The City Council in Rice Lake, Wisconsin has sunk Wal-Mart plans to build a new store on 44 acres just outside the city. The annexation vote needed a three-fourths vote to pass (six of eight councilors) — but only got a 5-3 count. An overflow crowd of more than 80 people against the project watched as the 195,000 s.f. Wal-Mart plan was submerged. The land Wal-Mart coveted is in the town of Rice Lake, but it needed to be annexed into the city of Rice Lake, because the city does not extend water and sewer service outside the city. According to the Rice Lake Chronotype newspaper, residents against the annexation argued that the project would create sprawl, storm water runoff problems, traffic problems, and that it would shift the city’s business district away from the central city while hurting existing jobs at smaller retailers. Rachel Carlson, a Councilor who spoke against the plan before the vote, said she wanted to see an independent economic impact study on the effect of a Supercenter here. “I want to be sure of what I’m voting on,” she said. “I’ve talked to a whole lot of folks out there that are really concerned about their small business.” Another interesting feature of the Rice Lake situation is that Wal-Mart has an existing store here. Under a proposed developer’s agreement, Wal-Mart would have to pay $18,700 if its existing building stood empty for over 1 year. A former Mayor warned that a Wal-Mart supercenter could tax police capacity, and “A second fire station will become a reality, at a cost of probably millions.” Under the proposed developer’s agreement, public improvements wouldn’t be extended unless the annexation was successful and the Town of Rice Lake agreed not to contest the annexation. If there was a lawsuit contesting the annexation, Wal-Mart would be responsible for the city’s legal costs. Wal-Mart agreed to pay, either upfront or in a letter of credit, about $1,559,400 for all necessary public improvements. Wal-Mart also agreed to make a payment in lieu of taxes should the current facility be vacant for more than 1 year, to provide an incentive for Wal-Mart to find occupants for the empty building. Wal-Mart also agreed not restrict any retailer, even a competitor, from occupying the current Wal-Mart store — which is a departure from their usual requirement that their empty stores not become available to competitors. The land Wal-Mart wanted had been farmed for 100 years. The family that owned the farm decided to sell the farm for commercial use. At the hearings, Wal-Mart brought in its current store manager, who said the Rice Lake store was operating at the maximum capacity of its 125,000 square feet. He said the existing store had 324 employees-214 full time, 110 part time. The City’s Administrator gave a cost-benefit analysis of the Wal-Mart, looking at costs the to the city, costs to other taxing jurisdictions such as the school district and the county, and the overall benefit, if any, to Rice Lake and the surrounding region. He said the city needs about $650,000 in development per acre to receive enough property taxes to pay the bills. He said currently Wal-Mart pays about $57,000 in real estate and personal property taxes, and that it costs about $88,000 per year in municipal services for the store, netting a loss of about $30,000 per year to the city. He said the new store will pay about $90,000 in taxes while requiring about $138,000 per year in services, which will result in an even larger loss. But that loss would be offset, he said, by increased sales tax revenues to the county — which also benefit the City of Rice Lake. The City Administrator said because city residents are about 20% of the county, city residents will benefit by about $30,000 in county tax revenues. But that still leaves the project a financial loser, and doesn’t count the loss of revenue from other businesses in the city which close down. “This type of development expands the economy, puts more jobs into the area,” he was quoted by the Chronotype as saying. But when the debate was over, Wal-Mart failed to come up with enough votes to annex the land.
The economics here are not very compelling. City officials admitted that revenues did not cover the city expenses of servicing the supercenter, and the existing store was in danger of remaining vacant for years. In the end, Rice Lake was not convinced enough to annex the land away from the town.
