Corporate welfare and the false promises of big box development

Salon excerpted a book by Charles Montgomery, well worth reading in full. Below, I've quoted some of the most interesting parts, which basically make untenable the argument that big box stores like Walmart create more tax revenue or jobs than more traditional forms of development:

To explain, Minicozzi offered me his classic urban accounting smackdown, using two competing properties: On the one side is a downtown building his firm rescued—a six-story steel-framed 1923 classic once owned by JCPenney and converted into shops, offices, and condos. On the other side is a Walmart on the edge of town. The old Penney’s building sits on less than a quarter of an acre, while the Walmart and its parking lots occupy thirty-four acres. Adding up the property and sales tax paid on each piece of land, Minicozzi found that the Walmart contributed only $50,800 to the city in retail and property taxes for each acre it used, but the JCPenney building contributed a whopping $330,000 per acre in property tax alone. In other words, the city got more than seven times the return for every acre on downtown investments than it did when it broke new ground out on the city limits. 

When Minicozzi looked at job density, the difference was even more vivid: the small businesses that occupied the old Penney’s building employed fourteen people, which doesn’t seem like many until you realize that this is actually seventy-four jobs per acre, compared with the fewer than six jobs per acre created on a sprawling Walmart site. (This is particularly dire given that on top of reducing jobs density in its host cities, Walmart depresses average wages as well.) 

Minicozzi has since found the same spatial conditions in cities all over the United States. Even low-rise, mixed-use buildings of two or three stories—the kind you see on an old-style, small-town main street—bring in ten times the revenue per acre as that of an average big-box development. What’s stunning is that, thanks to the relationship between energy and distance, large-footprint sprawl development patterns can actually cost cities more to service than they give back in taxes... 

In Sarasota County, Florida, for example, Minicozzi found that it would take about three times as long for the county to recoup the land and infrastructure costs involved in developing housing in a sprawl pattern as compared with downtown. If all went well, the county’s return on investment for sprawl housing would still be barely 4 percent...

The productive richness of the new Asheville approach becomes even clearer when you consider the geographic path taken by dollars spent at local businesses. Money spent at small and local businesses tends to stay in a community, producing more local jobs, while money spent at big national chains tends to get sucked out of the local economy. Local businesses tend to use local accountants, printers, lawyers, and advertisers, and their owners spend more of their profits in town. National retailers, on the other hand, tend to send such work back to regional or national hubs, and their profits to distant shareholders. Every $100 spent at a local business produces at least a third more local economic benefit and more than a third more local jobs. The arrival of a Walmart in any community has been shown to produce a blast radius of lower wages and higher poverty.