Naperville, IL. Wal-Mart Threatens City To Get $1.75 Million Tax Break
Facing the threat of Wal-Mart moving out of the city, the Naperville, Illinois City Council has voted to give the giant retailer a $1.75 million tax break.
Naperville is a community of roughly 145,000 people located 28 miles west of downtown Chicago. According to Money Magazine, Naperville has ranked as one of the best places to live in America three out of the past six years. Naperville is the fourth largest city in Illinois. The city boasts that it has "quaint shops in the historic downtown," plus "bustling shopping malls," with "many of Chicagoland's most popular retailers."
One of those retailers on Route 59 is Wal-Mart, which is planning to build a new 170,000 s.f. superstore in Naperville, and shut down its 'old' store in the city. The giant retailer scared local officials into granting the company a huge chunk of corporate welfare to prevent it from relocating its new store just over the border in Aurora, Illinois. To keep Wal-Mart in the city, local officials vote unanimously to give Wal-Mart a $1.75 million tax break.
As part of the price of giving Wal-Mart this huge bailout from taxpayers, Naperville will be left with an empty big box Wal-Mart, which is not likely to find a new tenant anytime soon. That's because the city already has other empty big boxes to spare.
A couple of weeks ago the media announced that the Naperville Kmart, owned by Illinois-based Sears Holding Corp., will shut down as soon as the end of March, and lay off 98 employees. This month the planned opening date for the new Wal-Mart superstore was delayed several months by Wal-Mart. Last August, the Naperville City Council voted to give a sales tax rebate of $1.75 million over 10 years.
According to the Naperville Patch, the city's original agreement with Wal-Mart required the retailer "to obtain ownership of the property by Jan. 1, 2013 and be open by Jan. 1, 2014." That's not going to happen, because Wal-Mart got mired in details with the property owner, and has been in discussions with the U.S. Army Corps of Engineers regarding potential wetlands on the site of the development. It is not clear why these wetlands were not discussed with the city long before this -- but apparently planning officials in Naperville were not going to be slowed down by some wetlands.
The fact is, the Wal-Mart site is bordered on two-sides by the Springbrook Prairie Forest Preserve and its parcel was part of the forest preserve before it was rezoned by city officials for commercial use. From forest preserve to retail strip -- it doesn't make the city look much like environmental stewards.
City officials have now agreed to give Wal-Mart a three month's extension, with a planned opening by April 30, 2014, according to the Patch. But recently one of the City Councilors realized the foolishness of giving a wealthy company a subsidy, and switched his vote against the tax break.
"It seems like this is one of those rare occasions where we actually get a second crack at the vote and I'm going to take advantage of it," Councilman Joe Mcelroy confessed. But the rest of the City Council stuck by the welfare deal for Wal-Mart -- and the reason for their affirmative vote became clear. "This was a good idea then, it's a good idea now," Council member Grant Wherli told the Patch. "If we don't do this Wal-Mart goes literally across the street to Aurora taking all sales tax dollars with it, leaving us with a $1 million-hole in our general fund."
So this is how Wal-Mart gets its frivolous projects approved: threaten to leave. To keep Wal-Mart, the city agreed to give the world's largest retailer a sales tax rebate of $1.75 million over 10 years. "What this rebate does, it takes over 10 years, $1.75 million of incremental sales tax dollars," Councilor Wehrli explained six months ago when the deal was made public. "This is an incentive to retain Wal-Mart who was talking about moving, literally across the street on the other side of Route 59, and taking their sales tax revenues with them to Aurora." He added: "Nobody wants to give anybody a handout, especially to a major corporation like Wal-Mart. This is retaining sales tax dollars."
When the issue of subsidizing Wal-Mart was being debated, many local residents questioned the wisdom of the deal. According to the Naperville Patch, one resident asked the City Council why a company with more than $400 billion in revenues should get any type of financial bailout. "Wal-Mart's current financials clearly indicate that they are capable of operating a superstore without the aide of $1.7 million in tax subsidies," the taxpayer testified at the hearing. "So, my question to you is, 'Why are we subsidizing a company of Wal-Mart's stature and profitability?' I think the city of Naperville is in a situation where Wal-Mart is using their leverage as a public company. I would go back to Wal-Mart and ask them, as a responsible corporate citizen, that they remain in Naperville and not ask for the $1.7 million." But that idea presumes that Wal-Mart is a responsible citizen.
One City Councilor explained the impact of Wal-Mart leaving: if the retailer moved to Aurora, the city would lose roughly $500,000 a year. "They will go away if we don't do what we need to do tonight. And losing them will just hurt our budget even more and make it that much more harder to balance our budget." Another councilor repeated the myth that Wal-Mart would somehow add new employment opportunities -- even as Kmart was laying off nearly 100 workers. Councilor Doug Krause told his colleagues, "It's going to create jobs and that's what we need right now."
What you can do: One Naperville resident commented on the August news story on The Patch when the tax handout was approved. "Who will be filling the $1.7 million dollar gap for the tax incentives given to Wal-Mart?" he asked. "Small business and family. In my opinion, taking money from small business and families to give to a wealthy, global company like Wal-Mart is the equivalent of looting. Why are small companies being forced to subsidize a powerful, well-connected company, like Wal-Mart, that has the potential to put them out of business? These business deals are a disgrace. Wal-Mart and the Council should be ashamed of going to the public trough to subsidize this global, profitable business. Where was the public discussion if Wal-Mart is good for Naperville to begin with?"
Readers are urged to email Naperville Mayor George Pradel at email@example.com with the following message:
"Dear Mayor Pradel,
You are aware of the fact that the Walton family controls more wealth than the bottom 40% of Americans today. Yet you voted to ask Naperville taxpayers to forego $1.75 million in sales tax, to give the Waltons a handout. That money could have been used for your schools, or police and fire protection. Or it could have been used to protect the forest preserve land that borders this inappropriate site.
This kind of corporate welfare is making voters cynical about the role of elected officials in spending tax dollars prudently. If the Waltons could not make this new project work without a tax subsidy, then let the project fall of its own weight.
Even more pathetic is the fact that the City Council approved the welfare for Wal-Mart because of their fear that the company would locate in another town. Does this strike you as a respectable way of doing business? Is it in some way different than corporate blackmail? Give us a subsidy or we will leave town?
There is certainly no consumer need for a larger Wal-Mart. You have 14 Wal-Mart stores already within 15 miles of Naperville -- including 8 superstores. Your next act as Mayor should be to pass a city ordinance requiring that any retail store which is left vacant longer than 12 consecutive months must be torn down by its owner and returned to its predevelopment state. Otherwise, city taxpayers are going to have to pay to tear down Wal-Mart store #1401 in Naperville when no one moves into it."