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2000-02-08
Whitehorse, Yukon. More Corporate Welfare

Do taxpayers have to shell out of their own pocket to support the construction of more retail malls? Here's another handout story with a high price tag. A developer in Whitehorse, Yukon, wants to build a huge mall with 4 major anchor stores -- none of which have been named or verified. To help this project along, the municipal government pledged $750,000 in tax dollars, and the Yukon Territorial Government matched it with another $750,000 subsidy. The local newspaper can't even figure out who Argus Development is, or who they are dealing with. Local residents have become angered that their City Council is using public funds to "subsidize a big box shopping center to the detriment of local business and the downtown core," as one resident wrote. The managing director of Argus has told reporters that he can't divulge who his tenants are, because of what he calls a "confidentiality requirement" that keeps him mum. Argus signed an agreement with the Yukon government, while some local Councilors did not even know the deal was finalized. The Yukon News quoted one Councilor who said he was supposed to be briefed on who the tenants were. The $1.5 million in corporate welfare for Argus will be used for "infrastructure development" at the site. On top of that, the Whitehorse City Council also voted to waive the requirement that Argus set aside 10% of their land for parks or open space, or pay the city more than $800,000. The newspapers said the Council "sweetened the deal" by taking neither the land, nor the money, from Argus. The Whitehorse Downtown Business Association says that giving tax subsidies to an outside developer, who will succeed largely by driving under existing merchants, is a bad use of public funds and creates an unlevel playing field. City Councilor Dave Stockdale sided with the developer. "I really believe we will create more jobs than we will lose," he stated. "It may disrupt some people's lives. Some people may go out of business. But this is a trend that is happening around the world. It's not a happy situation, but it's the reality of what we are facing. We cannot stop progress; it's coming to our backyard. I ask myself, 'Where would we be if we didn't puruse this?' We'd be nowhere." Critics of such helplessness point to the simple fact that Whitehorse has lost population and suffered through a recession, and that cookie cutter development WILL make Whitehorse into a Nowhere. The market pie simply is not there to support the $35 million new mall. They agree that Argus does not present a "happy situation", but think the government should not subsidize this negative trend -- worldwide or not. Meanwhile, the Argus representatives have publicly stated that without the tax subsidies, the mall would not be possible. "Every nickel and time helps to bring this into production." Argus sounds like a street beggar, looking for the public handout. Argus says the high cost of developing the land, including water and sewer installation, is costing the company a lot of money. So without any sense of Argus' financial capacity, local and territorial officials toss in more than $2 million in nickels and dimes. Argus says its mall must attract $60 million in sales -- or 20% of the current retail trade in Whitehorse. The local Chamber of Commerce says the project will mean "jobs, new money, reduce leakage and promote healthy competition." But the Chamber has no solid study or research behind any of those assertions. The Downtown Business Association replies that "fair competition is the issue at hand", and that locals just want a level playing field, with no special advantages for the big developers. "Municipal government has no mandate to create an unfair situation," the Business Association told the Yukon News, "by favoring some businesses over others, and to meddle in the ecoomics of the retail and commercial development market of this city."

What you can do: Investing in speculation. Whitehorse has no idea who the eventual tenants of this "power centre" will be -- or even if there ARE tenants that have signed agreements with Argus. In the middle of an economic slump, Whitehorse is chasing after more retail! Retail brings no new wealth to Whitehorse. They make nothing. Speculation is it could be a Costco. Or maybe a Home Depot. Whatever the logo, the result will be the same. Existing merchants will have to watch their tax dollars being spent by the government to attract a developer who will bring in conglomerates that will help put the locals off the map. It's a form of retail assisted suicide. In this case, the merchans get to help underwrite their own demise. The developer, whom the papers says "operates in the shadows", attracts tax money while never having to show their cards. If 60% or more of the sales at the mall come from existing businesses, Whitehorse will have accomplishing little outside of cannibalizing its own retail base. The real "unhappy situation" in Whitehorse is the fact that public officials mistake building more malls as "progress", and have such a low esteem of their own power to make zoning laws that restrict the size of megamalls. With no plan for the future, and no strategy for how to get there, they end up with developers looking for nickels and dimes.










 
 
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