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October 19, 2011

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Jeramey Jannene

I'll play devil's advocate...

Wouldn't the city have likely committed the public funds for cleanup regardless of who the tenant was (new apartment building, a Sendik's, new industrial tenant, etc, etc)? In which case, that $3 million was largely a sunk cost that was going to be paid regardless of the tenant to return the land to a productive use.

My central complaint would be that it's yet another auto-centric, sprawl-designed big box store. Given that it was city-owned land, and that the city invested significantly in environmental remediation, it seems to me that South Milwaukee should have been able to get all kinds of design concessions.

John Michlig

I see your point, but the cleanup accounts for "only" $1.8 million of an estimated $3.05 million in costs to the city. That estimate does NOT take into account infrastructure and utility improvements that the city will have to make and maintain in order to serve the Wal-Mart megaplex. You can be sure that Wal-Mart will enumerate their requirements and expect the city to deliver.

Consider road/street costs alone - lights, turning lanes, etc. Then add in the new wear-and-tear on existing roads and streets nearby. Wal-Mart's tiny $275,000 in annual property taxes will not even cover that aspect of the impact.

And, the already-strangled school district, which relies on property taxes for funding, will see NOTHING from this investment until AT LEAST 11 years have passed. Believe me, 11 years is very, very optimistic.

The tax revenue-per-square-foot of these retail monoliths is pitiably TINY compared to a much smaller multi-story, multi-use structure. On top of that, you can count on detrimental effects to surrounding businesses that pay family-supporting wages.

No, the city of South Milwaukee has been taken for an expensive ride.

Jeramey Jannene

@John - The cleanup cost is greater than $1.8m, the other $1.75m was for acquisition, demolition and cleanup as well. I'm not sure why the city acquired the land, but I'm guessing (judging by watching similar dealings in Milwaukee) that all that money would have been expended regardless of who ultimately ended up buying the land from the city.

I don't know how they financed it, but it doesn't appear they used a TIF that would prevent the funds from going immediately back to the school.

It appears to me that they will/have spend/spent $3.55 million straight out of city coffers (with $500k coming back from the sale).

It does, however, still seem quite foolish to invest all this money to get a standard suburban big box store, 110% with you.

Jeramey Jannene

Re-reading the original article, they must have used a TIF or some other financing instrument. So you're right, the school district isn't seeing income for a while on this deal.

On one side, the school district wasn't getting any revenue from the site the city owned, so they're not missing anything. On the other side, the Wal-Mart could have went elsewhere where it didn't require the financing. In addition, Wal-Mart's (and other big box stores) have been shown to hurt other tax-paying businesses in town, so that's definitely an impact to consider.

I'm thankful we don't have sales tax TIF's like they do in Missouri, which are often used to poach businesses from one city to another, or this short-sighted decision would be all the more common.

Kitty Hill

...not to mention the blight on the landscape. Maybe anthropologists 1,000 years from now will speculate that these sprawling structures across the world were some sort of ceremonial altars for the civilization of the pre-climate change period!

John Michlig

A man-made physical blight is bad enough when it disfigures the land it occupies, but these acres-wide Wal-Mart megaplexes are destructive for blocks and blocks beyond the area upon which it sits.

John Michlig

Pardon my lack of subject-verb consistency in that last sentence.

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