Talk about an awkward exit! Wal-Mart pulled out of a Cleveland, Ohio retail project, but made a lot of noise on the way out. The Cleveland Plain Dealer newspaper called it a “serious blow” to a huge shopping project, but Wal-Mart opponents call it one less piece of sprawl in their hometown. Wal-Mart sent a pointed letter to city officials this week pulling out of a shopping center project, just at a time when the City Council was putting details on legislation that would have prevented Wal-Mart from opening a grocery store at the so-called Steelyard Commons project for the next eight years. Wal-Mart said the draft legislation was not a factor in its decision, saying that the company “made a business decision not to move forward.” But the developer of the project blamed City Council for killing the deal, and their profit. “It doesn’t take much to read between the lines that Wal-Mart believed the welcome mat was pulled from them,” Mitchell Schneider, president of First Interstate Properties, told reporters. Cleveland Mayor Jane Campbell jumped in the tank with Wal-Mart, noting, “This project was moving forward as a retail development without city subsidy until a piece of legislation was introduced.” The developer sniffed that his project would die without Wal-Mart — but he offered little consolation to the local businesses that would have been seriously hurt if the Wal-Mart project had gone forward. First Interstate’s profits would have come at the expense of local merchants who would have lost sales, and the city, which would have lost tax revenues if businesses elsewhere failed. Not only did the Mayor take Wal-Mart’s side, she then suggested that taxpayers would have to subsidize whoever they find now to anchor the project. Perhaps retailers in Ohio can’t stand on their own without tax breaks, but the suggestion that wealthy retail corporations need public welfare must have struck smaller businesses in Cleveland as strange, since the Mayor did not offer those businesses any welfare payments. In the letter to the Council, Wal-Mart made it clear how they felt about the proposed delay of a grocery store in the plan: “Wal-Mart still believes it is not good public policy for a community such as Cleveland to place restrictions on a very specific type of retail development.” The developer complained that he was close to wrapping up a deal with Wal-Mart, and that Home Depot might have been a second anchor if Wal-Mart has signed up. So the Council’s action may have saved the community from two big box headaches. The City Council was considering a bill similar to ones passed in California that restrict the interior square footage of large retailers to no more than 5% non-taxable items, which means groceries. Wal-Mart has fought such ordinances in California. During negotiations on Steelyard Commons, the City Council forged a compromise that allowed Wal-Mart to come into the Commons — but only as a discount store until 2013. The 5% internal square footage bill was put on hold.
Was Wal-Mart’s letter timed to blow the compromise, and pressure the City Council to go back to the original plan to approve the Wal-Mart with no strings attached? Clearly Wal-Mart does not want to wait eight years to open up a supercenter at that location, and the company is building very few new discount stores anymore. Supercenters are their main growth vehicle, because supercenters generate three times the sales of discount stores. Wal-Mart’s threat to take its marbles elsewhere might dissipate if the Council backed down and let a superstore in immediately. But the developer ought to be asked to underwrite the cost of an independent economic impact study of his Steelyard Commons. And if the Mayor has her way, the project ought to be renamed, the Corporate Welfare Commons. Whatever else the Cleveland City Council does with this developer, they should send an unequivocal message that no taxpayer’s money will be used to subsidize private profits. A retailer coming in should stand on it own — just like the smaller businesses that have survived with less financing behind them, and no public subsidies. The Mayor should read the report done by Ohio’s Retail Forward, which suggests that for every one Wal-Mart supercenter that opens, two grocery stores will close. The developer may be fuming in this case, but Sprawl-Busters considers it a happy ending whenever Wal-Mart pulls out. In our opinion, Wal-Mart’s letter was written for one reason only: to guilt-trip the Council into rescinding its plans. Often when Wal-Mart pulls out of a deal, they don’t write a long letter explaining their reasons. In this case, the Council should just ask Wal-Mart to leave without slamming the door.
