Sprawled Out: The Search for Community in the American Suburb

Fact-deficient Wal-Mart defenders make it easy

ABOVE: Wal-Mart promotes literacy at its Menomonie "Distrubution" Center

What motivates a private citizen - - with no ostensible ties to Wal-Mart - - to write a letter to the editor filled with mistakes and sloppy logic?

Big-box retailer has economic benefit

Letter writer Pamela Fendt made several incorrect assumptions about Wal-Mart ("Don't welcome store," May 13).

She incorrectly stated that Wal-Mart is using the state's publicly funded health insurance, BadgerCare. This program is not used by stores. It is set up for individuals. Being a Wal-Mart employee is not an eligibility requirement for BadgerCare, which is based on income and other factors. These folks would be getting BadgerCare whether or not they worked for Wal-Mart.

Being a Wal-Mart employee is not an eligibility requirement for BadgerCare. However, one goes with the other pretty snuggly; Wal-Mart employees use BadgerCare.

Quoting one of my earlier posts: In Arkansas - Wal-Mart headquarters - Wal-Mart is NUMBER ONE in Children of employees on publicly-funded State Health Care programs.

Quoting a story in the Arkansas Democrat-Gazette: "Georgia, Tennessee, Washington, Massachusetts, Wisconsin, West Virginia and Connecticut have also reported that Wal-Mart employees, or their children are a disproportionately large share of their state health rolls."

More: "A 2002 Georgia state survey showed that 10,261 of the 166,000 children covered by PeachCare for Kids (a Georgia state health program) had a parent working at Wal-Mart. That’s 14 times the number for the next highest employer, Publix grocery store, with 734."

Now, is that just because Wal-Mart employs SO MANY people that the numbers are skewed? I'm afraid not: Wal-Mart claims to have similar health care coverage as other large retailers. That's just silly. A recent Harvard Business School study (2002) shows that Wal-Mart spent an average of $3,500 a year on health care for each employee, compared with $4,800 for the average retailer and $5,600 for the average U.S. company. In Tennessee these numbers are even worse, with 3,700 of Wal-Mart’s 9,617 employees, or 26%, on state aid (according to the Chattanooga Times Free Press)!

When you are the biggest employer in the country, these practices CAN and DO cost the taxpayer money, putting ENORMOUS pressure on state health care systems. Just "good business"? It's irresponsible and simply shameful.

As an addendum: Wal-Mart has been shamed into marginally improving its health insurance offerings to employees, but the company is still far from a superhero.

Back to the letter:

While it's true that Wal-Mart has used public subsidies, Fendt ignored all the revenue it brings to the state through sales taxes. Without taxes, BadgerCare would not exist.

"While it is true that Wal-Mart has used public subsidies...". That's it? Talk about colorful understatement - - Wal-Mart is the patron saint of corporate socialism, and avails itself to our coffers on a gargantuan scale.  From "Wal-Mart's Tax On Us" at Alternet:

The subsidies Wal-Mart lobbies for run the whole gamut: free or reduced-price land, infrastructure assistance, tax increment financing (TIF), property tax abatements or discounts, state corporate income tax credits, sales tax rebates, enterprise zone tax breaks, job training funds, and low-interest tax-exempt loans. The most deals and dollars were found in Texas (30 deals worth $108 million) and Illinois (29 deals worth $102 million).

And because of poor disclosure in most states, this could be just the tip of the iceberg.

And taxes? Think again.

More from the letter:

The claim is made that for every job Wal-Mart creates, 1.4 retail jobs are eliminated in the local economy. Economists have questioned this claim. At the University of Missouri, economist Emek Basker found that a Wal-Mart's move into a community increases employment.

Oops - I don't think the letter-writer read Basker's entire paper (neither did I). Other economists did; let's look at a passage from the testimony of Heather Boushey, Economist at the Center for Economic and Policy Research:

Wal‐Mart does create jobs. But, as I mentioned above these jobs are generally not well‐paid, and, the total number of jobs created, after discounting the local jobs destroyed, is actually quite small. In a recent paper, Emek Basker finds that Wal‐ Mart’s entry into a community in the United States increases retail employment by 100 jobs in the first year, but 50 of those jobs disappear over the next five years. Wholesale employment declines by approximately 20 jobs due to Wal‐Mart’s vertical integration, but no spillover effect is detected in retail areas that Wal‐Mart does not compete in. 

Ms. Boushey, you see, read the whole paper - not just the "good parts."

We shouldn't forget the jobs created indirectly from Wal-Mart's distribution network. Many local businesses buy supplies from Sam's Club.

Er - wonderful, I guess. For reasons not explicated.

Successful economies are diverse. Big-box retailers like Wal-Mart contribute to that diversity.

Al Savastio

Milwaukee

Right-o, Mr. Savistio.

UPDATE:  The Menomonie "Distrubution" Center pictured above cost the city $750,000. They subsidized half of Wal-Mart’s land acquisition costs through the use of tax increment financing. (Source: Shopping for Subsidies: How Wal-Mart Uses Taxpayer Money to Finance Its Never-Ending Growth, by Philip Mattera and Anna Purinton)
 

More on the Wal-Mart blight:

The cost of doing business with Wal-Mart.

George F. Will - "Condescending lectures by liberals RE Wal-Mart"

What's wrong with having a Wal-Mart across the street?

FAST COMPANY: The Wal-Mart You Don't Know (the article that became the book THE WAL-MART EFFECT

Paul Soglin: "Your Wisconsin Tax Hell: Manufactured by WMC"

"Scamming the system" - More about corporate tax abuse

Property taxes: "Why am I paying so much?" PART 2

 

 

Is Menards having its cake and eating it too with subdivision development?

No one else has asked, so I will: In cases where Menards is developing locations adjacent to or in proximity of land that they have acquired through subsidy deals with local governments, or near roads improved or built as part of that subsidy, is someone holding Menards accountable in some way as they exploit that subsidy in this new venture?

For example, are local municipalities seeing to it that taxpayer-funded subsidies to Menards are at least partially repaid by ensuring that these new subdivisions serve their constituents that are in need of affordable housing?

A sidenote to the story in the Milwaukee Journal Sentinel answers that question:

THESE AREN'T STARTER HOMES
Of the three residential subdivisions being developed by Menard Inc., just one - Prairie Meadows, in Yorkville, Ill. - has homes that have been built. Houses currently available there have listed sale prices ranging from $349,900 to $396,900. They include such features as three-car garages, walk-in pantries, stainless steel appliances and master bathrooms with whirlpool tubs.

Perhaps there is someone out there who can show me that the locations mentioned in the story were developed without subsidy support, and therefor Menards faces no obligation to local taxpayers. Good luck.

Wal-Mart plays a similar game. Local municipalities basically give Wal-Mart the huge chunk of land they demand for their superstores; then Wal-Mart collects rent from "out-buildings" on the huge unused frontage that are leased by Wendy's and other tenants (Wal-Mart counts itself as a tenant as well, paying rent to itself in the ever-popular REIT tax avoidance scheme).

What a deal.

Menards breaks new ground

Retailer hopes developing subdivisions will pay off

By TOM DAYKIN
tdaykin@journalsentinel.com

Posted: May 5, 2008

People typically run to Menards to buy stuff for their weekend projects: a new drill, maybe a toilet seat.

But lately, the company is stocking something a bit more unusual: home sites.

Eau Claire-based Menard Inc. is becoming more active as a developer of residential subdivisions - an extension of the company's role as the nation's third-largest home improvement retailer.

Menard is proceeding with plans to develop two large subdivisions, in Warsaw, Ind., and Urbana, Ill., and is currently developing another subdivision in Yorkville, Ill. The company also owns land set aside for a small condominium development that might someday be built near its Oak Creek store.

Those projects are happening through opportune purchases of excess land as Menard buys parcels to build home improvement stores, said Jamie Radabaugh, director of sales and leasing for the company's property division.

"We are actively looking for new residential projects around our new and existing stores," Radabaugh said.

The company appears to be the nation's only home improvement retailer that's also a subdivision developer, said Scott Wright, spokesman for the North American Retail Hardware Association, an Indianapolis-based trade group with around 13,000 members - most of them independently owned stores.

"I certainly haven't heard of anyone doing anything like that," Wright said about Menard's side business. "Especially in this economic climate."

Menard did its first residential subdivisions, in Franklin and Eau Claire, many years ago. The company's land acquisitions have increased as Menard, which operates around 240 stores in 11 states, continues to grow.

Because it's privately held, Menard doesn't have to meet the quarterly earnings expectations that Wall Street demands from the chain's chief rivals, Lowe's Cos. and Home Depot Inc.; the latter announced last week the closing of 15 stores, including three in Wisconsin. The fact that Menard is not publicly traded gives it more leeway to invest in real estate developments, according to a company presentation made in January to the Urbana Plan Commission.

By developing residential subdivisions close to new stores, Menard creates a larger customer base among those new homeowners, and among local homebuilders.

Houses go up in Illinois

Menard's development in Yorkville, on the outer fringe of the Chicago metropolitan area, illustrates that strategy.

Yorkville is in Kendall County, which the Census Bureau recently named the nation's fastest-growing county.

In 2001, Yorkville annexed around 250 acres of farmland owned by Menard. Some of the land was set aside for a new store, which opened in 2003, said Lynn Dubajic, executive director of the Yorkville Economic Development Corp.

Additional parcels were set aside for 164 single-family homes and 68 townhouse-style condos, Dubajic said.

Menard put in utilities and other infrastructure for the single-family homes, and so far, it has sold 129 lots to AMG Homes, a local homebuilder. Since 2005, AMG has built 110 homes, said Chad Gunderson, AMG co-owner and chief executive officer.

The townhouse sites probably will be sold once the housing market improves, Dubajic said.

Materials from Menard

In purchasing the lots, AMG agreed to buy virtually all of its building materials for the project from Menard, Gunderson said.

The shopping list includes lumber, windows, doors, flooring materials and roof shingles, Gunderson said. AMG was allowed to buy a few products, such as concrete, from other vendors, because Menard doesn't sell them in large enough quantities.

The arrangement has worked out well for AMG, Gunderson said.

"We look at the contract as mutually beneficial," he said.

The company will have similar requirements with homebuilders buying lots from other Menard-developed subdivisions, Radabaugh said.

"It only makes sense to tie our company's main business with the residential development projects," he said.

Two more sites in works

In Warsaw, in north central Indiana, Menard is building a store that will open early next year, said Jeremy Skinner, city planner. He said Menard owns 70 acres, with 30 acres set aside for the store and other commercial use. The remaining land is for single-family homes.

Menard originally proposed 66 single-family lots for the Warsaw site but now is seeking to develop 89 lots, Skinner said. He said Menard is in discussions with a local homebuilder interested in buying the lots.

In Urbana, in east central Illinois, Menard bought just more than 350 acres at an auction in 2005. Menard is still working on its plans for a store, additional retail space, single-family homes and townhouses. The company expects to have a total of 425 residential units in Urbana.

As in Yorkville and Warsaw, Menard plans to sell the residential lots to homebuilders, said Lisa Karcher, a city planner. She said the entire project, including construction of all the planned houses and condos, will likely take five to 10 years to complete.

In the Milwaukee area, Menard owns just over 5 acres of vacant land northeast of its Oak Creek store, at 6800 S. 27th St. That store opened in 1998, just across S. 27th St. from a smaller Menards store in Franklin, which closed.

In 2001, Menard was granted permission to develop 22 townhouses on the Oak Creek parcel, but that approval has since lapsed, said Doug Seymour, Oak Creek director of community development.

Menard is looking for homebuilders interested in developing the Oak Creek parcel, Radabaugh said.

Menard's foray into development is "very interesting," said Wright, of the hardware retailers association.

The chain, which has grown despite increased competition from national players Home Depot and Lowe's, "has staying power unlike any other," Wright said.

Senator Lazich's theory on "who pays what" in taxes is incorrect and more than a little sad

RE: Republican State Senator Mary Lazich's "Conservatively Speaking" blog entitled "How Does the Government Spend Your Money":

The senator's  "who pays what" numbers are skewed and easily dissected (her ongoing reliance on the "nonpartisan" Tax Foundation - - "in Washington D.C."! - - doesn't help).

As a PERCENTAGE OF INCOME, it is the middle class and lower-income population groups who pay MORE in taxes (not to mention fees and transportation expenses you may choose to ignore). This is a result of non-progressive tax and social policy embraced by the current administration (who unapologetically embrace their base, "the have and the have-mores.")

To say "In general, households that earn the most income pay the most dollars of taxes" is self evident; 4% of $10 is $4 and 4% of $1000 is $4000, for instance.

Examine instead the more intelligent - - and more personally consequential - - numbers: the percentage of each dollar earned that is paid in taxes and fees by the very rich as compared to the middle class and poor. THAT'S the real eye opener, and that's the embarrassment to anyone who cares to couple a cursory grasp of math with a rudimentary sense of morality and social justice (see, for example, "Warren Buffet: The Rich Need to Pay More Taxes").

The widening gap between what is expected from the rich as opposed to what is extracted from the middle class and poor is also the reason we can't afford sidewalks in our neighborhoods, decent schools for our kids, effective transit options, amenities for non-affluent communities, and librarians for our libraries.

I read recently that greed is the last socially acceptable vice. You reinforce  - - and pander to - - that sad observation, senator.

Cabela's: Perfecting the art of big box extortion

(ABOVE: Milwaukee Journal Sentinel photo by Jeffrey Phelps)

What a deal.

Cabela's - notorious for extorting local governments (and taxpayers) where they build stores - will be getting $4 million from Washington County for the favor of building their store there. The county will be taking out a loan at 5.5% to pay the subsidy; it will be in hock until 2023.

Now, understand: This is not $4 million worth of road improvements for around the store location, or $4 million worth of infrastructure enhancements surrounding the Cabela's building, or a deal for property tax abatements that total $4 million.

This is a straight cash payment of the county to a business of four million dollars.

I'm not kidding. And it gets better.

"Well," Mr. Pro-Big Box might say, "a store like Cabela's generates sales tax that the county can use to lower property taxes of its citizens, make county-wide infrastructure improvements, etc."

Wrong. The county has a plan: the tax dollars generated by Cabela's go right back to pay the loan on the extortion fee that the county agreed to. That's right; Cabela's does not contribute sales tax to the county until approximately 2023. Every penny of sales tax generated by Cabela's goes right back into their coffers.

Compounding the punishment inflicted on the county; they eat 5.5% interest on a loan - - almost another million dollars - - because Cabela's wants payment of $4 million immediately.

So, in return the county gets... "temporary ownership of 18,085 square feet" of the store? For what, exactly? And does the county swallow the property tax on that square footage (if they were due to get any in the first place)?

What a deal.

Cabela's works their magic all over the country. Texas, for example, as reported by Jim Hightower in The Austin Chronicle:

For its part, Cabela's is unabashed about its dependence on corporate socialism, even declaring in its annual report that grabbing public money is key to its business plan. But while it thrives on government giveaways, the retail chain has added a new twist to the game by demurely declaring that, as a private, for-profit company, its privacy rights would be violated if details about its public subsidy were revealed to the public. Thus, Cabela's has sued our state attorney general, claiming that it would suffer "substantial competitive harm" if the terms of its deal with the governor were publicly disclosed.

So, class, let's review: A private corporation is funded by the state to give it a leg up on its local competitors, but it declares that it must be exempt form the state's public disclosure law in order to protect its competitive advantage. Are we clear now on the new definition of "free enterprise"?

It bears repeating that Gander Mountain, which has a store here in Franklin, is actively anti-subsidy. Heck, I'll even link to a conservative website to illustrate the point.

Google "Cabela's" and "extortion," by the way, and you get 1,180 hits. And pray they don't come around here, where the current administration has never met a big box that it doesn't smother with wet, sloppy kisses.

From the Milwaukee Journal Sentinel:

Cabela's payment decided

County to temporarily 'own' part of store

By DON BEHM
dbehm@journalsentinel.com

West Bend - Washington County this spring will fulfill its September 2005 pledge to pay $4 million to Cabela's for building a store in Richfield, county attorney Kim Nass said.

In return for its subsidy payment, the county will gain temporary ownership of 18,085 square feet - encompassing the four major wildlife and fish displays - inside the 165,000-square-foot outdoor gear store, Nass said.

Documents officially describe the space as a "condominium" unit. The four displays include the towering conservation mountain with a stream at the center of the main retail floor, a walk-through freshwater fish aquarium, North Woods animal museum and an African diorama.

The county received a $4 million loan from the State Trust Fund in August 2007 to finance the subsidy, but the payment to Cabela's has been delayed as terms of the agreement continued to be negotiated, Nass said. A 5.5% interest rate will boost total payments to no more than $5.97 million.

The loan will be repaid no later than 2023 with county sales tax dollars generated by retail purchases at Cabela's, finance director Susan Haag said.

The first loan payment is due in March 2009. Washington County's ownership of the area inside the store will lapse when the loan is repaid, in 2023 or earlier.

Since the store opened in September 2006, the county has set aside the full $370,488 in taxes generated by Cabela's merchandise sales for the first loan payment, Haag said.

In 2007, the Cabela's store collected $234,262 in sales taxes for the county, or nearly 2.6% of all county sales tax collections last year.