Perceived Costs

Perceived Costs/Benefits of Wal-Mart

Page 1 – History of the Project against SprawlMart

Supposed Benefit #1
500 new jobs at Wal-Mart

Cost #1
750 lost jobs in existing retail businesses

Supposed Benefit #2
Provides revenue stream through the TIF
and PILOT to make up financing gap to
build 1142 residential units (258 of which
are for low-income residents)

Cost #2
Minimum of a $3,151,000 negative cash flow to City revenues over the next ten years from sales tax diversions to the project

Supposed Benefit #3
Attracts national retailer to New Orleans

Cost #3
Typical Wal-Mart results in the closure of 200 existing retail businesses in the surrounding community

Supposed Benefit #4
Must continue the development if the City is to receive any more HOPE VI funds for future developments

Cost #4
This is the 3rd most costly HOPE VI development in the United States, mostly due to inflated soft costs which inure to the developer. This is in addition to the fact that other developments include land acquisition costs which are $0 in this project. Soft costs include several hundred thousand dollars in fees which may have been paid in violation of law from Federal grant funds. The developer and the construction company are related entities, creating a conflict of interest.
New Orleans is the 4th largest “market” for HUD which is unlikely to abandon New Orleans

Supposed Benefit #5
A national retailer will fill a void in an underserved New Orleans retail market.

Cost #5
Existing retailers will be discouraged from remaining in a market in which a large discount chain receives a substantial competitive advantage as a result of City subsidies:

Wal-Mart gets……………

1. lower property tax rates
2. zoning waivers granting a parking lot which is twice what City ordinances allow
3. Benefits from infrastructure improvements paid for by a $6 million grant from the City
4. Zoning waivers allow for a store size that is 66 times larger than the average store in the surrounding area
5. 33% of the land the store is to be built on is public land to be transferred to the developer outside of the open market

The small retail businesses have created a climate that is responsible for the main tourist draw to New Orleans – shopping in the unique New Orleans market is the highest rated reason by tourists for coming to New Orleans. These are the very businesses at risk from a big box retail development.

Supposed Benefit #6
Denying a retailer like Wal-Mart will have a negative impact on New Orleans’ image.

Cost #6
Over 164 communities across the country have denied Wal-Mart access – most recently Dallas and Mobile in our region.
New Orleans needs to improve its image as a City in which it is easy for new businesses to enter. Encouraging new businesses at the expense of existing businesses will not improve the business friendly image of New Orleans, rather it will have the effect of making future investors concerned about the long term safety of their investment if the environment can be changed by politics.