Judge Rules Against Wal-Mart in North Carolina Tax Shelter Case
Wal-Mart has saved millions of dollars over the past few years by essentially paying rent to itself and then writing off the taxes. Unfortunately for Wal-Mart, a North Carolina judge thinks that this isn’t entirely legal. The company is using this strategy in dozens of states - several have already moved to close the loophole after Wal-Mart’s actions were exposed in a February article from the Wall Street Journal. The N.C. judge’s decision on Friday could mean that Wal-Mart might have to start paying its fair share of real estate taxes - a lot more than it’s used to - not only in North Carolina but in communities across the country. The Wall Street Journal’s Law Blog and financial bloggers at The Street provide further commentary.
Judge Rules Against Wal-Mart Over Its Tax-Shelter Dispute [Wall Street Journal]
A North Carolina state-court judge ruled against Wal-Mart Stores Inc. in a closely watched tax-shelter case involving an arrangement in which the retailer essentially paid rent to itself and then deducted the amount from its taxes.
In an attachment to an order filed Friday, but signed on Dec. 31, Emergency Special Judge of Superior Court Clarence E. Horton Jr. wrote that Wal-Mart’s structure had no “real economic substance” other than cutting taxes. The judge dismissed Wal-Mart’s suit, in which it sought a refund of $33.5 million in taxes, interest and penalties that it paid after state tax authorities determined it had underpaid by that amount.
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Posted by Alex Goldschmidt on Monday, January 07 | 76 comments | Permalink
Wichita, KS. Judge Upholds City Decision to Deny Wal-Mart
Many local officials believe that if a developer needs a zoning change, you have to give it to them. But not in Wichita, Kansas, and not for a Wal-Mart superstore. Wal-Mart lost a two and a half year battle this week in Wichita. On January 10, 2007, Sprawl-Busters reported that the City Council in Wichita had denied Wal-Mart’s request for a zoning change on 12 acres of land. The superstore would have been 135,000 s.f., of which 25,566 s.f. would have been for groceries. Protest petitions against the store were filed by 44% of the abutters, which meant the City Council had to pass the project with a three-fourths supermajority vote. At the time, then-Mayor Carlos Mayans reportedly wanted the project continued, not denied, to give Wal-Mart time to buy-out the neighbors, and to firm up a land deal the retailer was offering the city. Wal-Mart’s deal was: you give us the zoning, we’ll buy extra land for an elementary school. “We didn’t even give them every opportunity to work it out,” said one council member. “I wanted to give them that chance.” But the City Council stood firmly against the plan, citing resident concerns and unanswered questions. But a lawsuit was filed in Sedgwick County District Court against the city by plaintiffs called Nash Special K’s LLC et al. The plaintiffs were a group of homeowners who had a big financial interest in the project: they had agreed to sell their properties to the developer.
The plaintiffs noted that the city’s planning department approved the retailer’s plans. Nash Special K claimed in their lawsuit that most of the residents in the adjoining neighborhood supported the store, and that the opposition of residents “is lawfully insufficient for denial of these applications.” This week the court ruled that the City Council was justified in denying the Wal-Mart project. The court pointed out that the evening in January, 2007 when the project was voted down 5-2, the City Council gave no specific reasons for the denial in their motion. While reviewing the lawsuit, the Judge in June of 2007 asked the City Council to provide the court with more information about the factors it considered when denying the rezoning.
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Posted by Al Norman on Wednesday, January 02 | 0 comments | Permalink
Wal-Mart Says “No” to Food Banks
Wal-Mart and supplier partner ConAgra donated approximately 85 trucks worth of food to food banks this week. This may sound substantial, but Wal-Mart is a major part of why food banks are short of food in the first place. In 2006, Wal-Mart stopped donating excess food to food banks, creating a nation-wide shortage. As a practice, the company continues to refuse to donate at all. To quote Wal-Mart spokes person Robert Mosby earlier this month:
But when it comes to excess or soon-to-expire perishables in its stores, Wal-Mart doesn’t allow food banks to make pickups. “Our current policy for food is to discard it, primarily for the safety of our customers,” Mosby said.
The company cites “customer safety” as its reason for destroying food, but liability avoidance and profit protection also come into play.
Wal-Mart’s policy change has been a huge blow to food banks. In addition to losing Wal-Mart’s donations, food banks also lost the donations of many local grocers who had strong ties to the community. When Wal-Mart enters a local market many small grocers with stronger ties to the community close their doors, and food banks loose these donations as well.
While a new Wal-Mart often means lost jobs and fewer small local businesses, those who are left behind struggle even more because community resources such as food banks also struggle in Wal-Mart’s wake. Food banks are dependent on grocers, and Wal-Mart’s one-time donations fall far short of redressing the harm its corporate practices inflict. Though Wal-Mart claims to care about its communities, the company’s practices make clear that it cares more about liability and profits and less about poverty and hunger.
Refusing to donate nearly-expired perishables to food banks creates unnecessary waste, increases the problems surrounding poverty, is unsustainable, and despite the company’s slogan it does not help people live better. When addressing the shortages of food banks and addressing the needs of such places, Wal-Mart needs to critically examine how its practices and policies contributed to these shortages.
Posted by Research Team on Wednesday, December 19 | 28 comments | Permalink
Sioux Falls, S.D. Third Wal-Mart Supercenter “Dead”
The city of Sioux Falls, South Dakota already has two Wal-Mart supercenters. One is on South Louise, and the other on Arrowhead Parkway. According to the Argus Leader newspaper, the giant retailer realized that a planned third superstore in the northwest corner of the city was overkill. The newspaper added Sioux Falls to the growing list of cities and towns with cancelled Wal-Mart projects. “We regret we can’t come here after we said we would,” a Wal-Mart “senior manager of public affairs” told the newspaper two days ago. “We told Sioux Falls we would come, and now we’ve got to go back on our word. It’s dead. We’ve had to withdraw from our contract.” The cancellation was linked directly to the company’s plan to curtail expansion, first unveiled at its annual stockholders meeting in June. The newspaper said, “Sioux Falls didn’t make the cut.”
City officials responded in their typical, unexamined way. “It probably does set us back a year or two,” Mayor Dave Munson told the Leader. “It is unfortunate, but they have to make business decisions like everybody else
does. The store was pretty much a go. We’ll just have to go out and get something else.” This Wal-Mart was supposed to be the anchor of a new retail zone a mile from the junction of Interstates 29 and 90. “The area is farmland with few houses nearby,” the newspaper said, “but officials hoped Wal-Mart would spark growth.” But other voices suggest that the location for a supercenter did not make sense. “I was surprised from the beginning that they were going up there,” a commercial real estate broker told the newspaper. “Go up there and drive around. How many houses do you see? A couple subdivisions, and that’s it. Retailers like to go where there are lots of single-family homes and apartments. It was pretty scattered. It doesn’t surprise me it’s a site they took off the list.”
The 30 acres of farmland has been in one family’s hands for the past 93 years. It is being developed by the R.H. Johnson Co. of Kansas City, Missouri. The newspaper repeated the myth that the new store would mean 250 to 400 new jobs---but that is a gross figure, not counting the lost jobs elsewhere in the trade area. A spokesman from the Sioux Falls Development Corporation got it right. “I don’t feel Sioux Falls is underserved by Wal-Mart. It’s not going to make a big difference in the overall income statement for Wal-Mart if they don’t have a store there.”
The local TV station, Keloland, interviewed a Sioux Falls resident who bemoaned the Wal-Mart cancellation. “The other day for instance, I ran out of baby wipes,” she said. “Oh man, so then I had to go all the way into town just for baby wipes. Now, if Wal-Mart was there, I could have even just walked across the street to pick them up.” But another neighbor noted, “They already have 2, one on East 10th, and one up there Louise and that’s enough.” Keloland TV said most people interviewed said that now that Wal-Mart is out, they hope whatever does take its place “will mean progress for the Northwest side of the city.” Apparently “progress” in Sioux Falls means destroying farmland for more highway malls. Readers are urged to let Mayor David Munson know how you feel about sprawl in Sioux Falls. The Mayor can be reached by email at: http://www.siouxfalls.org/contactus/emailus/mayor.aspx, and by phone: 605-367-8000. Tell the Mayor: “Maybe its time to work on a small business development plan for Sioux Falls, and focus on protecting farmland, not turning it into malls. Your city is fortunate not to have a third Wal-Mart coming. If you don’t change directions, Sioux Falls will no longer be the ‘Gateway to the Prairie,’ but simply the Gateway To Sprawl.” It’s time to put a cap on the size of retail stores in Sioux Falls.”
Posted by Al Norman on Tuesday, December 18 | 0 comments | Permalink
The Wal-Mart Effect: When Wal-Mart Leaves Town
Many communities are eager to see a new Wal-Mart come to town, but few think of the effect the retailer will have if and when it leaves. This article from Minnesota’s St. Cloud Times gives a local perspective to the retailer’s global prospects. Visit Battle-Mart for more information about fighting Wal-Mart in your local community.
Wal-Mart’s exit is boon, bane for communities [St. Cloud Times (Minn.)]
An empty Wal-Mart building sits along a stretch of road in Little Falls and shoppers have been rerouted to a newer, bigger Wal-Mart down the street.
Its owners have taken care of the old building after the Wal-Mart Supercenter was built in August. It’s been repainted a shade of light green, masking signs of what once thrived there.
At any given time, about 300 to 400 former Wal-Mart stores sit empty around the nation, in some cases for as long as five to seven years, said Ken Stone, a retired professor from Iowa State University who has studied Wal-Mart for about 20 years. Those empty buildings can be a blight to a community and area businesses if they sit untouched for too long.
“It’s a real problem, there’s no question about it,” Stone said.
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Posted by Alex Goldschmidt on Tuesday, December 18 | 11 comments | Permalink
Nationwide Protests Against Wal-Mart
Across the country this week, citizens and activists are taking a stand against Wal-Mart. It’s the busiest selling season for the reatiler, and local communities are standing up to its unfair practices, unsafe products and unacceptable behavior. From Wake Up Wal-Mart:
Through its relentless pressure on suppliers to reduce costs, Wal-Mart fosters a corporate culture that encourages cheap manufactures to cut costs and cut corners. The result is that American children are literally placed in harms way when they play with cheaply-made toys from retailers like Wal-Mart.
Local papers have covered allied protests in Minnesota, several in California, and, below, Michigan.
Candlelight vigil against a Wal-Mart in Lincoln Park [Detroit News]
A candlelight vigil is slated for 6-7 p.m. tonight at the Lincoln Park Shopping Center on the northwest corner of Southfield and Dix-Toledo by a group that hopes to keep mega-retailer Wal-Mart from moving into center.
The group, called Wake up Wal-Mart Downriver, claims the discount chain destroys local businesses by undercutting prices, and sells unsafe products imported from China.
Nick Infante, Michigan spokesman for Wal-Mart, said the company now has no plans for a store at the site, which straddles the Allen Park/Lincoln Park border, with about 75 percent of the property in Lincoln Park.
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Posted by Alex Goldschmidt on Tuesday, December 18 | 17 comments | Permalink
South Dakota Site Fight: Wal-Mart Calls it Quits
Wal-Mart kills plans for city’s third store [Argus Leader (S.D.)] 
Retailer was to build on northwest side
Wal-Mart has canceled plans for a third store in Sioux Falls, a decision that ends a key role for the retail giant in developing the city’s northwest corner.
“We regret we can’t come here after we said we would,” Ryan Horn, senior manager of public affairs for Wal-Mart, said Thursday. “We told Sioux Falls we would come, and now we’ve got to go back on our word.”
The company, which has about 4,000 stores across the country, is scaling back nationwide expansion to save money. The Arkansas corporation had planned to build or make major upgrades on 280 stores next year. It cut the list to 170 to 190 properties, and Sioux Falls didn’t make the cut.
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Posted by Andrew Yonki on Friday, December 14 | 0 comments | Permalink
Laurel, MT. Small Businesses Feel the Pinch of Wal-Mart
Laurel businesses feel Wal-Mart’s effect [Billings gazette (Mont.)]
With the world’s largest retailer operating in their backyard, two longtime Laurel small-business owners said they feel the pinch of low-priced competition but are optimistic about the future.
Wal-Mart opened Oct. 24 in Laurel. In anticipation of its arrival, a bevy of new businesses were built on Southeast Fourth Street, and the town’s third stoplight was installed at Fourth Street and First Avenue South.
Existing business owners, including Laurel’s only grocery store and sole craft-and-fabrics outlet, braced for the opening.
Grocers Bob Dantic and his brother Mike, who co-manage Jan’s IGA, have reduced staff by about 40 employees since the peak summer employment in August. “It’s been an interesting ride,” Bob Dantic said. “The layoffs have been a major detriment to our family.”
Since Wal-Mart announced in late 2005 that it would open in Laurel, Dantic has told his employees that, overall, employment at Jan’s IGA is secure.
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Posted by Alex Goldschmidt on Wednesday, December 05 | 0 comments | Permalink
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