Where Will $94 Million in Walmart Sales Taxes Be Spent?


by John Kiljan

Dear CLRC members and friends,

The Arvada Plaza buildings are soon to be demolished, and it looks like Walmart will be able to start building its new and somewhat downsized Supercenter soon afterward. Construction and shelf stocking are expected to take about a year to complete before the new store opens up in late 2016.

Arvada Plaza demolition site

Arvada Plaza demolition site

If you follow social media, you will often see posts about this Walmart that say something like, “All our sales taxes will be going to Walmart and to AURA for 25 years.” Or, that Walmart will be taking money away from our schools, from our fire department, from our recreation district, from our libraries, etc.

There are a lot of other reasons not to like Walmart – or any other large discount retailer for that matter. But none of these assertions are true for Arvada’s new Walmart. What is true is just the opposite. And a lot of the new tax revenue generated by Walmart is going to get reinvested directly back into our own neighborhood.

The dozen or so public agencies that will be getting the new sales and property taxes that Walmart will be generating, starting in 2017, will be doing very well when it comes to sharing in this new tax revenue.

How well? Sales taxes are the easiest to predict. And the property taxes to be paid by Walmart are worth writing a separate article about. So let’s start with the sales tax on every purchase that we, as shoppers, will be making there.

If you look at the Arvada City Council packet for their July 15, 2013 meeting where the Walmart plan was approved, you can plug those estimated revenue numbers into a simple spreadsheet and see almost exactly where that sales tax money is going to go.

If you do that for yourself, you should come up with something close to my own estimates for where Walmart’s sales taxes (including the PIF fee) will be going over the next 25 years:

State of Colorado — $30.6 million (32.4%)
City of Arvada — $20.0 million (21.2%)
RTD — $12.5 million (13.3%)
AURA — $12.2 million (12.9%)
Jeffco Open Space — $6.2 million (6.6%)
IRG — $5.8 million (6.2%)
Arvada Police Department — $5.8 million (6.2%)
SCFD (for the Zoo, Arvada Center, etc) — $1.2 million (1.3%)

That adds up to a whopping $94 million in new sales taxes that the old Arvada Plaza shopping center will be generating in its first 25 years. About $88 million of that will be going to the seven public agencies on this list. The remaining $5.8 goes back to IRG for making it all happen.

IRG is the developer. The amount IRG gets is fixed by contract, but the other numbers will very likely grow with normal inflation over the next 25 years, and should actually be about 25% higher – or even more if the average annual inflation rate increases.

And don’t forget, the $12.2 million in sales taxes (technically, it’s a public-improvement-fee-in-lieu-of-a-sales-tax, or PIF) going to the Arvada Urban Renewal Authority (AURA) get reinvested back into this neighborhood for further urban renewal in places like Arvada Square on the north side of Ralston Road where the old Safeway building and Big O tire shop now sit empty. The City has the option to divert even more of the PIF to urban renewal after 12 years. That would be nice if it happened, but I wouldn’t count on it. If this works, urban renewal should be well finished with its blight remediation in the Triangle shopping centers by then.

Proposed Triangle Walmart

Proposed Triangle Walmart

Why is Walmart not on the list as a sales tax recipient? It’s because they get to keep none of the sales taxes they generate for us. That’s right, none of them. Walmart will instead be paying its own kind of sales tax to the City. Like other metro-area municipalities, the City will be charging a “use” tax on the construction materials Walmart uses to build its Supercenter, even if the materials were bought outside the City.

I think that tax rate is 3.46% of the cost of materials, and it should come to at least $200,000, but I’ve never tried to build a Walmart myself, and the amount could be much more than that. As a comparison, the similarly sized Hilton Garden Inn hotel in Olde Town is officially expected to be paying about $300,000 in use taxes to the City when it is built next year. This one-time money goes straight into the general fund and to the Arvada police department.

Of course, in the end, all that sales-tax money comes from those of us, living both inside and outside of Arvada, who choose to shop at Walmart. But the total sales tax on each purchase you make at Walmart won’t be higher. It will still be 7.96%, like it is everywhere else in the City. Other cities – such as Lakewood with its Belmar and Walmart developments – tack on an additional sales tax for each purchase to support their urban renewal developments. Arvada doesn’t do that.

These numbers also assume that Walmart will enjoy $50 million a year in retail sales. That’s AURA’s own expert’s estimate – not Walmart’s. And that’s what was in the 2013 Council packet. But that estimate may be low. If you compare that number with the projected increase in vehicular traffic going to the site – it used to be posted on Arvada.org before that website was redesigned – it only works out to $16.35 per shopping visit. When I think about what I spend on typical visit to Target, Kmart or King Soopers, that number seems a little low to me. And I only have a family of two.

I’m also guessing that 15% of Walmart’s sales will have no State sales tax because they are qualifying food items. It’s just a guess. The State doesn’t charge a sales tax for basic take-it-home-and-cook-it food items, but it does charge for things such as soda pop, candy, deli foods, prepared sandwiches, and some other convenience foods. The City does charge a tax on those items, but the State does not.

And it’s probably not fair to add in over $9 million in other benefits that the City will be realizing in things like undergrounding overhead electric lines on Ralston Road, new street landscaping, new sewers, and old building and hazardous waste removal.   Those costs are being borne by the developer, up front, in order to get their $5.8 million development incentive over time. Neutralizing old cleaning fluids poisoning the groundwater isn’t free, but, to me, those improvements are just icing on the cake – kind of like the 250 new jobs Walmart says it will be creating with this new store. Walmart also says that about half its hourly workforce will be working full-time, and those full-time workers will earn an average salary of well over $13 an hour at this location.

The last item on the who-gets-what list is a bit of a curiosity. Walmart’s Arvada sales will indeed be contributing to Denver’s zoo in a small way. On the flip side, Walmart shoppers in Denver also contribute the operation of the Arvada Center for the Arts and Humanities as a part of their sales taxes that go to the SCFD’s cultural fund. The Arvada Center receives about million dollars a year from the SCFD fund.

NoWMSignProp

 

We’re not quite done. There’s a similar good-for-everyone story with property taxes, which have nothing to do with sales taxes. Those taxes feed our county government, our schools, our library, our fire department, our recreation center, our flood-control district and the City itself.   You can see the full list by simply looking at your annual Jefferson County property tax statement. Although there may be some significant upward “baseline” adjustments before then, these benefits largely kick in 12 years after Walmart opens. And those benefits are worth another CLRC article in the future when I can better figure out what the assessed value of the new Walmart is likely to be.

WHERE TO FIND OUT MORE
If you are not familiar with Jeffco’s Open Space program and the good things it does, here’s a link to a useful web site to have a look through:

http://jeffco.us/open-space/about/history-jeffco-open-space/

Similarly, if you are not familiar with the metro-area’s Scientific & Cultural Facilities District (SCFD) and the neat things they do to make Colorado a better place to live, here’s another link to look at:

http://scfd.org/p/about-scfd.html

The CLRC has posted many articles about Walmart’s offer to move into Arvada Plaza. They begin in early 2013 and can be found by doing a word search on our main website. One of the first of those articles can be found at this link:

https://ralstoncommunity.org/2013/01/09/finally-the-triangle-gets-a-redevelopment-offer-walmart-proposes-a-supercenter-neighborhood-rec-centerpool-gets-a-boost/

The Citizens for a Livable Ralston Community is an independent neighborhood association representing the neighborhoods adjacent to Ralston Road from the Wadsworth Bypass to the Kipling Parkway.

You can read all of our articles on our main website at http://www.RalstonCommunity.org or you can read even more posts on our Facebook page at “CLRC – Citizens for a Liveable Ralston Community”. You can write to us, call us or email us at

CLRC
c/o John Kiljan, Secretary
6185 Field Street
Arvada, CO 80004

303-423-9875
jpkiljan@yahoo.com

October 8, 2015

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One Response to Where Will $94 Million in Walmart Sales Taxes Be Spent?

  1. Marc Williams says:

    Thank you, John, for providing facts to citizens so they know the truth.

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