CLEVELAND, OH
Bait and Switch
To avoid a “big-box” ordinance, Wal-Mart circumvents the City Council to build a Supercenter
THE CITY OF CLEVELAND challenged Wal-Mart’s entry into a large development site at Steelyard Commons in 2005. The sprawling development site on the outskirts of downtown Cleveland is the heart of the city’s steel heritage as well as home to the West Side blast furnace. As a retail and restaurant center, Steelyard Commons will include a steel-mill motif and expansive museum about the site’s history. In an ironic twist, a complex that will pay tribute to Ohio’s rich manufacturing heritage is fighting to keep Wal-Mart out of its own backyard.
To help protect local grocers and workers, Cleveland’s City Council proposed an ordinance that would have limited the sale of groceries in big-box stores, thus preventing Wal-Mart from opening a traditional Supercenter at Steelyard Commons.1 Still wanting Wal-Mart to anchor its project, developer First Interstate Development Co. Ltd. worked to broker a compromise with the Cleveland City Council President that would have allowed Wal-Mart to open as a discount store and expand to a Supercenter in the future.2
On the day before the City Council was scheduled to vote, Wal-Mart circulated a letter to council members effectively pulling out of the development. The company cited internal evaluations and specifically said the ordinance was of no consideration.3
“After weighing the various circumstances surrounding this site, we have made a business decision not to move forward. This decision is based on many factors. We also are aware of efforts in Cleveland to draft an ordinance that would restrict ‘combination stores’ within city limits. We want to assure you that this draft legislation was not a factor in our decision to decline to participate in the Steelyard Commons project.”4
THE ROAD TO STEELYARD COMMONS
January 2005: Councilman Joe Cimperman introduced an ordinance requiring “stores of 90,000 square feet or more devote at most 5 percent of their sales floor area to nontaxable merchandise.”11
February 28, 2005: On the eve of a City Council meeting to consider whether to block a Supercenter at the Steelyard Commons location until 2013, the company released a letter pulling out of the project.12
May 17, 2005: Wal-Mart entered into a secret agreement with a development firm to protect the project against zoning regulations.13
Without the threat of a Supercenter, the ordinance was dropped from consideration.5 But just two and a half months later, Wal-Mart circumvented the City Council and filed the building permits for a Supercenter at Steelyard Commons.
On May 17, 2005, developer Mitchell Schneider “applied for a building permit and submitted drawings to the city. By doing so, Schneider protected the project against any zoning regulation the City Council might introduce to block or restrict it. Under Ohio law, property owners who apply for permits are subject only to existing regulations, not ones enacted later. … Schneider took advantage of the fact that the council never voted on a law,” The Plain Dealer reported.6
In a follow-up letter to Cleveland City Council President Frank Jackson, Wal-Mart announced that the proposed ordinance had forced them to drop their Supercenter plans for Steelyard Commons.7 “The developer’s original plan had been for Wal-Mart to build a discount store, with the option of expanding to a Supercenter in the future. We looked very closely at that proposal, and eventually concluded that the economics of operating a smaller discount store at Steelyard Commons did not work,” the letter said.8
Because of the company’s bait and switch, Wal-Mart is set to open a Supercenter at Steelyard Commons – one that is not subject to any oversight.
