money go into the city treasury to help meet budgetary needs, it will go to pay off the bondholders. In essence, you are asking the property owners of little Rochelle to subsidize the world's largest retailer, with sales of $401.2 billion last year. Wal-Mart could financially swing this project, but why should they, if the city is willing to issue bonds to pay the front-end costs of the development? I doubt that many of your constituents believe that Wal-Mart cannot pay its way. They might also ask you what the plan is for the Wal-Mart on North 7th, when that store shuts down. Instead of voting for a TIF, the City Council should pass a zoning ordinance requiring that any owner of a stand-alone retail store over 50,000 s.f. that allows his or her property to sit unoccupied for more than 12 consecutive months as a retail center, should have to restore the site to its predevelopment state. This TIF proposal isn't for Wal-Mart, it's for the birds."










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

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