Council Passes $4M Tax Rebate Deal Under Pressure from Walmart
The chain told officials it would relocate if City Council failed to approve the agreement, Darien attorney John Murphey said.
City Council unanimously approved a $4 million economic incentive Monday to help fund Walmart’s expansion into a Super Walmart.
The vote came with the caveat, however, that several council members said they felt there was no choice.
“We’re between a rock and a hard place,” Ward 6 Alderman Sylvia McIvor said.
Walmart said it would leave Darien if the city failed to pass this deal, according to city attorney John Murphey. Because Walmart owns the building it occupies, the space could remain dark indefinitely, leaving a gaping whole in the Darien Towne Center strip mall and denying the city nearly $900,000 in annual sales tax revenue.
“It would be a knife in the heart to Darien Towne Center to lose Walmart,” Murphey said. Walmart did not respond to a request for comment.
In the deal approved Monday, the city will still get that roughly $900,000 annual sales tax payout from Walmart. Beyond that, however, $300,000 of the sales tax collected each year will go to Walmart and $200,000 will go to Inland Southeast Darien, the real estate company that manages Darien Towne Center.
The terms of the agreement will be met once each company receives a total of $2 million. Murphey estimated it would take 12 to 15 years to reach the mark.
The city will also pay interest on the rebate at a rate of 8.15 percent. The city has the option to prepay the rebate to avoid incurring interest, but Murphey said it would have to hold off on payments until the Super Walmart opened.
Although Walmart has not disclosed specific numbers, Murphey estimated the Darien location will bring in about 25 to 30 percent more sales tax revenue annually after it becomes a Super Walmart.
Walmart told the city that the rebate is necessary because it plans to stay open throughout the construction, which will make the renovations more costly, Murphey said. He said the expansion would likely be completed within a year. The company has not shared the projected construction costs.
Inland estimates it will cost between $1.7 million to $1.8 million to relocate existing businesses within the strip mall and prepare the properties for Walmart’s expansion. Walmart plans to increase its square footage by 35 percent, Municipal Services Director Dan Gombac said.
Fruitful Yield and Sally Beauty Supply plan to move east into the space that once housed Circuit City, Gombac said. The timeline and plan for the stores' relocation has not yet been finalized, he said. Panera Bread has decided to close its Darien store altogether because it’s competing too closely with the Panera in Willowbrook, he said.
As part of the deal, the city and Inland will give Walmart a total of about three acres of property behind the store, Murphey said. Walmart will not pay anything for the land.
McIvor asked Treasurer Michael Coren what he thought of rebate agreement.
“If I were negotiating this deal myself, I’d like some changes,” he said. “But I don’t think we have an alternative.”
Ward 5 Alderman Joe Marchese said the agreement is similar to the sales tax rebate Walmart arranged when it first came to Darien in the early '90s.
“The idea of sharing sales tax revenue is not something new to this deal,” he said. “We’ve done this before.”
Mayor Kathleen Weaver said she supported the deal.
"I think it’s a good one," she said. "It ensures city will continue to receive this important sales tax revenue. It helps ensure our continued economic strength thanks to Walmart that will become Super Walmart."
Walmart representatives are scheduled to meet with city officials Thursday to discuss further details about the construction process, Gombac said.
In This article
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Walmart
2189 75th St, Darien, IL -
Fruitful Yield
2159 75th St, Darien, IL -
Sally Beauty Supply
2125 75th St, Darien, IL -
Panera Bread
2161 75th St, Darien, IL
Jim Jankowski
7:23 am on Tuesday, April 3, 2012
Maybe our city needs an atty that can put up an agruement to "Big Box" businesses. What about small struggling business in Darein. Is the city going to give them a tax break? Who cares if Wal Mart leaves, let them go who runs our city Wal Mart or our elected officials? This is a problem with big chains. Everyone thinks they give so much revenue to the city and small business gives nothing. Wake up people, it is the small business who generate funds for the city. The big chains like to control the city as done here. I do not care how much they think they have done for the city, they have proven they want to sit in the drivers seat and our city let's them.
Brad Drake
7:26 am on Tuesday, April 3, 2012
The City of Darien really had no choice in this matter. Turn it down and lose guaranteed $900,000 a year. Our Council and Mayor did the right thing.
On the other side of the coin, though, this is the corporate greed evil that Walmart brings to every town it is in. They have destroyed Mom and Pop shops nation-wide, held local governments hostage in negotiations, and destroyed local economies when they haven't got what they wanted and uprooted and left. All this has resulted in them becoming a multi-billion dollar company that operates like La Cosa Nostra.
Perhaps Wal-Mart should consider making a donation to the city it just held at gunpoint. Maybe give something back to the community that it just threatened to severely damage. (Don't hold your breath, though, waiting for something like that to happen.)
Suzy Kurtz
10:12 am on Tuesday, April 3, 2012
Corporate bullying by WalMart. Give us what we want (free land and huge tax refund) or we'll take our ball and go home and leave you with a big, ugly empty big box. And they will try to make a 5 or 6 figure donation to repair their own image and say, "See, we support your community with this $20,000 gift." BOYCOTT WALMART!
jim Prueter
10:15 am on Tuesday, April 3, 2012
just a side note. The darien town center will fluorish with the Super Walmart. What about the Darien Town Center with the Chase Bank will it be the Darien Towne Center II ?
JGMB
10:27 am on Tuesday, April 3, 2012
Any clues as to what they're going to do with the land behind the store that they'll now own as part of this deal? That's honestly my favorite place in all of Darien -- an undeveloped wooded lot that's especially gorgeous when the trees are flocked with snow.
Jim Tikalsky
11:03 am on Tuesday, April 3, 2012
Boycott Wal-mart!!!!!
Jim Tikalsky
11:05 am on Tuesday, April 3, 2012
Darien Citizens should protest in front of Wal-Mart this weekend!
Wal-Mart another Corporate Bully!!!
Dennis Bolsega
3:20 pm on Tuesday, April 3, 2012
I agree that the city was in a hard place but really, 8 1/2 % interest? And free land? I think these two things are rubbing our face in it. The city may not have been using that land but it does have value. And please tell me where I can get 8 !/2% interest.
Adam West
5:01 pm on Tuesday, April 3, 2012
I believe some fault lies within the city as well. If the city had been more proactive over the years by allowing more businesses to come into Darien I doubt we would be so dependent on Walmart. I don't agree with Walmart's actions but I understand them. Why would Walmart compromise with Darien when other cities will bend over backwards to accommodate them. This situation is all the more reason to expand and diversify the retail tax base, and banks are not the answer.
Mary Ocean
6:48 pm on Tuesday, April 3, 2012
Hey Jim great idea in boycotting Walmart, go pay more at another store for what you want to buy....Walmart and Home Depot hold all the card's it is just the way it is, if you think losing almost a million a year out of principle is the answer you are silly. If principle mattered we would not have the people in office that we have now, we would have voted in other's like we should have. People forget that a mayor named ivan refused to take in international parkway and case equipment years ago, those would have been a windfall in taxes. We would not have to participate in real estate speculation like 75th and Cass and lose
Brad Drake
6:33 am on Wednesday, April 4, 2012
Darien is just the latest victim of Wal-Mart's gangster business practices. I do not shop there and avoid the chain entirely. In the grand scheme of things, this deal will probably hurt our city more in the long run by having them expand to a Super Wal-Mart. There are quite a few documentaries about what Wal-Mart has done to small towns around the country. An example this reminds me of is a town in Missouri that brought in a Wal-Mart and almost every other store in the city had to close it's doors because they couldn't compete with Wal-Mart's prices. This is the punch to the gut that true capitalism provides us. What they do in business sense is not illegal and follows the natural cycle of free trade. However it also creates a beast that forms a powerful monopoly in small markets and destroys all competition.
Think about it. If you had a small family business selling, say, tires and you had four employees making a decent wage, there is no way you could compete with the price the Wal-Mart garage would sell the tires for. They would go to the extent of dropping the price of the tires below cost, because they can afford to do so, just to make sure the doors of your business were closed down and competition eliminated. Now your business is destroyed, your employees have to look for new jobs, and your customers lose that personal-touch service that a place like Wal-Mart can never provide.
It's a vicious cycle, but it can't be stopped in a free trade market.