“Home Depot drops plan”. That’s the headline out of St. Paul Minnesota this week. The St.Paul Pioneer Press reports that the city’s efforts to bring the first Home Depot into the center of the community ended with nothing, following Home Depot’s announcement that it was walking away from plans to build a store on the southwest corner of University Avenue and Lexington Parkway.City officials claimed that Home Depot dropped its plans because of several financial factors, including the Minnesota Legislature’s recent decision to lower the amount of available tax-increment financing subsidy, a key component in Home Depot’s plan. The company also was concerned about the land and construction costs, according to the city’s planning director. Many residents in the community have fought Home Depot’s use of the 7-acre site, which is occupied by a strip mall and a well drilling firm. The land is privately owned, which would force future developers to negotiate a land lease or purchase with Condor Corp., the property owner. Housing advocates who had opposed the Home Depot proposal want the city to hold off development until a comprehensive study can be completed on the best possible use for the 50-acre Lexington-University property. A group called University United is promoting plans for a mixed-use housing development on the site. University United is a coalition of Midway-area citizens and businesses. “We want any development opportunities that would be compatible with (a potential University Avenue transit corridor),” spokesman Brian McMahon said. “But right now, I think it’s best we hold off on any proposals until the 50-acre study can be completed.” Rumors are that Home Depot is now looking for other sites in the city.
So Home Depot pulls out of a project in St. Paul, in part because the “subsidies” are not big enough! This is the world’s largest home improvement retailer. If this huge international corporation, which sits on top of its market, cannot afford to build without taxpayer’s subsidies, should local taxpayers have to fork up to allow the company to come in and drive out of business the smaller hardware stores that could never touch a deal like the one the Depot passed by? The Minnesota legislature’s move to reduce tax incremental financing subsidies is not surprising. A number of other states have questioned the use of such corporate welfare, especially when used for large retail projects. In neighboring Wisconsin, for example, a January, 2001 report called “State-Local Partnerships for the 21st Century”, recommends that TIFs be used more judiciously. “TIFs do raise questions about the use of government resources. Sometimes they provide subsidies to businesses that would have located in the community in any case. Too often they encourage bidding wars between neighboring communities. That is especially the case for TIFs.” The Wisconsin study concluded that “TIFs ought to be focused especially on their original purpose: jump-starting development in blighted areas.” The study also recommended that developments should meet a “regulatory triage test” that the “cost of plans should be in line with public benefits.” For more info on the Wisconsin TIF study, go to www.dor.state.wi.us/html/tifreprt.pdf
