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Small Business Suicides
Are small businesses in urban renewal projects committing suicides? Yes! They are doing nothing to protect themselves from being forced out of the area or worse yet forced out of business. When an urban renewal project is formed, it is generally formed with just commercial entities within the boundaries of the urban renewal project.
The financing mechanism of urban renewal allows tax incremental financing (TIF) to be used. This includes both property taxes and sales taxes that are collected in the project. Any improvement that the small business shows, whether it is an improvement in his appraised value of his property or in his increase in business sales is considered part of the increment and goes to urban renewal. These incremental taxes that any business creates within the project goes into a pool for urban renewal to offer to a developer to bring in a big box category killer that will shut down most of the small businesses that compete with the big box within that project.
By being to busy and not getting involved with the planning and overlooking the process of the urban renewal district, the small businesses are allowing their own money to help themselves commit suicide.
Here are some thoughts on how to rebut things AURA or Arvada may say about the public investment. Please add additional issues that may be raised and/or help sharpen the rebuttals.
1. The City of Arvada and the Arvada Urban Renewal Authority (AURA) say no money is being taken from the City’s general fund. Is this true?
True, but only in the legal sense. The sales tax that Arvada should have collected from the development’s merchants will be diverted to a shell company set up by AURA and IRG for distribution to IRG. This is no different than if Arvada collected the sales tax money, placed it into the general fund, and then sent the money to IRG. This is just a tricky legal way for them to say that no money is taken from the general fund.
2. Arvada says the redevelopment will increase the City’s revenue. Is this correct?
This is mere speculation by the City. Without an economic impact analysis, the City does not reasonably know whether the expected revenue will increase, stay the same, or decrease. An economic impact analysis is required because all impacts of the development, both positive and negative need to be considered. For example, an increase in the property value of the redevelopment may be offset by a decrease in the residential property values around the redevelopment. As another example, less money may be spent in areas that pay sales taxes because the money is now spent in the redevelopment area, thus reducing the amount of sales tax revenue collected by the City from these areas.
3. What if Arvada says they don’t need the money?
If Arvada does not need the money, then they should reduce our sales tax rate rather than give the money to a private company worth hundreds of millions of dollars.
4. What if Arvada and AURA say the developer will not redevelop Arvada Plaza without this money?
IRG says they have lost money since they purchased the property and will continue to lose money. With a tenant lined up, will IRG walk away from this redevelopment if the City denies them the money? The City should use this leverage to extract rather than make concessions to IRG and Wal-mart. The City Council needs to tell IRG that if they need the money to go forward with this project happen, then IRG should go get it from Wal-mart by raising the rent.
A rough financial analysis of Wal-mart’s expected net profit at this location shows that there is more than enough money for Wal-mart to absorb the rent increase while still making a profit. Wal-mart loves to publicly state how they are a good corporate citizen. Let them show it by accepting slightly less profit so that they can bring their “quality” store to the area.
5. What if IRG doesn’t redevelop the property because the City votes against the public investment and IRG continues to allow the property to deteriorate?
The City should enforce blight ordinances against IRG. If the property is not in violation of any blight ordinances, then the City Council should work on enacting tougher blight ordinances for commercial property rather than rewarding bad behavior by giving tax-payer money to property owners who deliberately fail to maintain their properties in an acceptable condition. If the property is truly blighted and IRG refuses to return the property to an acceptable state, then the City can use its eminent domain powers to take the property away from IRG.
Enough is Enough
The proposed public investment by Arvada to the developer of Arvada Plaza reeks with social and economic injustice. This public investment discriminates by favoring multi-million dollar businesses over private individuals and small businesses. It discriminates by favoring those with political power over those without political power. It discriminates by making the have-nots pay for a real estate project of the haves.
On one hand, a multi-million dollar out-of-state business is being offered a multi-million dollar handout by the City of Arvada. Meanwhile, businesses that have been at the location of the redevelopment for years are being forced to move to make way for the project. And what about small, local Arvada businesses or local residents? Do they ever receive multi-million dollar handouts from the City of Arvada? I think we all know the answer to that question. This is discrimination in favor of those with money and power over those who have little money and power.
So, what do we get for this $5.8 million taxpayer handout to a private land developer? A mostly socially useless big box store. Why do I say it is a mostly socially useless business? Well, based on past history, this corporation generally seeks to extract as much money from the local community while giving back as little as possible. But hey, that is just business. And at least some of their employees will likely receive food stamps and other public assistance. Of course, why pay a livable wage when the Federal and State Governments will pick up the tab?
I pay at least 1/3 of my total earnings, and probably much more, to public coffers through a variety of taxes: income, social security, property, sales, gasoline, phone, and so on. As a tax-payer, I am sick and tired of this public money going into the pockets of multi-million and multi-billion dollar companies to fund their land speculation through various tax schemes, such as tax rebates, tax breaks, and other handouts. Enough is enough.
If this isn't social and economic injustice, then please tell me how much more money and tax breaks we need to give these large, multi-million and multi-billion business before we have some injustice. If you are an Arvada resident who agrees that we should stop giving multi-million dollar taxpayer funded handouts to multi-million and multi-billion dollar corporations, then please write the Arvada council-members before July 15 and tell them that you oppose the public investment for the Arvada Plaza redevelopment.