Reference no: EM133335876
Case Study: Walmart Community Benefit Agreement
For the case study, you will be reviewing the proposed Community Benefit Agreement (CBA) from Walmart from your position as a Policy Analyst with the Washington, DC Economic Partnership, an agency designed to attract and retain businesses into the city.
The Chief Financial Officer for the city estimates that Washington DC losses $2 billion a year in retail sales to the surrounding Maryland and Virginia suburbs due to the lack of available retail options within the city. Washington DC especially lacks discount department stores, with Target currently the only operator within the city. To attract Target, the city used $45 million in tax increment financing to fund the construction of a 1,000 space-parking garage. Eight years after its completion, the garage has yet to reach 50% occupancy on any day, even though the Target is the highest grossing store per square foot in their portfolio on the east coast. As a result, elected officials have publicly taken a hard line stance against providing any financial assistance to attract additional department stores.
Walmart initially proposed to build 5 stores in the city, and informs your agency that they need public assistance for two of the stores to be constructed on city owned land. These two locations are on the east side of the city in two economically impoverished neighborhoods. For the other three stores, Walmart does not need any public assistance to develop on the three privately owned sites that they purchased themselves. As is their labor practice, Walmart has informed you that they will not allow unionized labor to work in the store nor will they provide a living wage of $15/hr as required on all infill development projects that are constructed on city owned land.
Walmart appears ready to proceed with developing the five sites as they have applied for building permits for each. However, for the two sites owned by the city (which are located in the most impoverished parts of the city, that have been characterized as food and retail deserts with the highest unemployment rates, lowest educational attainment rates, highest crime rates), Walmart has proposed this CBA in exchange for the following assistance package from the city:
Purchase the two public properties at an extremely discounted price 75% below the market value,
Waive the requirement that Walmart pay the $15/hr living wage for its employees,
Fast track expedited public approvals for zoning for the two public parcels they want to build on (from 12 months to 3 months process),
Reduce the property taxes by 50% for the two publicly owned parcels for 15 years, and
Eliminate the requirement that Walmart contribute $500,000 into an affordable housing trust fund.
Walmart claims that without these concessions from the city, they cannot develop the two stores on the public parcels.
Questions: Please analyze Walmart's proposed community benefit agreement and determine the following:
- Should the city agree to the assistance package proposed by Walmart? Please explain your answer fully.
- Should the city agree to the terms of the CBA? Please explain your answer fully.