CITY TAX INCENTIVES TO HELP WALMART BUILD IN THE WEST END? Mayor Parker tells the Houston Press‘s Christopher Patronella Jr. that the city has been discussing the possibility of a tax-incentive agreement with the developer of the 25-acre site off Yale St. in the West End — where Walmart is planning to build a new store: “‘The city is not negotiating with [Walmart]. However, there are ongoing conversations with the developer regarding a 380 Agreement, which allows for the dedication of future tax revenues from a qualifying project to be used as reimbursement to the developer for necessary infrastructure improvements. 380 Agreements are authorized under state law and have been used previously by the city. This is still not a done deal.’ The 380 agreements, as established by the Texas Local Government Code, authorize cities to refund a portion of projected sales-tax income over a period of time. From Jan 1, 2000 to May 21, 2008, according to the City of Austin’s peer city comparison of economic development agreements, Houston has among the lowest number of such agreements with 11, next to Austin with 7. San Antonio is next in line with 43 and Dallas and Fort Worth with a combined 85. City spokesperson Janice Evans told Hair Balls that the city generally considers projects that are at least $25 million, require substantial new public infrastructure and create a measurable number of new jobs, for the 380 agreements. “The major project that I can point you to that utilized these same concepts is the planned [Regent Square] redevelopment of the former Allen House site. That project will eventually be a $750 million investment.'” [Hair Balls; previously on Swamplot]
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Low paying jobs with no benefits. Just where Houston needs to invest sales tax money.
Thats the greater point here. Ainbinder is choosing to sell to Walmart, and Ainbinder is asking the city to use Public Monies to help them complete that transaction. Why on earth then would the government not ask of its citizen’s opinions when deciding how to spend revenues that we have contributed to?
The public money is a reimbursement of public infrastructure improvements that the city would have had to build anyway. The developer will fund the improvements and the city will reimburse them on the back end.
The decision to enter this agreement is purely based upon potential revenues to the city and potential job creation. Objection to Wal-Mart or the style of the development have no influence on the decision.
A similar agreement was performed with the Target at Monroe and Beltway 8.
The city is not assisting the developer in any transaction. The developer has to front the money for any improvements and wait for the reimbursement after all construction is completed and accepted by the city.
Understood. But at the basis of it, its a loan based upon possible future returns, where the only one that definitely gains is the middle man, in this case Ainbinder.
Ainbinder gets their money (from the public cookie jar), no matter what. If Walmart cannibalizes tax revenues (which they statistically do just about everywhere) or tries to negotiate for more (which they also have a documented history of), then the only one left to gain is the retailer and the developer. The city loses, and the neighborhood loses even more.
Tax payers money or not, we the people of the heights do not want it at all. The increase in traffic alone on Yale would be horrific. It will become more of a safety hazard for those of us that have to cross Yale on the bike path while dodging cars that fly down the street as it is. They would have to put in a crosswalk light to aid people to safely cross with their kids, kids bikes, pets and strollers.
“Why on earth then would the government not ask of its citizen’s opinions when deciding how to spend revenues that we have contributed to?” – Nick
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Because the citizens have elected the government officials to represent them, not to consult them. When you elect someone, you implicitly say “I trust you to do what you think is in my best interest”. Elections have consequences.
Well, voters like me will make sure there are consequences for officials for not listening to the community when I vote their rear ends out of office.
I’m not happy about the Walmart, but in a free market, they should be allowed to build. But once our community dollars become involved in any way, it is no longer a free market situation in my book. It’s corporate welfare and the community should have a say in the development.
And remember who really pays the sales taxes in the end. It isn’t Walmart, its the shoppers.
I know I will alienate many people, but IT DOESN’T MATTER IF THE NEIGHBOORS WANT THE WALMART OR NOT.
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Our property rights laws, coupled with our lack of zoning, allow the owner of the property to build whatever he wants.
The two available recourses for the citizens are: (1) vote for zoning laws and (2) do not shop at walmart. If all the citizens “vote with their feet” and boycott walmart, then walmart will learn it is not a good business decision to build near the NIMBYS. I can gurantee you that if walmart is building here, they know with great certainty that the citizens will shop at the store. It’s not their first rodeo.
Good point Andres.
Public input on every issue is a waste of time. What’s the point of elected officials if the decision has to be made by the rioting citizens. There is a reason elected officials exist.
Nick,
It is isn’t a loan. It’s not Ainbinder’s position to improve infrastructure. The city will benefit in the end. Wal-Mart does not cannibalize tax revenues. If they do, please link to a economic study that details this. Every town that gets a Wal-Mart sees a big bump in revenues (even when local mom and pop shops close up).
My home town (small town of 15k) went from having about $800k a year in a sales tax revenue to $1.5 million with the replacement of an existing Wal-Mart with a Supercenter Wal-Mart. Primarily due to the fact that Wal-Mart brings in shoppers from farther away than a mom and pop retailer. Wal-Mart also brought in additional retailers that were currently not in the region. Wal-Mart even fronted the money to expand a state highway (without any reimbursement for improvements).
In the end, Ainbinder would still move forward without the reimbursement, but it would be stupid of them not go after the money if it is being waved in their face. Also, the concept of the agreement is a state issue and not city. The city can ultimately not sign off on it, but they would be stupid to do so. The benefits far outweigh many of the negatives (most unfounded) that have been put forward.
A little aside: No company ever pays taxes. If you raise taxes, the costs are just passed down to the consumer. This is why it’s idiotic when politicians are running around saying they’ll tax evil big business. What they are saying is they want to raise all their customers taxes.
“I’m not happy about the Walmart, but in a free market, they should be allowed to build. But once our community dollars become involved in any way, it is no longer a free market situation in my book. It’s corporate welfare and the community should have a say in the development.
And remember who really pays the sales taxes in the end. It isn’t Walmart, its the shoppers”
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Exactly, it’s the shoppers who pay the taxes. These are not “community dollars”, this money comes from projected sales tax, from Walmart shoppers. If you don’t want to pay for the improvements, don’t shop at walmart.
I don’t shop at Walmart. Haven’t since I saw a PBS Frontline on the company’s business practices many, many years back. Many of the forecasts for the future made in that report have come true.
So, back to Ainbinder. If Ainbinder would plan to move on without the incentives, why should we give them anything from our infrastructure funds if they’ll go ahead anyway. We’ll still receive the benefits pointed out.
And would those necessary infrastructure improvements have been a true necessity without the Walmart going up?
Wouldn’t giving them our own money back and then paying their sales taxes be double-dipping the community?
Heights Weirdo,
That’s a question you should ask your state representatives that made it possible for these types of agreements to exist.
Personally, I’m not really much in favor of these types of agreements. If your a business and the local officials are willing to throw money at you, then you take it.
Essentially, the agreement is based upon the concept of the MUD’s development mechanism. Developers build all the infrastructure upfront, then the MUD reimburses through bonds that are paid by the property in the district. Difference is that the city can assess sales tax also and will see a net benefit from the development that a MUD can’t.
“The two available recourses for the citizens are: (1) vote for zoning laws and (2) do not shop at walmart.”
I’m not impugning your legal credibility and total impartialness in this issue, but I find it really, really hard to believe that those are the only options available.
anony,
What other options do you want? Even with zoning, this project would still move forward. Zoning would label the area as industrial and a simple change to commercial retail would be requested. A zoning board wouldn’t say no because the city wants the development.
All of the anit-Wal-Mart crowd needs to realize how small of a group they are. Wal-Mart and the developer aren’t stupid. They know there is some opposition to this style development. But they also know that the majority really doesn’t care. Bending over for the minority (even when they have a loud voice) is not something they will do.
KJB – Your assessment is oversimplified for mass consumption, far beyond what can be ‘debated’ in comments on swamplot. There are numerous published studies that muddle the tax revenue discussion. And, as is the case with any ‘bump’, there is a declining side of the bump that apparently you choose to selectively ignore. Classic in a a presentation or salesmanship sense. Unfortunately, this is not your hometown, and there is not a state highway to be effected. There are two walmarts going in within a five mile radius of this proposed site, so the ‘cannibalization’ of revenues, retail sales, etc, is obvious due to the oversaturation of the potential market. And you’re correct, its not technically a ‘loan’, but a 380 agreement, for all intents and purposes, is a reimbursement later for improvements now, so very similar to a loan. Obviously you are not a business owner, as you state that ‘no company ever pays taxes’. This is a complete falsehood; most companies mitigate taxes for accounting purposes with any number of opportunities. Walmart, however, historically and by their business methods generally negotiates for more, which in effect does effect the public coffers for the benefit of a Retailer, and a Developer. So, if the improvement of our infrastructure, in fact my street (which borders this proposed development) comes with the use of my contributed tax dollars (from whatever method), BUT at the expense of additional traffic strains, 18 wheelers in my neighborhood, 24/7 lights, and an increase in crime, to support a retailer that will negatively effect the property value of my hard earned investment (home), then they can keep the ‘improvement’ until there is a responsible company to develop/build there.
Saw the same Pbs show, where they damn near ran rubbermaid out of business, and forced them to basically manufacture their products overseas to ensure an absolute rock bottom price. If you don’t have shelf space at wally world, you are doomed. Same practices you’d have seen with Standard oil 100 years ago, capitalism works, sometimes too well. Make your peace with Wal Mart Rice Military/Heights/Washington avenue douchington’s it’s a done deal..
Nick,
Yes, on paper a company pays taxes (at a ridiculous 40% also). A company also will take that tax and all other overhead costs and incorporate that into the cost of providing goods are services. So every time you buy something or pay for a service, you are paying for their business taxes. They aren’t.
I don’t understand. If Ainbinder/Walmart build out the site without tax incentives, why give them? If they won’t do it with the incentives, it’s a “loan” by the city to complete the deal for Ainbinder.
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It’s true that they won’t get the improvments proposed by the developer. But without a Walmart, the “improvements” aren’t needed. The city doesn’t need 5 new stop lights, an extension to Koehler, or replacement of the bridges over Heights/Yale, or much of anything else.
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Hard to see it anything but accomodation by the COH, and TXDOT (for the feeders).
Here’s the reality some people don’t like to admit.
The city and state has an interest in development and redevelopment. The improvements that Ainbinder will build and get reimbursed for will also go a long way at making other land around the improvements available for development.
That’s the premise. The new signals, repaved road, and rebuilt sidewalks are seen as a way to make more land around the improvements open for development.
The reimbursement program also labels the city and the state as friendly for business. Developers and businesses that weren’t considering Texas think twice when the state and city show an interest in making it easier for them succeed. Part of the reason Texas is doing economically well even apart from the energy industry.
It also makes your city competitive. San Antonio and Bexar County offered incentives to Toyota to build their manufacturing facilities which means the Houston region lost out.
Some of these incentive programs don’t benefit the local area. A great example is the local taxes going to stadium deals. This has never panned out for Houston and many cities. The incentives for Ainbinder are tiny and the net benefit will far out pace it.
Also, as for cannibalization, this is another concept dreamed up by anti-development folks. Don’t you guys think that Wal-Mart knows that the store just 5 miles away may hurt it’s other stores? This is already accounted for in their projections.
Oh yeah, it’s accounted for, along with accounting for the taking of enough market share from everybody else in the area, in the grand plan to become the only game all over town sometime in the distant future.
If you saturate the market everywhere, someday they will be forced to come. Then you control what the consumers can buy from your designated overseas factories.
We, as consumers, are our own worst enemies.
“What other options do you want? Even with zoning, this project would still move forward. Zoning would label the area as industrial and a simple change to commercial retail would be requested. A zoning board wouldn’t say no because the city wants the development.”
Why are you still talking about zoning? I’m asking about options *besides* zoning, and I’m talking about irrespective of whether or not the city wants the development.
“All of the anit-Wal-Mart crowd needs to realize how small of a group they are. Wal-Mart and the developer aren’t stupid. They know there is some opposition to this style development. But they also know that the majority really doesn’t care. Bending over for the minority (even when they have a loud voice) is not something they will do.”
Wrong, all that’s needed is any legal or legislative mechanism to stop it and it doesn’t matter how big or small the crowd is — for or against. The idea that Wal-Mart should be built because the majority happens to be apathetic is pretty idiotic, and exactly the reason why we have elected officials acting in our stead.
That’s how competition works. Other retailers and supermarkets need to compete.
Target and K-Mart actually conceded the low end to Wal-Mart. This is why they started marketing and aiming for middle and upper middle income bracket shoppers.
Wal-Mart now realized this is trying to appeal to the markets that Target and K-Mart are doing quite well with right now. This is all part of the work they are putting into making the stores more appealing on the inside and out instead of making it appear as a warehouse.
anony,
Legal or legislative action? Really? Just to stop a store. Why? Talk about abuse of the system. Luckily our local officials and some of the state level officials have a higher regard to property than you.
Lets not forget something very simple about this entire situation. It is very well known that HEB was bidding. They’ve come out, and said they would happily open up on the site. So the site is going to be developed. The simple thing that changes everything is that the devloper is trying to utilize public monies to make more for themselves … thats it. If you want to make more money, fine, but be prepared to deal with the opposition that comes when trying to utilize the public as your stepping stone to do so.
“Luckily our local officials and some of the state level officials have a higher regard to property than you.”
Right, their crack-like addiction to eminent domain being an example of such? Sounds like you haven’t lived here very long.
Hey, I just thought of another option to add to the list. So that’s 3 so far. Any others?
When the opposition amounts to some dufus named “Urbano” and a rag tag bunch of classist snobs; I think it’s a lost cause.
Shoot WalMart might even carry some Affliction or Ed Hardy wares for your night out at the pearl. Just make sure you tip the valet so your ipod and lola/gps aren’t stolen..
If eminent domain is used for transportation and school, it in accordance with the U.S. constitution. If eminent domain is used to acquire land for a developer (like METRO plans to do), then I believe it’s a complete abuse.
What crack-like addiction to abuses of eminent domain are you referring to?
@Nick: Even if HEB were the anchor tenant, the developer would want to be reimbursed for the utilities improvements.
Texas cities love to do things this way because somebody else has to build out improvements for them and the cities don’t have to pay a dime until the job is done. Heck, this is how anything gets built in Missouri City… the city makes the MUDs and developers do all the work. That city doesn’t even know how to build a road or a sewer line. They just make everyone else build it for them. (Heck, Mo City tried to make its residents pay to repair their own sidewalks a few years back.)
@ kjb434:
Basically rights of a corporation to do whatever are limited by their infringment on rights of others. Even the basic Libertarians will agree on this. Apparently you are willing to overlook this very simple argument on freedom in all your arguments in these post.
Irfan,
What rights of your will be infringed?
I second that, do ellaborate on which rights you seem to feel are applicable? Seriously, if you have a valid point, please make it..
Im guessing the same crowd that loves the idea of Wally World being able to build anywhere it wants, no matter what the locals say, is the same crowd howling about the Islamic Center going in near the WTC in New York.
I thought Annise Parker had become the champion of homeowners?
Maybe she didn’t carry West End in the runoff?
@sugarpie: You live in Houston, a city with absolutely no zoning or planning. If you don’t want Walmart, your choice is to offer more money to buy the land and put something else there or deal with it. If there’s no deed restrictions, the owners of the land can build a Walmart with an Islamic cultural center across the parking lot and you can’t do a damn thing about it. You want free market… you’ve got free market!
@ kjb434
A development that is infringing on quality of life, high traffic, de-valuation of my property, light pollution, noise, 24/7 operations in a residential neighborhood, increase in crime.
Is the Walmart doing anything to appease this to its immediate neighborhood? No.
Mr. SnarkyPants-
Just because one can do something doesn’t necessarily mean one should do it. I can smoke cheap cigarettes and tear down historically significant buildings and sit on my butt all day in front of my computer moniter. Should I do these things? No, not really.
And I have to admit to you I’m not one hundred percent certain that the zoning free-ness of Houston is such a wonderful thing. It has caused lots of things that piss me off on a daily basis. Is one Beer Can House really worth three miles of Westpark?
“It is the aim of good government to stimulate production, of bad government to encourage consumption.” – Jean Baptiste Say
If Retail makes NOTHING….and Government makes only MORE DEBT….the only thing that can have a positive affect on communities is Small Business and companies that make stuff.
The picture of George Washington can float around a town six to eight times before leaving the community but if that dollar is spent inside of a big box store it will leave the same day that it entered.
Big Box stores like Wal*Mart can take in 200,000 George Washington’s a day and that be a lot of “Liberty” “Pride” “Freedom” leaving town each day.
And when one figures into the equation America has a six to one trade deficit with China which means five out of every six George Washington’s that go there will never come back unless the US Government sells bonds(debt) this is what those on Jenkins Hill and Wall Street don’t understand when it comes to local banks not having any George Washington’s to loan out in their communities.
Why is it that people ain’t writing articles about those fifteen cargo ships that pollute as much as 760 million automobiles, T Boone Pickens owning a Texas Water District, Nestle draining the Great Lakes, the disconnect between Coca-Cola and the people of India, Wal*Mart putting less than 5% foreign in their stores in China and Warren Buffett buying a Choo Choo train a few years after Wal*Mart makes a deal on a port in Mexico.
In 1960 U.S. goods manufacturing produced a $5 billion trade surplus – – 2006 merchandise trade had a $836 billion deficit. Today, for some reason, the world thinks the American consumer needs to support what they make….well, it doesn’t work like that even a fifth grader can figure that out.
So-call cheaper items only breed cheaper wages and this will go on until the rich of the world carry out the manufacturing of ignorance through out the 182 or so counties that will have a chance to make something.
I’m just an O’fart with very little book learning but from what I’ve seen over the past sixty five years in this great union of fifty states has shown me that common sense left in the year 63′ and “my sh!! don’t stink” sense as been here every since.
Sad, those few fat farmers with penmanship of poets holding feather quill pens and writing the American dream has today become nothing more than a page within a history book that a bunch of asinine dipsticks are to lazy and ignorant to teach.
Over the past 100 years the Federal Debt has gone from $2.6 billion in 1910 to over $14 trillion today….In that time there has only been one 10 year period that the debt has gone down 1920-1930.
All done by a bunch of elephants and jack@sses acting like turnips. People today still think Clinton balance the budget but anyone knows if they think with an open mind that if the budgets of the Clinton years had been balance the debt would had not gone up.
America is over $57 trillion in debt and it didn’t get there by people using common sense. If the American people don’t wake-up to that fact within another twenty years they will witness Lady Liberty kneeling to her knees in the Hudson and someone in Tiananmen Square holding that tablet from under her left arm celebrating what is written upon it.
God Bless!