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1999-10-08
Ocean View, CA. Wal-Mart's Voo Doo Economics

City staff in Ocean View, CA have submitted a report to the City Council on October 4th that suggests building a 150,000 s.f. Wal-Mart would produce more revenue for the town than if the 13 acre property in question were used to construct homes. The city staff who prepared the report also happen to be proponents of the Wal-Mart project, and opponents have charged that the report is self-congratulatory. The land Wal-Mart wants is owned by the Ocean View School District, and the staff report suggests that Wal-Mart would pay the district about $400,000 a year in taxes on a 65 year lease. Most Wal-Mart leases on land run no longer than 25 years, and it is debatable what a 65 year lease on property even means in this context. Any study of what the City would gain over the life of the lease has to consider what really is the life of the agreement, and what would prevent Wal-Mart from simply closing down its store? Most leases do not require the company to continuously operate a retail store, and when they leave, revenues plummet. The company admits that it has moved hundreds of stores, and its relocation program today is one of its main expansion strategies. Of the 165 supercenters Wal-Mart hopes to open this coming year, 100 will be relocations or expansions. This is why Wal-Mart has more than 300 empty stores up for sale or lease today. The idea of a 65 year tenancy for Wal-Mart is obviously an unproved concept, since the company has only been around since 1962, and few if any leases last that long. Secondly, the staff study compared retail to residential development, but apparently did not look at the offsetting impact retail development has on other retail establishments in the trade area. It is here that the city could stand to lose significant amounts of public revenues as other retail property closes, or as residential values around the site deteriorate. The "study" by inhouse city staff is another step towards a March 7, 2000 election in which voters in Ocean View will decide whether or not to rezone the land from commercial back to residential. The developer of the Wal-Mart has agreed to hold back on pursuing city permits until the election is over, according to the Independent newspaper, but the developer is still pursing a lawsuit that challenges the validity of a petition drive that put the rezoning measure on the March 7th. ballot. The developer said he would pursue the lawsuit after the election, and not drop it. As for the staff economic analysis, one Ocean View resident told the Independent: "Don't be fooled by this type of report. This is similar to asking an employee to write their own performance review." If the voters rezone the land residential, Wal-Mart's Ocean View is over.

What you can do: One City Councilman in Ocean View has already decided how to spend the purported Wal-Mart tax revenue. He said the money Wal-Mart would bring could be used for a senior center or a sports field, or to "help 10,000 kids" in the Ocean View School District. This is a common appeal by developers and their supporters: If you approve our plans, you'll have money to build a new school, or senior center, or (fill in the blank). But when the net impact of retail development is considered, the financial impact is sometimes negative or break even. City Councilmen can build dreams with such revenues -- but little else.










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

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