Off the Kuff

There was another meeting about the proposed Wal-Mart on Wednesday, this time for residents only.

[I]n the second public meeting in eight days addressing concerns over the Walmart-Ainbinder Company development, the city’s proposed 380 Agreement with the developers took center stage.

The 380 Agreement is a statewide compensation program, which would reimburse the developer building the Walmart (Ainbinder) up to $6 million through city tax money for infrastructure such as widening roads and increasing drainage.

“I’m not going to defend it,” Parker said to a troubled crowd. “I don’t shop at Walmart.”

During the Q&A portion of the meeting residents kept harping on traffic. One Heights resident asked why City Council would even consider talking about the project before all of the research on traffic is done.

Jeff Weatherford, deputy director of public works at the City of Houston, said, “If we’re wrong, we’re wrong. We’ll go back and make some adjustments.”

Hair Balls adds an interesting angle.

[Deputy Director of Public Works Andy] Icken stressed that the agreement is with developer Ainbinder and has nothing to do with Walmart. The money that is reimbursed comes from property taxes generated after the development, whether or not Walmart is a tenant, is up and running for one year.

The reimbursement money would be paid out during a ten-year period.

The idea of using 380 agreements is fairly new and rarely implemented in Houston, and this Ainbinder project would be only the fifth to use one. The future HEB development at West Alabama and Dunlavy, for example, will not be built with a 380.

Icken said, however, that he would like to strike a separate deal specially for Walmart that would regulate things like which roads delivery trucks can use to enter and exit the property. Those details, of course, will have to be finalized in future contracts.

“I think it’s appropriate to have that agreement with Walmart,” Icken said. “Citizens here have made some good points.”

I like the sound of that. If you believe, as some do, that this is going to happen no matter what, then getting the best deal possible has to be the goal. I know some people don’t like to hear that, and I don’t blame them, but it surely can’t hurt to have an endgame strategy in mind. Be that as it may, the Chron has the counter argument to that:

They stand with Mayor Parker

Dropping the 380 agreement will not make Wal-Mart go away, she said; it would result in the Wal-Mart being built without community input and with fewer amenities around the site.

The negotiations, Parker said, have been used to secure improvements in the area in anticipation of new exit ramps off Interstate 10 onto Yale Street, as well as to address lighting in the Wal-Mart parking lot and traffic on Koehler Street, among other items.

“Those are the kinds of discussions that would be extremely helpful,” she said. “That’s why we’re here. You’re telling me, ‘We want Wal-Mart to go away.’ Tell me what to ask for.”

That argument didn’t persuade some residents, among them Nick Urbano of Responsible Urban Development for Houston, a nonprofit formed by residents opposed to the project.

“They’re bluffing,” Urbano said, referring to Ainbinder. “(The designs) they’ve thrown out there they’re going to build anyway, so why are we giving them money for it?”

Parker disagreed with that assessment.

“They’re not going to redo the bridge over White Oak Bayou. They’re not going to do the enhancements on Heights Boulevard,” she said. “Those are not part of the development. They have no requirement to do that. Why would they?”

I respect the “hell no” forces. I don’t think they’re going to prevail, however. I wonder what will happen when some of them start to conclude that.

Hair Balls also noted and made some fun of this study, done by Austin-based Civic Economics and commissioned by Responsible Urban Development for Houston, which disputes all of the justifications for giving incentives such as a 380 agreement for this development. I thought it was fascinating. One bit that stood out to me:

While a more complete market study would be necessary to making absolute statements in this regard, we cannot conclude that the Supercenter proposal would increase retail sales and sales tax revenues in Houston by any significant amount.

Wal-Mart projects $870,000 in sales taxes to be collected at the store, but it makes no attempt to quantify how much, if any, of that revenue would be new to the city rather than diverted from the abundance of competitors in the area. The same can be said of the 300 jobs projected. If sales are simply diverted from other stores in the market, a comparable number of jobs will be lost elsewhere. In fact, if those losses are incurred by locally-owned merchants, the net change in jobs in the city will likely be negative.

We therefore believe any development incentives provided would represent lost revenues, money the city would otherwise receive with or without this project.

This sounds an awful lot like what Andrew Zimbalist says about public financing for sports stadia – that they don’t really generate new economic activity, they just relocate it. I presume there are some conditions under which there is a net gain – the study suggests one such scenario, which is for a Wal-Mart to be located in “underserved and relatively poorer sections of the city”, such as “sites to the south and southeast of downtown”. Their maps make it clear that there’s a large area that is essentially free of large retailers and grocery stores. I don’t know that a 380 agreement, which isn’t often used in Houston, is the right tool for that, and just saying it doesn’t change the fact that Ainbinder has this land and intends to do something with it. The point they’re making is that we should be wary of claims about sales tax revenues, especially if we just consider revenues generated by Wal-Mart in a vacuum.

Of course, Ainbinder could be reimbursed by increased property values in the area, if sales taxes aren’t an appropriate measure. Some folks who currently live near the site are betting against that. Honestly, that’s what I’ll be watching for. The study didn’t discuss this at all, unfortunately.

Finally, there’s this:

Does this store address underserved markets?

It does not. Indeed, Maps 3 through 5 illustrate that west central Houston is well served by a wide variety of retailers.

As described above, the area already enjoys short drive times to discount stores, with two additional Wal-Mart proposals just outside Loop 610 to the north and west promising even greater convenience and competition in that sector. South central and southeast Houston may well be described as underserved by large-format discount stores, but this proposal does nothing to alleviate that condition.

I agree that while points south and east are truly underserved, though again that isn’t Ainbinder’s concern, these maps don’t really contradict the thesis that the area right around Yale and Washington has few options. Look at Map 5, for grocery stores. The nearest ones are the Kroger at 11th and Shepherd and the Fiesta at 14th and Studewood to the north, and the Randall’s at Westheimer and Shepherd and the Disco Kroger at Montrose and Hawthorne to the south. (For now, anyway. The eventual arrival of the Whole Foods on Waugh at West Dallas will change that, at least at the high end. You’re still out of luck if what you seek is toiletries and paper goods and low-to-moderate prices.) As someone who drives through this area every day, I sure wouldn’t claim any of them are five minutes from that site, certainly not in weekday traffic. It’s no mystery why many of the people who are opposing the Wal-Mart were especially disappointed to hear that HEB had lost out in the bidding. I’m one of those who’d have preferred an HEB to a Wal-Mart, and I think the point about relocating economic activity from other parts of the city rather than increasing economic activity overall is a strong one, but I suspect a lot of people will find it convenient to buy their groceries there.