The City Council in Lafayette, Colorado is desperate. They are offering Wal-Mart millions of dollars to stay in town, and not close down their discount store. The giant retailer, with more than $253 billion in sales last year, has been offered $2.3 million in taxpayer’s funding to stick around. The Rocky Mountain News called the money “an economic incentive package”, but it looks like a pay off to plead with Wal-Mart to construct a super center on 27 acres of land near a state highway. As local residents watched in horror, the City Council decided to enter into negotiations with Wal-Mart to subsidize the world’s wealthiest corporation, and five of the richest people in the world — the Walton family. The City Council’s rationale was that if Wal-Mart closes its current store and moves outside of the city limits, the city will lose 13% of its sales tax. The current store is located in a shopping mall across from the City Hall, and if the anchor store leaves, the whole mall could be toast. One Councilman said it would take the city 10 years to recover from Wal-Mart’s departure. Mayor Chris Berry told the newspaper he was not particularly passionate about big chains such as Wal-Mart, but felt he had to protect the city services funded with the sales tax. “I feel very strongly about these services, and we have an obligation and responsibility to provide those kinds of services to our citizens,” Berry said. Wal-Mart critics told the City Council that they had no business offering incentives to a corporation that has a reputation of offering poor pay and benefits to its workers. Neighbors also complained bitterly that their community would pay the price in increased traffic, lighting and noise. The Rocky Mountain News quoted one neighbor as saying, “Wal-Mart is a bad corporate citizen, and you wouldn’t put a thief across the street from you. Do not invite Wal-Mart across the street from me.” City officials assured the public that all they were doing was taking sales taxes from the existing Wal-Mart, and rebating it to the retailer to help pay for the new store. Wal-Mart moved into Lafayette in 1987. Ten years later, they started negotiating with the city to move out of their store. The city offered them two other sites, both of which Wal-Mart rejected. Now the city is playing a losing hand: offering Wal-Mart money to stay, like a jilted lover.
If it wasn’t so sad, it would be funny to watch public officials throwing good money after bad. Wal-Mart came to town, cleaned the other merchants’ clock, cost the town those lost sales, and then created a dependency on the big store. Everyone in Lafayette knows that Wal-Mart can afford to build its own superstore without public welfare, so why do officials still make them offers? If Wal-Mart leaves, the police budget will go down. Less calls to the building, less arrests, less court time, etc. If Wal-Mart leaves, other businesses will spring up to replace them, smaller, local businesses will come back. How can officials spend money their local taxpayers need? How can local officials turn to other businesses in the area and say, “We had to subsidize Wal-Mart, but we can’t lower your taxes one iota?” To read more stories about how Wal-Mart takes advantage of public subsidies, search the Newsflash page by “corporate welfare.” Cities like Lafayette would do well to talk to the city attorney about writing up a developer’s agreement that requires the applicant to agree to continuously operate a store on the site for the full period of the lease, say twenty years, and to put money in escrow to pay for demolition of the building if the tenant leaves the store empty for any extended period of time, before the lease is up. The city took Wal-Mart on faith that they would be around for awhile. Imagine what the city would have said if Wal-Mart indicated that in ten years they would start looking around to move. Without a developer’s agreement, the city is in no position to negotiate with Wal-Mart. Now the taxpayers will lose millions to keep Wal-Mart around. This gives a new dimension to the words ‘free market.’