Sunday, June 17, 2012

Walmart Developers & Local Gov’t Sticking it to Taxpayers!

A front page article in the Gettysburg Times on June 14th lays out a plan for the developers to defer payment on the up to $6 Million infrastructure improvements to roads, water, sewer, and the relocation of power lines on and around the construction site for the new Walmart Project at the US 30/15 interchange.  Named Gettysburg Crossing, the project is expected to house a Walmart Super Store, Kohl’s Department Store, Michaels Arts and Crafts, and perhaps a Lowes or Home Depot type store, along with banks, eateries, and the like. 

Under the plan, the repayment of the cost for these improvements, which will benefit local residents, will be deferred for several years and paid for when the taxes, currently assessed as unimproved, but then to be improved and eventually commercial space, would go up with those changes.  Those increments would be used to pay for the estimated $6 Million infrastructure work, much of it required by PennDot, the rest by Straban Township and various Adams County authorities. 

The repayment deferment would be guaranteed by none other than our old friends, the secretly operating Adams County Economic Development Corporation [ACEDC], and up to $5 Million of the project would be secured by the Pennsylvania Department of Community and Economic Development [DCED].

According to the article, this “incremental tax financing plan” [ITFP] would not cost the local taxpayers anything, and that covers Adams County, Straban Township, and the Gettysburg Area School District. 

In another article on the subject, this in the Hanover Evening Sun, the spokesperson for the developer said, “Without the $6 Million, this project doesn’t get done.”

The developer claims this project would create up to 600 jobs.

All three County Commissioners came out of the meeting with the developer apparently enthusiastically pumped up by the concept, after voting to send a representative to meet with representatives of the other taxing bodies to decide to approve or not approve the financing plan.

Ahem…let us follow the money…and the facts. 

First, the guarantor, ACEDC, gets its funding from Harrisburg out of the Commonwealth’s General Fund, which gets its money generally from the tax payers.  The rest of the money generally comes in the form of grants and appropriations from the Federal Government, which of course, gets its money from…? guessed it...the taxpayers, meaning YOU!

Now let us take a look at ITFP itself.  As the project gets developed, the land use changes from “unimproved” to “improved,” and then, in this case, to “commercial.”  Each change would increase the taxes incrementally.  It is these incremental increases that would be used to pay for the up to $6 Million in infrastructure improvements MADE NECESSARY BY THE PROPOSED DEVELOPMENT.

The developer, and then the retailers, would have to pay those increases anyway!  So the money from those increases would be used to retire the $6 Million debt from the infrastructure work.  Sounds like the old shell game, doesn’t it?  Well, that is exactly what it is. 

So the developer, with the able and willing assistance of the Adams County Commissioners, the Straban Township Supervisors, and the Gettysburg Area School Board, along with the Pennsylvania Department of Revenue, and the Pennsylvania Department of Transportation, and the DCED, and the super-secret ACEDC, are shifting the burden of up to $6 Million for this project to…guess who…YOU!  Every one of your tax bills will go up – Federal, State, County, School, Township.  Some of your transportation fees may go up as well. 

Welcome back to the “Adams County/local Township development shuffle!”

According to the 2012 Annual Report by the Walmart Corporation , the world’s third largest corporation generated $444 Billion in sales last year, from roughly 10,000 stores in 69 countries.  That, if our math is correct, averages out to about $44.4 Million per store for the year.  If you think that local government will see a juicy cut of that $44.4 Million from the new Walmart superstore at Gettysburg Crossing, you are sadly mistaken.  They will pay taxes on the same flat rates you pay to local government. 

Here is the rub.  Apparently, there are two developer companies working this project, and they both failed to do their due diligence.  If the developers were worth their salt, they would have had engineers check the roads, survey crews, and the like, and check the township and county and state requirements for development of commercial properties, even to the point, for example of consulting with PennDot over required road improvements.  They also would have made the cost of moving power lines part of their estimate of the total cost of construction of the development.  They did a shoddy job.  And ACEDC, and local governments want to back them anyway, and with YOUR MONEY. 

Oh, they will get paid for their work whether Gettysburg Crossing is built or not, it is a contract job.  But if the project is not built, they will not get nearly what they would get paid IF the project were completed.  Now we find their projected cost to completion is already $6 Million over budget, so they will lose from that as well.  And every day of delay costs them the rental money they will generate from the retailers once they open. 

In other words, the developers want to pass on the cost overrun to the taxpayers, to save themselves [and their investors] from taking the loss.  They are in a desperate situation as, we are certain, they have more than a few very angry investors!  So they are turning to local and state government to become complicit in what is, in effect, thievery from the taxpayers.   

Finally, the developer has fed local government and the public the dangling worm-on-a-hook of 600 jobs.  Let’s look at this.  By far, the majority of those jobs will be temporary construction jobs, not permanent ones.  Some of those construction workers may very well transition into building maintenance positions with the retailers, but they will be very few.  More of those 600 jobs will go to the existing staff of the current Walmart store [did you think they were just going to vanish?].  That will not leave many jobs to be had when the project is built and the retailers open.  And what jobs are those?  Store manager?  Nope, sales clerk, door greeter, stock person and the like.

The second worm-on-a hook is that these infrastructure improvements will benefit all local citizens.  Well, yes, but no one will be inconvenienced by the lack of those improvements if the project does not get built.  So that is a red herring.   

Don’t bite!

Weak, hollow arguments from the desperate developers, and confusing tax talk from local government are signs this project is in dire straits.

If the developers can’t rework their project contract with the world’s third largest corporate entity to cover their own lack of due diligence, then perhaps the project should wait until another developer comes along and does it right.  One also wonders what other errors were made by these developers, errors that might escape the local authorities in their inspections after the fact. 

You deserve better than this.  You deserve a better developer for this project, and you certainly deserve much better from your elected officials than the “incremental tax financing plan.”

Don’t bite. 

Don’t bite.

Don’t bite.


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Anonymous said...

Wow very nice uninformed fear mongering. You should do your homework. Ever thought about the increase in revenue to the county and city? Several hundred new jobs, yep people paying taxes. Several new large companies, yep paying taxes on the property for DECADES!!! And the infrastructure improvements that no one will miss, please, the city is rotting because ignorant people like you spout off with your ignorance to keep it that way. Everyone benefits with infrastructure improvements.

Novus Livy said...

Wow! I am impressed that you waited four years before posting your uninformed rant.

No "new" tax revenue would be realized as TIF calls for the developer/retailers to pay what the current appraised rate is when the first shovel is turned. That lasts 10+ years. Who makes up the difference for new costs of maintenance of infrastructure, law enforcement and emergency services cost increases to cover the new business? Not the business! The taxpayers.

Raising taxes to encourage development: that is akin to the Chinese Communists' practice of putting a bullet in the back of the head of one of their citizens who offended, and then billing the offender's family for the bullet and disposal of the remains. It is thievery! Why make Joe Taxpayer invest involuntarily to develop a business that he may or may not patronize, but will certainly never share in the revenues and never get a discount for his investment.

And please, tell me, why is it necessary to subsidize the developer for a project including Walmart, the largest corporation in the world. Why does the developer not spread the extra costs that his due diligence missed among the eventual retail outlets?

And, no, there will NOT be hundreds of new jobs. Walmart would not keep both stores open, but would transfer their employees to the new store. The rest of the development will employ less than 100 people.

It's is a shame your opinion of Gettysburg is so low. The air will be fresher there now that the Commissioners will be working outside of town.

Gettysburg CANNOT grow in land. It can only in value. Current borough government does not know how to do this.