Wal-Mart and more bad math

In 2010, then Sarasota County Smart Growth Director Peter Katz hired a consultant to look at the revenue-raising potential of various land uses. In a prescient kind of way, he compared Wal-Mart with other types of mixed use and higher rise projects on a per-acre basis.

The study was covered nationally, but did not seem to make a splash locally. One of the problems is that the county is gigantic and has abundant land. Looking at tax revenue on a per-acre basis doesn't really hit any nerve endings when there is land aplenty.

But here in the city, the use of acreage in a largely built-out, small city is a big deal. So we decided to look at the 10-acre Ringling Shopping Center site using the information from Misters Katz and Minicozzi, the consultant. Consider this analysis ballpark-y; we barely know how to figure out tips. Luckily, pretty charts help. The chart below is from a 2012 conference presentation. From the yellow circles, the "tax yield" in property tax per acre for Wal-Mart was $8,374 and for Palm Avenue, over $92,000.

Looking at this image, the math is pretty clear for property taxes. For the Ringling Shopping Center, TWIS thinks Palm Avenue is the best fit (and most conservative estimate) for comparison. The bottom line? For this prime 10-acre site, the chart boils things down to a basic question: Do you want to eventually capture about $100,000 a year in revenue---or closer to $1 million in property taxes?

Now, we bet you are thinking this is not complete because we are not looking at sales taxes. Sales tax in Sarasota County is 7%. The state minimum for sales tax collection is 6%. Sarasota County adds one percent (referred to as the "Penny Tax") for infrastructure. Of that 1%, schools get one fourth, the county gets about half  and the cities (Sarasota, North Port and Venice) split the remaining quarter based on population. There is also revenue sharing and a half-cent portion of sales tax which is redistributed back to cities based on population and other factors. (If you are waiting for a punch line, it's this: Cities don't get 7% from the cash register---they get crumbs after the cash is routed through Tallahassee).

The proposed Wal-Mart Super-Duper Center is 97,000 square feet. A quick Google search gives a range of sales per square foot, but it looks like $450 in sales per square feet is solid. (Some estimates give $600/square foot of sales, but that includes Walmart.com merch, which is not taxed.) Math says this size store can anticipate about $43,000,000 in total sales each year. That’s about $3,000,000 in total sales tax sent to Tallahassee. Of that, the Penny -tax surcharge sends around $430,000 sent back to County and the cities would split up about $100,000 based on population. If Sarasota gets half, that's only $50,000 a year in tax revenue for the surtax. Based on a generous interpretation of historical returns, another $100, 000 might come from the other sources. This assumes that the dollars spent at Wal-Mart are not just substituting sales within the same shopping area.

But it gets worse. Hopefully the commissioners are aware that staff is planning for a downtown streetcar or other circulator. Some of the routes include a loop near Payne Park, which was chosen because of the redevelopment and service opportunities at the eastern end of the city. Looking at stats from other cities such as Cincinnati, cities can expect new economic activity as transit draws investment. But a city can't enjoy this return on investment if it locks in low-return, low density suburban land use at prime station areas.

TWIS was kinda disappointed when the city sold public land at the intersection of Fruitville and Beneva to the lowest bidder. We don't expect city leaders to get every decision exactly right, but we expect a lot out of this one. Guess how we're feeling right about now.