Wal-Mart Rejects Subsidy for Cleveland Store
Ten-year property tax abatement relinquished
By The Plain Dealer editorial board
First published by the Cleveland Plain Dealer, February 21, 2007
Editor's Note: We're pleased to see Wal-Mart, which often aggressively lobbies for subsidies, for walking away from this one, but public ridicule from Cleveland citizens should have been noted in this article. Given the corporation's record of milking taxpayers for well over $1 billion in subsidies, we're skeptical that the giveback would have occured absent the public backlash.
Developer Mitchell Schneider and Wal-Mart, one of the anchors in his new Steelyard Commons retail center, have decided to do the right thing for their neighbors and for Cleveland.
The developer and the retailer are going to say "no thank you" to a 10-year holiday from most property taxes. The abatement was to have been a reward from the state of Ohio for cleaning up the former industrial site where Steelyard Commons is under construction. Both Schneider and Wal-Mart say they had no idea that the voluntary action program and its coveted liability protection also came with a tax break that until now has been mandatory.
Thanks to last year's lame-duck General Assembly, companies may decline the abatement beginning next month. And that's exactly what Wal-Mart and Schneider say they will do. Their decision will channel millions over the next decade to the Cleveland schools, to the Towpath Trail and to small businesses that might be affected by Steelyard Commons. Back in 2005, the city proposed setting aside part of new property taxes from the shopping center to extend the trail and bolster local retail, goals that Schneider enthusiastically embraced and wrote into his deals with Wal-Mart and two other anchor stores.
Unfortunately, the city officials who drafted the set-aside failed to do their homework and overlooked the state exemption. Future deals must be vetted more thoroughly.
At least the other anchors at Steelyard Commons - Home Depot, which is already open, and Target, which hopes to open later this year - now have a model for what they need to do: Waive the exemption.
One last point: Much of the early controversy around Steelyard Commons stemmed from Wal-Mart's presence. The Arkansas firm's labor and pricing practices are anathema to many unions and community groups.
So in addition to paying full taxes, the new Cleveland Wal-Mart will help market nearby businesses as part of a pilot program in 10 cities. It will not satisfy all of Wal-Mart's critics, but it does suggest that the company understands that new markets require new strategies.
© 2007 Cleveland Plain Dealer
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