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Old 26 August 2009, 06:32 PM
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Icon104 WalMart pays no property taxes

Comment: I have heard that Walmart does not pay any property taxes on any
Walmart store locations. I was told that when Walmart opens a new store,
Walmart sells the store to a charity or non profit group. Walmart then
leases the buidling and therefore does not pay any property taxes.
Walmart then closes stores and these charities are stuck with a vacant
building. I was told this is the explanation for all the empty Walmart
buildings across the country.
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Old 26 August 2009, 06:35 PM
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D'oh!

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Walmart then closes stores and these charities are stuck with a vacant building.
What were these charities supposedly expecting to get when they "bought" these locations in the first place? Did they think WalMart was going to turn over active, fully stocked stores to them and walk away?
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Old 26 August 2009, 06:40 PM
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Wal Mart does pay property taxes although according to THIS article Wal Mart tries to get those taxes lowered on a regular basis.
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Old 26 August 2009, 06:54 PM
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Comment: ...I was told this is the explanation for all the empty Walmart buildings across the country.
What's the explanation for the fact that I haven't seen any empty Walmart buildings anywhere.
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Old 26 August 2009, 06:59 PM
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Wouldn't WalMart's closing of stores leave empty WalMart stores behind, regardless of whether WalMart owned the land or was leasing it from some other entity?
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Old 26 August 2009, 07:01 PM
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Originally Posted by Tootsie Plunkette View Post
What's the explanation for the fact that I haven't seen any empty Walmart buildings anywhere.
Honestly, I would suggest the reason is that property is so tight in the Seattle region that if WalMart wants to upgrade, it does so on-site. Around here, it si quite common for Wal-Mart to simply close smaller older Wal-Marts when it wants to put a Super-WalMart in the area.
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Old 26 August 2009, 07:16 PM
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Wal*Mart does try to negotiate incentives for building in an area including property tax abatements and reductions. Counties that are anxious to welcome the retailer will offer such concessions in exchange for new jobs and economic growth. I don't think this is unusual for a business moving into an area. I've never heard of them having charities being involved. I have heard of Wal*Mart getting the concessions and then moving before the property taxes rise (there was a documentary on Wal*Mart several years ago that talked about this tactic).

Study Says Wal-Mart Often Fights Local Taxes
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Old 26 August 2009, 07:35 PM
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I think most large businesses try to negotiate incentives for building, including property tax abatements and reductions. I do not see why WalMart should be an exception. They may fight harder than others.
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Old 26 August 2009, 07:38 PM
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I think most large businesses try to negotiate incentives for building, including property tax abatements and reductions. I do not see why WalMart should be an exception. They may fight harder than others.
That's what I was thinking. And considering the power of the corporation, I'd guess that they're in a stronger negotiating position than most.
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Old 26 August 2009, 07:39 PM
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Originally Posted by Tootsie Plunkette View Post
What's the explanation for the fact that I haven't seen any empty Walmart buildings anywhere.
Melbourne, Florida, on Babcock St. next to the Mario Andretti racing complex stands an empty WalMart. Last time I saw it was a bank home-loan center or something. The way I understand is that WalMart received a tax abatement when opened the store (and other stores across America), and when the abatement expires, they close that store and open another one just over the border. They opened a new store over the border in Palm Bay, next to I95 when they closed the Melbourne store.
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Old 26 August 2009, 07:43 PM
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Negotiating a lower tax is just smart business. I've seen other companies do this, too.

As for closing a business to avoid paying a tax, this sounds excessive to me. Paying the taxes when they are due and keeping the store in place would be a lot more profitable.
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Old 26 August 2009, 08:28 PM
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Originally Posted by Recklessmess View Post
The way I understand is that WalMart received a tax abatement when opened the store (and other stores across America), and when the abatement expires, they close that store and open another one just over the border.
David Cay Johnston in his interesting book Free Lunch discusses in detail the practices of Walmart and their negotiation for lowered or eliminated property taxes and sales taxes. He also discusses the practices of Cabelas and Bass Pro Shops as well, as they do similar things.

It made for very interesting reading.
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Old 26 August 2009, 08:52 PM
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Walmart then leases the buidling and therefore does not pay any property taxes.
I believe this is a fairly standard practice for retail stores. The store often does not own the land or the building, they lease or rent it. Technically that means the store doesn't pay property taxes. But the owners of the land and/or building do pay taxes and they sure as heck pass that cost on to the store.

A person that rents an apartment probably doesn't pay any property taxes. The landlord does though and I doubt the landlord is paying the taxes out of their own pocket. So, though the renter doesn't send a property tax check to the local gov't, they do give money to the landlord who turns around and pays the taxes.
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Old 26 August 2009, 08:59 PM
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Here, big box and mom & pop stores pay unsecured property taxes on shelving, lighting, signage, etc. And regardless, the land owner pays the property taxes, either sucking it up or charging it out in the lease, unless the taxing authority has made a concession incentive in exchange for the increase in economic development, unsecured property tax, and sales tax revenues. Trying to get your assessment lowered is not uncommon, be it big box, mom & pop, or home owner. Who wouldn't try to use legal avenues to reduce their expenses?
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Old 27 August 2009, 12:59 AM
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Quote:
Originally Posted by jimmy101_again View Post
I believe this is a fairly standard practice for retail stores. The store often does not own the land or the building, they lease or rent it. Technically that means the store doesn't pay property taxes. But the owners of the land and/or building do pay taxes and they sure as heck pass that cost on to the store.
Yep. Our tenants (some are retail, most are office) pay "fixed rent" plus "OET" - operating expenses and taxes. We pay the property taxes, and then charge each tenant their pro rata share (based on how much space they lease).

It's not uncommon to negotiate lower taxes for commercial property. In fact, I'd venture a guess that it's standard practice. The property tax rate is based on the valuation of the building, which is partially based on the building's earning potential. Our company successfully protests (that's the official term) it's real estate taxes every year, arguing that the buildings are overvalued. We're not a big name company, so I assume Wal-Mart has more clout than we do.
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Old 27 August 2009, 01:31 AM
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Quote:
Originally Posted by Tootsie Plunkette View Post
What's the explanation for the fact that I haven't seen any empty Walmart buildings anywhere.
I've seen a few. There's one in my home town. The reason for it is the same reason as for the majority of them; Walmart came into town and built a store, in a really good and central location, but later (only a couple years later in this case, which is not unusual either) they moved to juuuuuust right outside the city limits where they do, in fact, pay lower taxes of course, and built a new building. Then the old one (a couple miles from the new one, but less centrally located) sits there vacant unless a tenant who has need of that large of a building comes along and buys or leases it, which in the case of my home town, is not likely to happen any time soon. ~ they probably did what Photo Bob mentioned in his post - got concessions, then moved before they were up and they had to start paying taxes. I wouldn't be surprised.

Walmart is a mixed blessing - it's not all bad, but the Walmartization of a small town is not all unicorn farts and cupcakes. There used to be 4 other grocery stores there, and every one of them closed up. I don't know if Walmart was much cheaper than the others, but in that town anyway, the minute they get anything big and corporate they all flock to it even if it's actually crappier than what they already have. Good lord, when Mcdonald's opened it was like the POTUS was coming to town.

So now they have one grocery store in the whole town. *shrug* I guess as long as that one grocery store provides better service and price and quality than the other ones did even after the competition is long gone, then fine - but I know I'm glad I have a few options other than Walmart even if I do shop there a lot. Quite often they just don't have what I want even as big as they are. And their meat is nasty.
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Old 27 August 2009, 03:50 AM
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Quote:
Originally Posted by jimmy101_again View Post
I believe this is a fairly standard practice for retail stores. The store often does not own the land or the building, they lease or rent it. Technically that means the store doesn't pay property taxes. But the owners of the land and/or building do pay taxes and they sure as heck pass that cost on to the store.
I work for a commercial real estate company that does retail work and thats pretty much exactly how things work - somebody owns the property space and leases it out to stores. While I am fairly sure that the owner pays the property tax - the costs are passed on to the tenants as part of the lease arrangement - they can't just back out and quit without paying it out or going out of business.

So while Wall-Mart might not directly pay property taxes in certain areas, they do pay it indirectly as part of a long term lease (which explains why they campaign for lower taxes) which they do not not just "abandon" the property owner with. The guy who runs the property will just find another retailer to fill the vacancy (if he or she can find one - they work darned hard to fill vacancies) and the company that they work for takes care of the expenses (which they can afford) if it should be empty. By the way, the property owners tend to be part of larger commercial real estate companies like the one I work for - they are not going to be mom and pop systems or charity type organizations. Retail space is expensive.
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Old 27 August 2009, 04:40 AM
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Depending on tax systems, Walmart may generate more income for a city through sales taxes than property tax. The Walmart store that has been in my city since 1987 will soon move to a neighboring town. The move will cost Panama City about $500K in annual sales taxes - probably more, as the new store will be a Super Walmart, with more merchandise and variety.

http://www.newsherald.com/news/panam...y-walmart.html
Quote:
Walmart generated more than $505,000 in sales tax revenue to the city in the last fiscal year
I don't see how Walmart could, as implied in the OP, just abandon a location with little or no warning. The relocation in this news story has been common knowledge for at least a year, maybe two. There were negotiations with the local governments over tax issues and permits; there was the site selection, preparation, and construction of the new store; there is excitement and dismay (depending on where you live and your shopping habits) throughout the community. If anyone is "stuck with an empty building" once Walmart opens their new store, it will be primarily the property owner's own fault.
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Old 27 August 2009, 04:46 AM
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Quote:
Originally Posted by Photo Bob View Post
Wal*Mart does try to negotiate incentives for building in an area including property tax abatements and reductions. Counties that are anxious to welcome the retailer will offer such concessions in exchange for new jobs and economic growth. I don't think this is unusual for a business moving into an area. [/URL]
I've done this myself. When looking to build an abattoir a few years ago, we had a few towns to choose from. We shopped around the different local councils until we got the best offer. We did not pay for building permits, received a fastrack permit process and pay no council rates for 10 years. In exchange, we had to employ a certain number of people from that town and surrounding area. Plus we receive State Government incentives to build in a regional area.

(Ok, that wasn't the only reason to build there, but it helped sway the judges.)
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Old 27 August 2009, 04:57 AM
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Quote:
Originally Posted by diddy View Post
I work for a commercial real estate company
Hey, looks like we're in competition... Gasp!
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