and the city collects no tax from increased sales at a new, much larger store it has to provide municipal services for. Wonder how many towns Walmart has perhaps threatened to pull out of to renegotiate sweetheart deals like this one. This is according to a 2007 news blog in Rayport, MO. http://raytownreport.blogspot.com/2007/12/walmart-tif-explained.html
Walmart TIF Explained
... So, I have some catching up to do . . . from my reading of the posts, it is clear that explanation called for in explaining how the TIF created by the city for Walmart works. Raytown Live is the name given to the TAX INCRMENT FINANCING District where the new Walmart Super Center is to be constructed next summer. Call it what you will – the TIF is there for two purposes: 1. To build a new votech school for the School District. 2. To pay for the infrastructure (parking lot, buildings, etc.) for Walmart.
RAYTOWN’S WALMART TIF: Tax Increment Financing is the term given to the practice of creating a taxing district and using the tax collected to finance the commercial entity within the district. Most TIF’s are written in such a way that a 1% sales tax increase is split between the community (in this case the City of Raytown) with the other half to the development. Raytown’s Walmart TIF does not work that way. In the Raytown Live TIF District most of the sales tax dollars collected will go to pay for the building of the new votech school and the new Walmart. That sales tax revenue collected includes the city’s regular 1% sales tax, the Fire District’s ½% sales tax and the special transportation sales tax voters recently approved to pay for street overlay.
To appreciate the enormity of the bite the TIF district is taking out the city’s sales tax one need only look to the sales tax revenue collected by the current Walmart Store located at 67th and Blue Ridge Cutoff. That location collects 12% of the city’s sales tax dollars. The difference between the old Walmart and the one to be built on 350 Highway is that the 12% collected at the current location goes directly to the city’s coffers. The sales tax at the new location will not go to the city, but to pay off the debt of the infrastructure costs of the school district and Walmart. Since the new Walmart will be larger and have a grocery store it will create more than 12% of the city’s sales tax revenue. Some place the additional sales tax as capable of creating up to 18% of the city’s sales tax revenue. The point is, the amount will be greater than the current 12% -- whatever that figure is, it represents money that will not be available to maintain our streets, remove snow, pay police, etc.
Raytown’s TIF is also unique in another way. It has the full faith of the city behind it. That means that if the new Walmart does not meet the anticipated income levels to pay off the debt, the city is obligated to pay the debt for Walmart. The majority of the city’s fathers are betting that other development will take place in property adjacent to the new Walmart to make up the difference created by the debt service. Time will tell whether or not that scheme is successful. In the meantime, look for tight city budgets in the near future.
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