Issues

Wal-Mart

Sep 1 2001

The Economics of Wal-Mart

2003.01.01

The following information is from an article in Inc Magazine, When Wal-Mart Comes to Town.

Wal-Mart Claims its Store Will Help the Local Economy

The keenest student of Wal-Mart is Ken Stone, a professor of economics at Iowa State University who specializes in retail trade and rural development. About eight years ago Stone started hearing from small-town Iowa merchants whose downtowns were dying. He began gathering sales-tax data and concluded in 1988 that Iowa towns within a 20-mile radius of 14 Wal-Mart stores saw total retail sales decline by 25.4% after five years. Even towns outside that 20-mile radius felt Wal-Mart’s pull. Their retail sales declined by 17.6% after five years. “I was amazed by the impact of Wal-Mart,” says Stone.

Stone further found that the sales of small specialty stores decreased substantially. Eight years after Wal-Mart’s entry into Iowa, department stores — led, obviously, by Wal-Mart — had added $334 million worth of revenues, amounting to a 20.2% gain in market share, while clothing, drug, jewelry, auto-parts, hardware, variety, and grocery stores had all lost market share ranging from 2% to 44%.

John Hichborn, who operates the True Value Hardware store in Bath, which had been in his wife’s family for four generations, felt he was well positioned — even though Ken Stone’s Iowa data showed that hardware stores took a huge market-share hit, minus 30.9%, when Wal-Mart came into the state.

Would Wal-Mart Build a Store and Then Abandon It?

Andy Rosenthal, a Maine developer who has worked with Wal-Mart, notes that typically Wal-Mart owns land until it has its building built — then it sells the land and becomes a tenant. “That gives it control when the project is under construction, and flexibility once it’s up,” Rosenthal explains.

Wal-Mart thus recoups its investment and is on the hook only for its lease. Ken Stone explains the rationale behind that strategy: “If K mart comes into the market with a bigger store, you can bet your bottom dollar that Wal-Mart will soon find a place for a bigger store.”

What about the 500 Jobs?

Another troubling element involved the disjunction between how many jobs Wal-Mart claimed it would create and how many of those jobs were really only part-time — as many as 60% by some estimates. “That creates a hidden cost to the community,” asserts Jayne Palmer. She reasons that if Wal-Mart ends up “paying less than people can live on” and doesn’t offer sufficient benefits, local taxpayers will simply end up subsidizing a ragtag work force.

Wal-Mart’s Don Shinkle maintains that the company’s work force is at least 60% full-time. But Wal-Mart hardly defines full-time in a conventional way. By the company’s standard, any employee who works at least 28 hours a week is eligible for benefits — and thus is considered full-time.

Will Wal-Mart Generate New Sales or Just Steal Market Share from Local Stores?

“Wal-Mart is not going to generate new sales,” says Naylor. “It’s going to earn its money from existing stores. It’s not providing great jobs with a future. Wal-Mart will not do its banking in Brunswick or in Maine. We are a colony market to it. It will use our consumers and our labor as its raw material, and everything except the low wages and the tax revenues it provides will be pumped out of state.”

Reny has been in business 43 years, and he has withstood them all. But now, at 66, he finds himself confronted by a new force, perhaps more formidable than the others. “Wal-Mart thinks it’s invincible,” says Reny. “The problem is, it does not want just its share. It wants it all … . Wal-Mart comes and goes, but after Wal-Mart goes, there’s nothing left.”

Will My Tax Dollars Subsidize Wal-Mart?!

The second [example of Wal-Mart’s power] occurred in Augusta, the state capital, when the legislature voted to allow the newly built Augusta Mall — to be anchored by a Wal-Mart — to use $7 million in sales-tax receipts it generated for improvements specifically around the mall. Reny was fighting that measure until he went away one weekend — and it was summarily passed. He considers such a tax break outrageous, since it uses public dollars to give further advantage to the mall against downtown merchants.

HRI Needs to Answer Some Questions About the True Costs of This Project to the New Orleans Taxpayers. Tell your Council Representative and our State Senators that you want a FULL economic impact study BEFORE this project moves forward!

Overview & History

2003.01.01

The redevelopment of the St. Thomas Public Housing project was begun in 2001, when the last of the buildings were razed and residents relocated. The Housing Authority Of New Orleans (HANO), in cooperation with the US Department of Housing and Urban Development (HUD) planned a transformative project typical of the federal program called Hope VI. The program is intended to decentralize poverty and create communities with a mix of economic classes and the amenities necessary for thriving neighborhoods.

After the first developer was disqualified from the project, local developer Historic Development Inc. (HRI) was selected by HANO to develop the property based on plans to build a community on the vacant land made up of low income housing for some of the residents who were moved and market rate condominiums for middle to upper income buyers. The plans also included a retail component to service the residents’ and immediate neighbors’ shopping needs.

Map-Proposed Development

In July of 2001, HRI informed the public that the original plans to create a small shopping center had been changed due to funding problems and in its place, a 200,000-220,000 square foot Wal-Mart Supercenter was to be built on the site, using land from both the housing development as well as parcels speculatively purchased by the CEO of HRI and his partners, including local developer Darryl Berger, through a corporate construct identified as Riverview Retail Development LLC. According to the developer, the Wal-Mart and the revenue from a percentage of 6-20 years of sales taxes generated by its sales would be needed to pay off bonds necessary to fund the market rate component of the housing, which is a required component of Hope VI developments. The announcement of the Wal-Mart Supercenter began a contentious battle in New Orleans which involved the issues of affordable housing, economic development, historic preservation, political patronage and race.

UC St. Thomas Wal-Mart Analysis

2002.08.29

HISTORY

The redevelopment of the St. Thomas Public Housing project was begun in 2001, when the last of the buildings were razed and residents relocated. The Housing Authority Of New Orleans (HANO), in cooperation with the US Department of Housing and Urban Development (HUD) planned a transformative project typical of the federal program called Hope VI. The program is intended to decentralize poverty and create communities with a mix of economic classes and the amenities necessary for thriving neighborhoods.

After the first developer was disqualified from the project, local developer Historic Development Inc. (HRI) was selected by HANO to develop the property based on plans to build a community on the vacant land made up of low income housing for some of the residents who were moved and market rate condominiums for middle to upper income buyers. The plans also included a retail component to service the residents’ and immediate neighbors’ shopping needs.

In July of 2001, HRI informed the public that the original plans to create a small shopping center had been changed due to funding problems and in its place, a 200,000-220,000 square foot Wal-Mart Supercenter was to be built on the site, using land from both the housing development as well as parcels speculatively purchased by the CEO of HRI and his partners, including local developer Darryl Berger, through a corporate construct identified as Riverview Retail Development LLC. According to the developer, the Wal-Mart and the revenue from a percentage of 6-20 years of sales taxes generated by its sales would be needed to pay off bonds necessary to fund the market rate component of the housing, which is a required component of Hope VI developments. The announcement of the Wal-Mart Supercenter began a contentious battle in New Orleans which involved the issues of affordable housing, economic development, historic preservation, political patronage and race.

ISSUES

Both supporters and detractors of the proposed Wal-Mart point to its building as a critical turning point in the economic and cultural viability of New Orleans. Supporters identify the project as key to:

  • New Orleans’ perception as a business-friendly city
  • Returning sales tax revenues to the inner city from outlying suburban areas
  • The creation of jobs both in its construction as well as ongoing operation
  • To allow inner city residents, many of whom lack auto, access to a variety of goods and services inexpensively.

Critics of the project cite:

  • The destruction of residents’ homes before budgets had been identified
  • The ruin of locally owned businesses
  • The use of sales and property tax dollars to subsidize the project
  • The introduction of suburban type development in a delicate, historic urban area with its attendant problems.

THE NEIGHBORHOOD

The St. Thomas Housing Development is located in the Lower Garden District of New Orleans, an area with a mix of people and economic classes. Homeownership and rentals are mixed and much of the stock is classically inspired homes and mansions. Part of the district fronts the Mississippi river where wharves and warehouses reflect the industrial component of the area as well. Much of the Lower Garden District has enjoyed a rebirth through increased population and renovation. The portion of Magazine Street in the district has a number of burgeoning businesses and restaurants that service both locals and tourists. A number of community groups, individuals, businesses contributed financing, and direction to the rejuvenation of the community. The St. Thomas residents were in need of a similar rejuvenation. Crime, chronic underfunding and government mismanagement created an environment that threatened the all residents of the Lower Garden District. Observers have noted a reduction in crime in the area after the destruction of the housing but caution that the relocation of many of the residents has forced many into other impoverished areas or into other, overcrowded housing developments in the city, many of which have suffered extreme upswings in violent crime.

URBAN CONSERVANCY ANALYSIS

The Urban Conservancy supports the redevelopment of the St. Thomas community, and the rebuilding of the homes of displaced residents. We urge the creation of a mixed use community that includes options for groceries and shopping that respects the community and supports local, sustainable economic development. We maintain that the time has come to rebuild residents’ homes while other components of the project receive further public input. The Urban Conservancy vigorously opposes the Wal-Mart component of the project. UC Opposition to the Wal-Mart component is based upon the following considerations:

  • The lack of good paying job options for former St. Thomas residents and the community created by Wal-Mart.
  • The threat to local businesses resulting from Wal-Mart’s business practices.
  • The diversion of desperately needed city funds through special taxing districts, reduced property taxes for Wal-Mart and public subsidy of infrastructure improvements for a private for-profit development.
  • The introduction of suburban type development into a fragile historic area, diminishing the surrounding area aesthetically and introducing substantial car traffic into an area without the ability to mitigate the effects.
  • Location of the store in an area incapable of supporting the additional traffic flows necessary to make the store economically viable. Tchoupitoulas is already congested and, according to city planners, cannot be expanded beyond two lanes with a turning lane.

The Urban Conservancy maintains that the gaps in funding identified by the developer could be eliminated by a simple reduction in the fees charged for building the low income housing components, including inflated profit and professional service contract fees with no reduction in quality of construction.

The independent audit commissioned by the city identified the cost of building the St. Thomas housing as one of the highest in the country, including the average costs of public housing in cities like Los Angeles and New York City.

The Urban Conservancy also notes that most Hope VI redevelopments are not anchored by a single, “big box” retailer and that this type of development violates the principals of good urban planning and threatens the vitality of the community it is meant to serve.

FURTHER INFORMATION/CONTACT INFO

Historic Restoration, Incorporated
* Pres Kabacoff, CEO

Housing Authority of New Orleans
* No contact information is available for George Miller of Spectrum Consulting Inc., who assumed receivership of HANO in March of 2002.

St. Thomas Resident’s Council
* (no contact information available)

The Urban Conservancy
* Geoff Coats, Ed Melendez, Principals

The Preservation Resource Center
* Patricia Gay, Executive Director

Wal-Mart-Corporate Offices
* H. Lee Scott, President and CEO, no e-mail contact information is available

LATEST NEWS

  • May 1 — HRI CEO denies impropriety in hiring of defenders of plans to build Wal-Mart in Lower Garden District.
  • April 26 — Wal-Mart announces the building of urban “prototype,” includes many of the design considerations suggested by New Orleans city planners.
  • April 18 — New Orleans City Council votes to waive city planning objections to Wal-Mart in Lower Garden District.
  • April 16 — Independent audit released to City Council Budget Committee.
  • September 2005 — Wal-Mart looted in aftermath of hurricane Katrina.

Wal-Mart: The Hits Just Keep On Coming

2002.05.01

This week brings two new revelations to the insult heaped on injury that is Wal-Mart in the Lower Garden District. First, Wal-Mart announces yes, it can build a store that respects a historic, urban environment—in Dallas, not New Orleans. Then, the release of a document listing the contractors’ fees paid by the euphemistically named Historic Restoration Inc. (HRI) identifies that many of the “concerned citizens” that came forward in support of the project were actually on the payroll. Perhaps this is why HRI CEO Kabacoff had to defend the inflated figures the independent audit [Note: the report is no longer available on the City Council website its original address was http://www.nocitycouncil.com/content/temp/Draft-StThomas.pdf] uncovered, numbers that make the St. Thomas redevelopment one of the most expensive in the country, ahead of cities including Los Angeles and New York City.

The City Council disregarded the suggestions of the city’s professional planners in their decision to allow the Wal-Mart to be built essentially to Wal-Mart’s specifications, city laws and historic districts be damned. The “Blue Ribbon” committee felt that it was not incumbent upon them to challenge the word of the “most successful retailer in America” in the words of committee member John Koerner. Councilmember Oliver Thomas used this stamp of pseudo-experts to hit a home run for donors to his election campaign, including Kabacoff, Wal-Mart and the owner of the land the Wal-Mart is to be built on (Darryl Berger, in partnership with Kabacoff). The cost of the “Blue Ribbon” committee was approximately $15,000, most of it paid in the form of fees to ex-Planning Commissioner and longtime Morial loyalist Kristina Ford. Scheduling meetings and making copies is apparently strenuous work, and ironically is more lucrative than the average annual salary of a Wal-Mart “associate.”

The very same Wal-Mart representative who stood in front of the New Orleans City Planning Commission and the City Council and stated that Wal-Mart could not build another model of store, Daphne Moore, is the same one who glowingly announced the new store in Dallas. Described by media as “unlike most discounters that are surrounded by a sea of parking, the store proposed for Mockingbird Lane will front right on the street. All of the parking will be built at ground level under the elevated Supercenter.” Ms. Moore adds: “we want to listen to and work with residents to ensure that this store will be a good neighbor.” However, in New Orleans, City Zoning law, the opinion of the Planning Commission (who voiced support of the project with certain changes to mitigate the damage to the neighborhood), and the vast majority of public opinion were all dismissed and Wal-Mart lavished with tax breaks. There appears to be a disconnect between elected representatives and the will of the city, although the decision came of course, post-election.

The list of “third-party” contractors released recently by HRI helps complete the circle of paid influence. Minister Marie Galatas, whose church was previously known as “Queen of the South Christian Association,” and one of the first to raise the “racist” label about opponents of the troubled project was paid consulting fees of $35,000. Others who received payments included Felton White, who delivered many a heartfelt speech about “the people of St. Thomas,” and, it turns out, was paid $60,000 for services rendered. Danae Columbus of Katz/Columbus was paid $55,000 for services that included advertising in the Times Picayune decrying “racist preservationists.” Columbus’ business partner Allan Katz, has written a number of fulsome pieces on Wal-Mart’s entrance into the Lower Garden District that portrayed the issue as a battle of economic development versus preservationists. His work has been published in weekly e-mails, faxes and on the web acting as the moderator of a “news” section of a local website. Urban Systems, the contractor who delivered the only traffic study of the area to date, should be disappointed. They were paid only $25,000 for their services, painting a rosy picture of post Wal-Mart traffic on Tchoupitoulas. Pollster Silas Lee was paid $20,000 for published polling results like “[of the poll/focus group participants] 69% believe that the benefits of the Wal-Mart project outweigh the negatives.” And what city contract would be complete without a plum for a Morial ally? Bobby Major’s company, Major Services was paid $350,000 in consulting fees.

Perhaps all of these “professional services” have led to what the independent audit identified as inflated costs that the HRI CEO defended as premiums for taking on this “risk.” If we are to consider Wal-Mart to be the master retailer they are, clearly they are not moving into the St. Thomas as a risky venture, unless using one of their suburban model stores instead of one of the new Dallas models is a risk. As many critics have asked, why can’t New Orleans do better? The answer is economics, plain and simple. It is less expensive for developers, major retailers and anyone with deep pockets to buy influence in New Orleans than it is to compete on even a slightly level playing field. Until we demand a change in how business is done in this city, how decisions are made, including how zoning laws are enforced, we will be sold out to the benefit of a few velociraptors who will take what they can from the city and leave us in a worse mess than before. These same people will wag their fingers at our “regressivism” when the next scheme is launched.

The Nature of the Problem

2002.01.01

“Suburban Big-Box stores are running out of suburbia and are eyeing inner cities as viable new markets. It’s like Godzilla coming into town, crushing historic structures underfoot and leaving in his wake Big-Box stores and acres of parking.”

—William E. Borah and Lloyd Vogt

“Community, as it once existed in the form of places worth caring about, supported by local economies, has been extirpated by an insidious corporate colonialism that doesn’t care about the places from which it extracts its profits or the people subject to its operations.”

—James Howard Kunstler

A Fork In The Road

(Originally published in The Rogue Literary Magazine, January 2002)

New Orleans will die without a Wal-Mart. Wal-Mart will kill New Orleans. Which of these forecasts is correct? Probably neither. Nevertheless, underlying this debate are very serious questions about the future of arguably the most unique city in the United States. The question we need to decide (before others decided it for us) is, what kind of city do we want to live in 15 years from now?

One place to start this discussion is with the fact that the social and cultural vitality that sets New Orleans apart from the rest of the United States can be killed. Those of us who live in this captivating city owe it to ourselves and to future generations to seriously consider what this simple truth means.

What is the relationship between physical space and community? Why is it that New Orleans maintains a vital culture of music and community celebration? Why is it still possible to hear great music on St. Claude Ave. and in the Treme in spite of the blight and distress nearby while nothing of cultural importance is happening in the suburbs and Veterans Highway with its much-vaunted tax base?

Perhaps if we begin conceptualizing our city not as a concrete, masonry and wood backdrop to our daily activities but as an organic space that makes possible our creative efforts and social interactions, we will come to appreciate what was once called wise stewardship; an acceptance that the land we live on and the buildings we inhabit do not belong to us in any absolute sense but are given to us as a trust for future generations to enjoy as we have enjoyed them during our stay.

This view does not imply a sentimental nostalgia nor does it inevitably lead to economic paralysis. Cities are dynamic human creations. Change is inevitable. But not all change is good. It is the responsibility of each generation to determine the nature, direction, and scale of the changes it embraces.

Neither does this view place “buildings before people.” The single greatest economic resource New Orleans possesses is the historic urban fabric of the city. Communities across the country have discovered that protecting the scale and integrity of the urban fabric encourages investment. It provides predictability and stability; necessary precursors to serious business investments. Cities that build from their strengths have higher returns on their investments than cities that destroy large chunks of historic areas in misguided attempts to save what remains.

New Orleans is a poor city. Too many of our neighbors struggle daily merely to survive. Young people seeking professional careers often abandon a city they see as offering no future. There is no getting around the fact that we need to improve our economy and we need to improve it in a way that distributes the benefits among all members of the community. In short, New Orleans needs economic development that is sustainable over many years, that adds net jobs to the city rather than redistributes existing jobs, that diversifies our mono-focused service industry economy, and that creates the kinds of jobs that take people out of the cycle of poverty.

Economic Development or Sweetheart Deal?

So, is the proposed Super Wal-Mart a smart piece of economic development for the city?

The developers claim that Wal-Mart will create 500 jobs. This claim is true, however, only if we ignore the existing jobs that will be lost. According to Wal-Mart’s own numbers, the Super Wal-Mart is expected to take in $77 million in sales annually. Conservatively, 50% of those sales will be taken from existing businesses within Wal-Mart’s market area: roughly Tchoupitoulas to Canal St. to Claiborne to Carrollton Ave. That means $35-40 million in sales lost to existing retailers. No one doubts that this will cause business failures and reductions of staff in remaining enterprises.

The developers state that Wal-Mart will pay all of its taxes and receives nothing from the city. Technically, this is true. But it is also true that the sales taxes generated by Wal-Mart for the next 20 years will not go into the city’s general fund. Instead they will go to pay off bonds floated by the developers to cover a shortfall in the financing of the project. Moreover, the developers will still get their profits — $8 million to Daryl Berger and Pres Kabacoff on the sale of the land to Wal-Mart alone plus development fees and management fees to Kabacoff’s company, Historic Restoration, Inc.

But while the developers make a handsome profit, the city will not be getting money for street repairs, police salaries, the fire department, or the Regional Transit Authority. To this shortfall in the city revenue must be added the taxes currently being paid by existing businesses that will disappear as these enterprises lose revenue and eventually fail. Finally, we must add the ancillary loss of jobs in businesses that currently service the local businesses but which will not be used by Wal-Mart. This category includes accountants, bookkeepers, lawyers, graphic designers, print shops, regional product distributors, etc.

The average annual salary of a Wal-Mart employee is approximately $12,000. This is below the federal poverty line and means that Wal-Mart employees often still need public assistance and social services provided by the remaining taxpayers. This places an additional burden on the city’s diminished revenues.

The long-term prognosis for bringing Wal-Mart into the historic core or our city suggests that we will end up with a net loss of jobs in the overall economy, we will have reduced revenues flowing into our general fund, and those reduced funds will be burdened by services provided to Wal-Mart employees - a subsidizing of the work force for the world’s largest retail corporation.

While the economics of the project are damning, to focus exclusively on that aspect obscures that vitally important question we face as a community: What kind of city do we want 15 years from now? Constructing a Super Wal-Mart with a sea of parking for over 800 cars introduces suburban sprawl into the heart of our city. The developer’s traffic impact study projects 10,000 additional cars per day driving through the surrounding neighborhoods. That figure takes into account only the Super Wal-Mart itself. No mention is made of the inevitable spin-off developments: Taco Bells, Red Lobsters, suburban-style mega gas stations, Home Depot, Toys-R-Us, etc.

The Tchoupitoulas corridor contains some of the largest parcels of undeveloped land in the city. These parcels abut our city’s greatest asset: the Mississippi river. Directly across the street from the proposed Super Wal-Mart the Trust for Public Land, in cooperation with the city, is in the process of creating a linear park along the river. Is the best use for this important property a suburban-style Big-Box mega retailer? Are there other options that could increase the long-term tax revenue to the city, connect this area with the river, and blend harmoniously with the surrounding neighborhoods and with the city’s urban past? Why are we being confronted with a do or die proposition on the most important redevelopment the city has undertaken in five decades?

Urban or Suburban? The Choice Is Ours

Urban areas are marked by a healthy mix of residential and commercial uses, by a pedestrian scale that respects people as much as automobiles, by integrated modes of transportation and by localized economies tied to broader regional and national economies. Thus, urban environments provide amenities such as restaurants, grocery stores, art galleries and — yes — bars close to peoples’ homes. The cultural web supported by such a physical environment cannot be replicated in the suburban moonscape of superstores, chain restaurants and “entertainment complexes.”

Since the 1950s, however, the overwhelming majority of development in the United States has been suburban development. Suburban development is characterized by a separation of residential and commercial uses, the supremacy of the automobile, and low-density land use patterns. The result has been the proliferation of strip malls, subdivisions, office parks and parking lots and the miles and miles and miles of asphalt linking these disparate pieces together.

The urban and suburban worldviews delineate fundamentally different ways of constructing our built environment. Suburban-style developments pose a very real danger to the continued existence of historic urban environments. Once introduced into an historic area, these developments begin to destroy the fragile fabric of the old neighborhoods. The transformation is gradual but clear: First comes a Wal-Mart or other Big Box retailer. To accommodate this the streets will be widened and traffic signals installed. Next comes the gas station at the light. Then the fast food outlet next to the gas station. Then the second Big Box Super Store across the street. More lanes. More traffic. More fast food.

The historic urban fabric of our city is an irreplaceable (but renewable) asset. It is the source of our unique culture, cuisine, music and celebrations. It is what draws artists and tourists alike and it is what nourishes each during their stay.

Today this urban fabric is the engine driving our tourism-based economy. The architecture, the vibrant neighborhoods, the corner groceries, restaurants and bars provide tourists with a genuine sense of what has been lost across much of modern America. They return to New Orleans year after year because they do not have these neighborhoods back home. This unique space attracts many new residents each year, each bringing new ideas and the potential for a true diversification of our dangerously one-dimensional economy. Many people, especially young professionals, will admit that living in our city can be a challenge financially. However, those who do stay will tell you that there is something here that is rarely experienced in a city of this size. Here is a community that still values social interaction over cars or buildings or Wal-Marts. For those fortunate enough to live in the city, the historic built environment offers a quality of life that has never existed in the sterile suburban experiment of the post-World War II era.

Unfortunately, the urban fabric that nurtures and nourishes our culture and that has survived remarkably intact for more than a century is in danger of being destroyed by the introduction of incompatible suburban-style developments. The problem is real even while the nature and virility of the threat it is difficult to comprehend.

New Orleans has reached a critical point in its development. Residents, businesses and political leaders need to decide if this city will maintain its historic urban character or if it will embrace a suburban mentality that will undermine and eventually destroy the existing fabric of the city. This is an important decision and one that should be made consciously rather than by default to popular trends in the development and retail industries.

Maintaining the historic urban fabric of New Orleans is in the best interest of all New Orleanians. This urban environment provides an enduring foundation for a strong and resilient local economy, has the potential to reverse decades of out migration by attracting young talented individuals to the city, and nurtures local culture, traditions and customs.

The built environment of this city was handed down to this generation as a trust for the future. It is our duty, as the current residents, to exercise wise stewardship of this precious resource until such time as we pass it on to the next generation.

Ten Questions That Have No Good Answers

2001.11.01

This list of questions was created by MEMBERS OF THE LOCAL BUSINESS COMMUNITY!!

Ten Questions that have no good answers!

  1. Is it fair to force New Orleans retailers to lose three quarters of a billion dollars in sales over the next twenty years to make up shortfall in equity in a private real estate development? Could this be called corporate welfare?
  2. The city has a 20 million deficit. Why would any Councilman think the City could lose up to $2,000,000 per year in sales tax revenues for the next 20 years?
  3. Why should the biggest retailer in the world be exempt from current zoning laws and the big box ordinance when every other retailer in the City is required to abide by existing laws?
  4. Does it make sense to lose 750 jobs to create 500 jobs that will not pay enough to support a family?
  5. Is it fair to put a big box retail store the size of five football fields in the middle of a neighborhood that ALL of the surrounding neighborhood organizations oppose? (Coliseum Square Association, Historic Magazine Row Association, Irish Channel Neighborhood Association, Garden District Neighborhood Association).
  6. What is the effect on traffic to the surrounding neighborhoods and why should the Planning Commission rely solely on the developer’s traffic study which did not assess the traffic impacts beyond a few blocks on Tchoupitoulas St?
  7. What is HRI paying for the several acres of HANO property that will be occupied by the Wal-Mart superstore and its parking lot, and what is Wal-Mart paying the developer for this valuable riverfront property? Why are HANO and the City transferring land to HRI without adequate public hearings and what is HRI paying for the City streets that will be closed?
  8. What assurances are there that none of the TIF and PILOT money will be used to develop the Wal-Mart?
  9. Local merchants buy goods and services locally. (i.e. accounting, banking, legal services, supplies, etc.). They spend their profits locally. Wal-Mart buys its goods and services outside of Louisiana and sends its profits to Arkansas. Is this economic development? Any one familiar with economic multipliers knows this would result in economic contraction.
  10. What is the profit to the developer for this important project? Since public money and land are involved, don’t we have a right to know?

This is not economic development!

It is a scheme to unjustly redistribute income from New Orleans retail businesses to HRI. Imagine any other business proposing to the City that it: 1) be exempt from zoning laws, 2) be able to ignore local ordinances, 3) be allowed to close city streets, and 4) keep 70% of the City sales taxes it collects and all of its property taxes for the next 20 years. The City would rightly say no.

HRI Needs to Answer Some Questions About the True Costs of This Project to the New Orleans Taxpayers. Tell your Council Representative and our State Senators that you want a FULL economic impact study BEFORE this project moves forward!

Protecting the City’s Urban Character

2001.09.01

By William E. Borah and Lloyd Vogt

In the 21st century, the biggest threat facing America’s historic cities, especially New Orleans, is suburbia’s encroachment into the inner city.

Suburban Big-Box stores are running out of suburbia and are eyeing inner cities as viable new markets. It’s like Godzilla coming into town, crushing historic structures underfoot and leaving in his wake Big-Box stores and acres of parking.

The essential ingrediants of the vitality of New Orleans are its neighborhoods — neighborhoods with personality, diversity and cultural interaction. Many historic neighborhoods in New Orleans have maintained their vitality, while others are suffering. We must nurture those that are vital and revitalize those that are in need.

However, revitalization by suburbanization is not the answer. In suburbia, there is no neighborhood personality, only convenience stores, chain restaurants and Big-Box Super-Centers set behind an asphalt sea, stretching along wide suburban thoroughfares. Is this what we want for New Orleans?

Albertson’s proposed 66,000 square-foot supermarket in Central City just off St. Charles Avenue is not in the best interest of the neighborhood or the city.

By ignoring the pedestrian scale of the neighborhood, removing Polymnia from the street system, demolishing or removing 10 historic buildings, favoring the automobile above all other means of transportation and refusing to design a building in keeping with the scale of the neighborhood, Albertson’s is attempting to impose low-density suburban sprawl in New Orleans. This is not the way to revive a pedestrian-scaled neighborhood that many believe is ripe for residential and smale-scale commercial rehabilitation.

This insensitive effort is an affront to Central City and the distinctive urban character of New Orleans, and it should be strongly opposed by any citizen concerned about maintaining that unique character.

A grocery store or “Village Market” could greatly assist the rejuvination of the neighborhood. But for this project to serve as a catalyst for the economic development of the Lower St. Charles Avenue Corridor — the area bounded by St. Charles Avenue, Oretha Castle Haley/ Dryades Street, Philip Street and the Pontchartrain Expressway — and not create a blighting suburbanization effect on the neighborhood, the scale, design and operation of such a store should complement and serve the neighborhood and city.

The scale of the supermarket should be reduced from the proposed 66,000 square feet to a maximum of 40,000 square feet. Supermarket chains throughout this country have realized that as they take their Big-Box models from the suburbs into the inner city, they must reduce the size of their stores to be compatible with the scale and character of traditional neighborhoods.

A Winn-Dixie store on the industrial side of Tchoupitoulas Street and Jefferson Avenue is 46,000 square feet. Albertson’s is building stores in the 40,000 square foot range in California and a 43,000 square foot “Village Market” in its hometown of Boise, Idaho, with reduced parking, demonstrating that it is possible to build a smaller store and still make a profit.

The number of parking spaces should be reduced. Central City is already plagued with several large parking lots. The proposed 227 parking spaces will only add to the neighborhood’s blighted landscape.

Grocery store chains in the inner city, because of the higher density and the availability of public transit, do not require the number of parking spaces per foot of store that their suburban stores require. A good number of parking spaces for a 40,000 square foot store is 100 to 120.

The architectural design and the scale of the store should complement, not mock with a facade of false fronts, the historic character of the neighborhood.

Parking areas should be enclosed with attractive fences and landscaping. Well-kept and landscaped sidewalks should form the outer edges of parking areas and the store.

Signs and lights should also reflect the character of the neighborhood. The loading area and trash disposal area should be behind a wall out of view. Delivery truck traffic should be regulated for minimal impact on the neighborhood.

Demolishing or dissassembling the 10 historic structures in the footprint of the project will aggravate the blighted character of the neighborhood.

The Lower St. Charles Avenue Corridor is part of a National Register Historic District, and the rehabilitation and relocation of historic buildings should be an essential component of a comprehensive plan to revitalize the neighborhood.

The Kroger company moved and rehabilitated four historic structures when it built its highly successful 43,000 square foot supermarket in Savanah, Ga.

A store designed within these guidelines would respect and reflect Central City. It would accommodate the automobile while not permitting the car to dominate the development site or overwhelm the neighborhood.

Why not build a pedestrian-scaled Village Market that reflects the urban tradition of Central City and New Orleans rather than the proposed suburban supermarket fronted by a sea of asphalt?

New Orleans neighborhoods make this city one of America’s most beautiful cities. As residents, we should demand that new developments enhance our city.

If Albertson’s sets the precedent of suburban development in the inner city with its proposed store for Central City, New Orleans’ unique character may soon fade away to be replaced with cookie-cutter strip shopping centers. Would you replace St. Charles Avenue with Veterans Boulevard?

New Orleans is a special American city. To accept Albertson’s proposal without question is to accept mediocrity. New Orleans and Central City deserve better.