Wal-Mart had a special Christmas surprise for the tiny village of Glenwood, Illinois (pop. 9,045), which is located about 18 miles due south of Chicago.
On December 24th, the Mayor of Glenwood, Kerry Durkin, told the Northwest Indiana Times that he had met with Wal-Mart officials two weeks earlier. “They have approached me and told me they are moving,” Durkin said. Wal-Mart had made up its mind to shut down its Glenwood store before revealing its plans to the Mayor–but even worse– the retailer said it was planning to open a new superstore just minutes away in the neighboring village of Homewood (pop. 19,418) at the site of a dead Super Kmart—a store that was unable to survive Wal-Mart’s saturation of the trade area.
Glenwood today has 11 Wal-Mart stores within 15 miles, including 5 superstores. There is absolutely no market need for another Wal-Mart, and even less need for a dead Wal-Mart in Glenwood.
Mayor Durkin said that Wal-Mart did not give him an exact reason for the relocation. “I think they’re shuffling the deck on a lot of their properties right now,” the Mayor guessed. Durkin noted that Wal-Mart had met with the President of Homewood Village, Rich Hofeld. Wal-Mart apparently went to Homewood for a handout–asking the President for financial incentives to build their store.
To his credit, Hofeld reportedly offered Wal-Mart nothing “that would snatch the store from Glenwood,” according to the Times. Wal-Mart made it clear to Homewood officials that with or without a tax break, Wal-Mart was shutting down the Glenwood store.
According to Mayor Durkin, Glenwood village takes in $1 million in property taxes from the Wal-Mart store. Durkin began an effort to negotiate to keep the Glenwood store, emailing Wal-Mart to ask them to reconsider their plans, and throwing out undisclosed tax incentives for Wal-Mart to stay. Durkin told the Times, “We’re going to fight to try to keep them.”
A few days after Wal-Mart’s plans to abandon Glenwood were announced, Village President Hofeld told the media he was prepared to ask his Village Board to help out Glenwood by giving them a share of the taxes generated by the new superstore for several years. “I would like to have an intergovernmental agreement with Glenwood where we would give 10% of the sales tax generated from that Super Walmart for a three-year period, to Glenwood,” Hofeld explained.
Hofeld also disclosed that he had known the Glenwood store was closing a couple of months before Mayor Durkin got the news. Hofeld met with a developer in the Fall. By the time he first learned of the project, the deal was already done. Wal-Mart “had essentially a signed lease from Sears Holding, who controls the Kmart property. We were contacted by Sears Holding that we should direct all of our inquiries to a Wal-Mart representative,” Hofeld told The Times.
Hofeld says he told the developer: “I don’t want to see a neighboring community hurt, And they said they were gonna do it regardless and they asked for some sales tax sharing incentives and I said no.” Hofeld said that the developer asked a second time for a tax break one month later, but Hofeld again refused. “So they’re coming in with no incentives,” he said.
All this was going on without Mayor Durkin’s knowledge.
The Wal-Mart superstore will replace sales tax revenue for Homewood, which lost its Kmart in mid-December—-but there is very little net gain to Homewood, and Glenwood loses revenue from its dead Wal-Mart. In effect, two big box stores have become one–so the net deal is a bottom line loss. “There will be probably an incremental increase compared to what the Kmart was doing,” Hofeld estimated, but he added, “They’re going to be losing their largest retail sales tax contributor, and I just don’t like to see a neighboring town hurt.”
Lessons learned from the Glenwood/Homewood retail dance:
1.Wal-Mart arrives with its bags already packed.
2.The company has no allegiance to its host communities, and if it can squeeze a subsidy out of a neighboring town, it will move across the road or down the lane.
3.Such retail hopscotch does not create new jobs or revenue. In this case, the total sales at the Homewood Wal-Mart superstore may be more than at the Wal-Mart in Glenwood and the Kmart in Homewood–but not by much. The superstore’s grocery sales will eat into existing grocery stores in both communities, potentially leaving both communities with less sales tax.
Readers are urged to call Glenwood Mayor Kerry Durkin at 708-753-2400, and leave this message:
“Mayor Durkin, It’s important to remember that Glenwood is a village of 9,000 people. Your village says “We understand the needs of business and will tailor a package of ecomomic incentives to assist with their development and expansion in Glenwood.” Wal-Mart is the largest retailer in America. They do not need “economic incentives” to stay in Glenwood.
If your village and Homewood did regional planning, and had regional revenue sharing, this “steal the store” mentality would not exist. Instead of trying to throw money at Wal-Mart, your two villages should tell Wal-Mart to remodel its existing store in Glenwood to add groceries, and agree between the villages on a real revenue sharing plan for sales and property taxes.
The offer from Homewood is symbolic—but not that valuable financially. It ends in three years. Instead, keep Wal-Mart in Glenwood, share the revenue for the life of that store, and use the old Kmart site for other developments that add to your bottom line, not simply steal sales across village lines.
Today you have 11 Wal-Marts within 15 miles of Glenwood, including 5 superstores. Your economic plan calls for “enhancing the quality of life for residents while nurturing opportunities for growth in our local economy.” You can do that without saturating you area with superstores.”
Wal-Mart had a special Christmas surprise for the tiny village of Glenwood, Illinois (pop. 9,045), which is located about 18 miles due south of Chicago.
