Walmart Says It Doesn’t Need D.C.’s Supermarket Tax Break. Does Anybody?
Earlier today, there was a fairly typical tiff in the Wilson Building: A councilmember wanted to make a constituent eligible for a tax abatement, and the bean counters pushed back. In this case, it was Tommy Wells who was trying to help out Safeway, which wanted its Southwest branch to be able to claim the Supermarket tax exemption, even though the Chief Financial Officer and the Deputy Mayor for Planning and Economic Development said it hadn't fallen within the geographic boundaries for the exemption since 2004.
Safeway disputes that accounting of events, and says the deputy mayor's office assured them back in 2008—as permits and financing were being secured—that the break on personal and real property taxes would kick in, no problem (if they'd claimed it originally, sales taxes on construction materials would also have been forgiven). It's a significant chunk of change, worth at least half a million dollars every year.
It's a weedsy debate, and you're not interested in the details. But the relevant point is this: Safeway is trying to go back and claim a tax exemption after a project is fully built and operating. If they really needed it to move forward, wouldn't they have taken care of it ahead of time? Sure, the area has lots of public housing, but also lots of solidly middle class people for whom Safeway is their only option; it's unlikely the chain would have picked up and left (like they abandoned their Brentwood location, which was in the tax credit area but had stopped being profitable).
The tax break for supermarkets was instituted back in 2000, when there were few fresh grocery stores in broad swaths of the city. It got tweaked a few times throughout the decade, and then overhauled last year by the FEED DC Act of 2010, which made the eligibility boundaries conform to personal income levels by census tract (play around with the incentive map here). Since the program started, supermarkets have proliferated across the District, and the may have helped companies decide to locate in underserved areas of the District.
But the parsing of motivations gets more difficult when the city also throws in other incentives, like a $900,000 grant for Yes! Organic Market on Pennsylvania Avenue SE in Ward 7, tax increment financing for Steuart's Giant-anchored development at 3rd and H Street NE, and a tax break for the NoMa Harris Teeter's parking lot. If it wasn't in the eligibility zone for one tax abatement, the District's politicians would find another.
And now, Walmart comes along and demonstrates that it doesn't need any of that. It's always been part of the retailer's strategy to ask for nothing from the city that would allow it to ask for something in return. In a seemingly thoughtless oversight, the Georgia Avenue, Skyland, and New York Avenue locations fall just outside the eligibility boundaries for the supermarket tax exemption. But at the other three, Walmart is basically entitled to a big tax break, and spokesman Steve Restivo says they have no plans to claim it.
That may be just the cost of doing business for Walmart, which is in a different public relations universe from everybody else—just like throwing around donations to favorite District causes (the Aldi that just opened on 17th Street NE, by contrast, does plan to apply for the exemption).
But it does demonstrate the market's confidence in the neighborhoods where District officials previously had to pull teeth to get someone to sell carrots. So if the exemption isn't driving location decisionmaking, and grocers are even trying to claim it for staying exactly where they are—as much as Safeway might say it couldn't have done its big renovation without the help—it's worth asking how long we should keep it around.