WALMART NEEDS ANOTHER TAXPAYER BAILOUT…

Free-market enthusiasts tend to sputter when asked to explain why, in a free market, their favorite business needs to suck at the public teat. Politics is not about stopping redistribution of wealth, its about deciding where you think the money should go. From The Houston Chronicle:
The city is negotiating a deal with the developer of Washington Heights — a proposed Wal-Mart-anchored shopping center near Interstate 10 and Yale - that would reimburse the local builder for as much as $6 million in public infrastructure improvements. If the agreement is approved, developer Ainbinder Co. would widen and repave streets surrounding the project, refurbish bridges near the site, develop a bike and pedestrian trail along a stretch of Heights Boulevard south of I-10 and improve underground drainage, among other upgrades. The improvements are expected to ease traffic congestion as well as prime the area for other future developments, the developer said. The deal being negotiated is part of a program authorized by the state called a 380 agreement. It allows the city to grant or loan local tax revenue for economic development purposes.
The Houston blogger at Off The Kuff takes exception to the plot.
Besides the nature of Wal-Mart itself, the 380 agreement is probably the least popular aspect of this, from what I’ve observed. It’s bad enough that a Wal-Mart is coming in, the sentiment is, it’s even worse that tax dollars will be used to help them. The city’s position is basically that the 380 is one of the few tools they have to get the developer to do something it wouldn’t otherwise do, which is to say make infrastructure improvements.
You know what? On principle, I'm not opposed to the use of tax dollars to foster economic development, when a business with a good idea that can legitimately help a community steps up, the public financing should be considered. What angers me is how people pretend that one person's handout is another person's investment. Tools are neutral. Our intent in wielding the tool makes the difference. Jeff Hess: Have Coffee Will Write.

6 Responses to “WALMART NEEDS ANOTHER TAXPAYER BAILOUT…”

  1. UncleBob says:

    I think, at some point, you have to back away and look at the fact that it is the role of government to provide for basic infrastructure – which includes things like roads. If a new housing development went up and it started causing traffic issues, does anyone expect the developers to pay to install stoplights at the surrounding intersections?

    • Jeff Hess says:

      Shalom Bob,

      I have to disagree with your premise that it is the role of government to provide for basic infrastructure. His name is lost to history, but the businessman who first discovered how to shift business costs off on taxpayers was corporate genius.

      The city of Portland, Oregon should serve as model for other governments who need to learn that what is good for business is not good for the community, it is only good for business.

      Decades ago Portland drew a line in the sand and said that developers were free to build outside the line, but that the people of Portland would not pay a penny to enhance the profits of the developers. The result is that developers decided to build inside the line, where infrastructure already existed and Portland has a model sustainable city center without the urban decay created by developer-generated sprawl.

      B’shalom,

      Jeff

    • antichue says:

      If a new housing development went up and it started causing traffic issues, does anyone expect the developers to pay to install stoplights at the surrounding intersections?

      Yes, most municipalities who are looking at approving a new residential development require the developer to mitigate the impacts that moving more people into the community will have. Some even go so far as to require a deposit into the capital fund to pay for sewage treatment and water treatment upgrades. Even during the recent housing boom, unless it was a million dollar homes, a new house development built cannot produce enough property tax income to offset the impact of the people it moves into the community. Partly this is because property taxes are assessed at a lower rate on primary homes than they are on businesses, but also because houses themselves are not money-generating properties (in the form of sales and income taxes) like businesses are.

      Local communities have to find that money to pay for utilities, and it’s easier to assess those people/entities creating the known incoming impact up front than it is to pass those costs on to the community and raise everyone’s taxes later.

  2. Thanks for linking to my post. To be clear, I am not opposed to the 380 agreement, at least not in principle. What I wrote was that I’d noticed a lot of people specifically mentioning the possibility of Wal-Mart getting public funds as part of the deal, in return for them making certain agreed-upon infrastructure improvements. The nature of the 380, which requires the developer to make infrastructure improvements up front and only pays them back if sales tax revenues and/or property values increase, seems like a decent approach to me. But I certainly understand why people are agitated about it.

    • Jeff Hess says:

      Shalom Charles,

      First thank you for stopping in, for reading and, most importantly, for giving of your time to enter the discussion. We build our communities with our conversation.

      Here in Ohio we call the equivalent of your 380, Tax Increment Financing. The flaw is that those increases in taxes ought to benefit the community, not supplement the profits of private corporations.

      What is good for business is good for business and no one else.

      B’shalom,

      Jeff

  3. [...] WALMART NEEDS ANOTHER TAXPAYER BAILOUT… Free-market enthusiasts tend to sputter when asked to explain why, in a free market, their favorite business needs to suck at the public teat. Politics is not about stopping redistribution of wealth, its about deciding where you think the money should go. Keep reading… [...]

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