Following is a press release from GreenWheaton.
FOR IMMEDIATE RELEASE
Contact: Elizabeth Chaisson
Tel. 301-962-9558
Email: eliz.chaisson@gmail.com
GREENWHEATON INSTALLS A DEMONSTRATION GARDEN IN DOWNTOWN WHEATON
On Sunday, May 2, 2010, From 12 p.m. to 3 p.m., Volunteers Will Install a Conservation Landscape on the Wheaton Green Triangle Across From 2424 Reedie Drive
Wheaton, MD April 27, 2010 – On Sunday, May 2, 2010, GreenWheaton, an affiliate of the Mid-County Regional Services Center, will be installing a conservation landscape opposite the Center’s offices at 2424 Reedie Drive. The conservation landscape will be installed in a 500 square foot section located in the southwest corner of the Wheaton Green Triangle. Interested Montgomery County residents are welcome to attend and learn about the benefits of removing turf and creating conservation landscapes in our environment, which soak up more rain water than typical lawns or gardens.
The Montgomery County Department of Environmental Protection RainScapes Program will provide the soil amendments and plants native to the Maryland area for this project. These native plants will help absorb rainfall that would otherwise be diverted to nearby storm drains. Capturing rainfall that would otherwise become polluted runoff has a number of long-term environmental benefits; principally, replenishing groundwater and recharging streams and preventing stormwater pollution from entering our waterways. To learn more about how to install a conservation landscape or a rain garden in your yard or neighborhood, please visit Montgomery County’s RainScapes Program on-line at: http://www.montgomerycountymd.gov/dectmpl.asp?url=/content/dep/water/rainscapes.asp
Upcoming Wheaton Events that will provide the public an opportunity to view the installed conservation landscape include:
15th Annual Taste of Wheaton on Sunday May 16th from 11am-5pm
Wheaton Flea Market every Sunday from 9am-3pm all year
Wheaton Farmer’s Market every Sunday from 8am-1pm June through October
Sponsors of this conservation landscape installation include Montgomery County Department of Environmental Protection, Maryland-National Capital Park and Planning Commission, Friends of Sligo Creek, Neighbors of Northwest Branch, Anacostia Watershed Citizens Advisory Committee, and Speedy Signs.
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The GreenWheaton Sustainable Initiatives Workgroup is a joint sub-committee of the Wheaton Redevelopment Advisory Committee (WRAC) and the Wheaton Urban District Advisory Committee (WUDAC) dedicated to applying environmentally-friendly building and planning techniques to the Wheaton Maryland downtown and surrounding neighborhoods.
http://greenwheaton.groupsite.com
Tuesday, April 27, 2010
GreenWheaton Installs Demonstration Garden in Downtown Wheaton
Wednesday, April 14, 2010
Excellent Gazette Coverage in Wheaton
Gazette reporter Amber Parcher deserves special recognition for banging out three top-shelf articles on Wheaton this week about landlord Leonard Greenberg, redevelopment issues in the Central Business District and Costco's proposed gas station. This is really thorough, high-quality stuff that reflects hard work and attention to detail. Amber Parcher deserves a raise. Yes, Chuck Lyons, we are talking to you!
Thursday, March 25, 2010
Look Them in the Eye
And now we see their true colors. After frenzied lobbying by Director of Economic Development Steve Silverman, a majority of the County Council has caved in and supports a $4 million subsidy to finance a Costco at Westfield Wheaton. The Gazette has not named them, but we will: Nancy Floreen, George Leventhal, Mike Knapp, Duchy Trachtenberg and Roger Berliner. Here is what they have done.
First, let’s understand exactly what this is. The money is going to Westfield Wheaton – a profitable mall that received $6 million in county money just five years ago – to subsidize construction of a building that will house Costco and other retailers. Of the 475 jobs that will be subsidized, at least 200 will be employed by Dick’s Sporting Goods and other rock-bottom-paying companies. Costco employees will start at $11 per hour. These are the very jobs that other counties get for free, and that Best Buy created just outside Westfield Wheaton for free. Environmental standards governing the gas station that Costco will construct in the Sligo Creek watershed will be summarily discarded so that the project can be rushed through. All of this is motivated by the fact that county officials are fearful of losing Northrop Grumman to Virginia and want to have an election-year “victory” to show for themselves. We can’t attract the best of the best anymore but we can still buy ourselves a Costco!
The cost of this cannot be measured merely by the $4 million the county will give away to Westfield. You see, the Lords of Annapolis are watching us. The county has a story to tell them to save our tattered fiscal hide: we are allegedly poor. We are running half-billion dollar deficits forever, we will say. We will ask for waivers on the state’s Maintenance of Effort education spending requirement every single year because we are too poor to pay for our schools. But when we look Maryland Superintendent of Schools Nancy Grasmick in the eye to beg for relief, she will say, “You’re not poor. You can afford a $4 million subsidy for Westfield.”
We are also allegedly too poor to afford the costs of teacher pensions. Under the proposal drafted by our own Senate Delegation Chairman, our deficits will go up by tens of millions of dollars every year. But when we look the Lords of Annapolis in the eye to beg for relief, they will say, “You’re not poor. You can afford a $4 million subsidy for Westfield.”
Next year, when the General Assembly returns to pass a tax package that will inevitably hit the county hard, we will say that we cannot bear it. But when we look the Lords of Annapolis in the eye to beg for relief – again – they will say, “You’re not poor. You can afford a $4 million subsidy for Westfield.”
Here is a secret for our readers. The reason why the administration and many on the County Council cannot comprehend these facts is that the county officials and the statehouse delegation rarely talk to each other. A state Delegate is hardly more likely to get a phone call from a county elected official – even one who shares a common district – than he or she would from Barack Obama. That goes both ways. The last time the council and the delegation held a joint meeting, it was such a train wreck that many delegation members vowed to never participate in any such thing again. Rockville and Annapolis learn about each other the same way you do – by reading the Post, the Gazette and blogs. The county government has no idea how budget blowups like the $65,000 bathroom, the police helicopters, taxpayer-financed junkets for Council Members, multi-thousand dollar staff “retreats” at county parks and gold-plated body guards look in Annapolis. What should we expect Mike Miller to do when we whine about our supposed poverty while showering million-dollar giveaways on low-wage multinationals? How can we expect our state legislators to defend such actions?
But it gets even worse. Every Council Member who supports squandering $4 million on this subsidy will be shortly voting in favor of a devastating budget that will wreak havoc across the county. Council Members, when representatives of the poor and helpless come to ask that you refrain from gutting their services, look them in the eye and say, “No, the money is better spent on Westfield.” When the bus drivers and librarians come to ask that you spare them from furloughs and layoffs, look them in the eye and say, “No, the money is better spent on Westfield.” When parents come to ask that you not increase class size, look them in the eye and say, “No, the money is better spent on Westfield.”
And after the poor and the bus drivers and the librarians and the parents go away empty-handed while Westfield carries our money back to its headquarters in Australia, look your people in the eye and tell them why on Earth you deserve to be their Council Member.
Wednesday, March 10, 2010
The Man With(out) a Plan
By Karen Cordry, Matt Schmidt and Holly Olson.
This is in response to the Gazette’s article of February 3, 2010 about County Executive Ike Leggett’s decision to not move the Wheaton Library. It is time to set the record straight about where this idea came from and how it was handled by the County Executive.
In 2008, the County hired the International Downtown Association (IDA) to take a look at all of the County's assets along Georgia Avenue to see if they could potentially be utilized to spur development in the downtown core area of Wheaton. In March 2008, IDA met with panels of community leaders, business leaders, and community residents in the Wheaton area to understand and report back to the County on what the community wanted for Wheaton. It was the overwhelming consensus of the community members who volunteered their time for this panel that having the Wheaton Library relocated to the downtown core would not only jumpstart development there but could also be a potential anchor to an internationally themed cultural center for the community. It was also thought that having the Library more centrally located in the downtown would better serve the large and growing neighborhoods located south of the Wheaton Triangle. The idea of moving the Library came from the community volunteers, not IDA. Matt participated in that process, in his capacity as then-chair of the Wheaton Redevelopment Advisory Committee (“WRAC”). Holly and Karen were Matt’s predecessor and successor, respectively, as Chair of WRAC.
After the report was released, there was a community meeting held at the library to discuss the topic of moving the library. In our view, that meeting was premature and ill conceived in that there was no current financial ability to move the library, much less any concrete ideas about what such a project would entail. As a result, it was easy for those satisfied with the existing situation to rally around “saving” the library, while there was no realistic or concrete alternative that could be looked at or discussed. .
The result of the County’s failure to properly prepare and present a realistic proposal on this issue created a serious rift within our community that cannot be helpful to the shared goal of improving and revitalizing Wheaton. Residents adjacent to the current location argued that the Library “is ours,” while giving short shrift to the needs of residents who live south of the Wheaton triangle. There were also fears expressed about venturing into the downtown core (scarcely half a mile away from the current location!) based on a false impression that the crime rate in downtown Wheaton is greater than that in the vicinity of the Library's current location. Although police reports show to the contrary, the widespread dissemination of such claims only serves to undercut ongoing efforts to make the downtown a more lively and vibrant place that will both be – and feel - safe for all.
What has been most apparent about this process, though, was that this idea was thrown out without context, detail, or sufficient fact, so everyone was left to speculate about what might be done. That is no way to run a decision-making process – and, even worse, to simply drop this concept on the basis of that highly flawed process, without making any attempt to provide a meaningful proposal to which the whole community can react. Worst of all is that the County has shown that it has no vision or plan to replace the library as a focus and an anchor for assisting downtown Wheaton, its residents and its small businesses.
If the revitalization of Wheaton is to be anything more than just a pious set of fond wishes, the County Executive and the County Council need to have a vision and a plan and be prepared to present – and defend – that plan when questions are raised. Ruling out any consideration of moving the library, in view of the way the issue has been dealt with to date, does not show that sort of vision or dedication. Similarly, providing a large subsidy to Barry’s Magic Shop so it could move out of Wheaton, after it rejected numerous accommodations, rather than using those funds to assist Wheaton’s existing small businesses, was no more helpful.
Now, the County is considering whether to use $4 million to assist in bringing Costco to Westfield. We are skeptical over whether two companies worth billions of dollars actually need taxpayer money to bring Costco to a space that is ideally located for it to tap into the lucrative downcounty market. But, whether such funds are approved or not, they should not be a substitute for the spending needed to spur redevelopment efforts and help struggling small businesses in the downtown. One of WRAC’s main focuses has been to maintain the small business character of Wheaton during redevelopment. As far as we know, the County has not done any study as to whether a Costco would have an affect on small businesses in Wheaton, nor has there been consideration of how bringing Costco to Wheaton would fit into a larger plan for this area.
The County has been working on a sector plan for Wheaton. If that plan is not just to be words and drawings, the County needs to demonstrate that it has a real vision that it will stand behind and work for. We’re still waiting.
Karen Cordry is the former Chair of the Wheaton Redevelopment Advisory Committee, 2008-2009.
Matt Schmidt is the former Chair of the Wheaton Redevelopment Advisory Committee, 2007-2008.
Holly Olson is the former Chair of the Wheaton Redevelopment Advisory Committee, 2005-2007.
Wednesday, January 27, 2010
Gazette vs. Costco Subsidy
The Gazette issued an editorial questioning the Costco subsidy today, but it was Gazette cartoonist Chris Curtis who really put things in perspective.
Tuesday, January 26, 2010
MSM Falls Down on Costco Story
Here’s one more element of the Costco story for MPW readers to mull over: the issue has exposed the limitations of the local mainstream media (MSM) in reporting on the internal workings of government.
Consider how this story developed.
Westfield Wheaton has been in negotiation with Costco to move into the space vacated by Hecht’s in 2005 for quite some time. Recently, Westfield approached the county seeking a subsidy to support the cost of construction necessary to prepare the mall for tenancy by Costco. Westfield, of course, had acquired another subsidy for its Macy’s tenant just a few years before. The Executive Branch supplied the following rationale for the new subsidy to the County Council:From the initial development of Westfield’s financing pro forma, the company has sought the County’s financial assistance to attract Costco to Wheaton. Based on prevailing market conditions, the rate of return Westfield projects from a $28 million investment (of the $58 million project costs, Costco will reimburse $30 million) is insufficient for Westfield’s corporate management to approve the Wheaton project over other competing Westfield projects around the country. Westfield has estimated the financial gap at $4 million plus.
Note the fact that the administration did not identify the rate of return expected by Westfield, the rate of return typical in the retail real estate industry for such projects or the exact reason for the “$4 million plus” needed for the project in contrast to some other amount. No private investor would ever invest millions in any project on the basis of such scanty information.
Accordingly, the County Council reacted with skepticism when the administration presented its case for the subsidy in closed session on January 12. Immediately after the session, administration officials scrambled into action, contacting community members that they believed would be supportive. Some of them began calling and emailing the council within hours. This occurred despite the fact that the issue was supposed to remain secret through the commitment of both branches of government. These contacts alarmed some in the council building because it was an obvious breach of closed session rules by the administration. This proved to be the downfall of the administration’s strategy as MANY hands reached for their cellphones. If they can leak, so can we. Soon enough, the leaks turned into a water sprinkler.
MPW broke the story on January 15 and our initial post remained the only account on the subject for over 48 hours. The first MSM article that contained original reporting on the matter appeared in the Examiner on January 17, which quoted Marchone’s owner Filippo Leo as saying that “we will not survive” if Costco arrived. NBC 4 went up on January 18. The Gazette first reported on the issue late on January 18, almost four days after the story broke. By then, the story had spread as far as India. And in an epic disgrace for the Washington Post, the newspaper has not only failed to report on the Costco story at all, it instead chose to re-write a County Council press release about a new bill on development oversight introduced by Council Member Duchy Trachtenberg.
When the MSM has reported on the Costco issue at all, its coverage has tended to be spare and formulaic. The last Gazette article was typical, offering a bare bones description of the project followed by standard pro and con views. The Washington Business Journal was even worse, quoting only project promoter and Director of Economic Development Steve Silverman. No one delved into the data, the process or the politics of the issue.
In the meantime, events swiftly left the MSM behind. On Sunday, January 17 - a day before the Gazette’s first article - Silverman began the defense of the subsidy on this blog. The next day, Just Up the Pike author Dan Reed – an employee of Council Member George Leventhal – also defended the project and linked to the Gazette article quoting Leventhal’s similar defense without disclosing his employment relationship. That attracted baleful notice in the council building. More importantly, some Council Members struggled with the subsidy in the face of the county’s $608 million budget deficit. “Well, for me it is very hard to justify spending $4 million while we are in the process of budget cuts,” said one. “This is a moral issue for me,” said another. “I don’t want to look my constituents in the eye, cut their services and give away $4 million to a giant retailer.”
As a result of these tensions, a secret straw vote of the County Council scheduled for Tuesday, January 19 was postponed. But the administration did not stop lobbying for the project. In a closed meeting with small businesses in Wheaton that same night, a Westfield representative pleaded poverty in making the case for the subsidy. One attendee at the meeting wrote, “To that end Jim Agliata from Westfield stated that it had been four years since Hechts left the mall and that millions in lost revenue have made the situation for the mall precarious if not dire.” That statement ignores the fact that Wheaton is the second-most profitable mall of the 55 malls owned by Westfield in the U.S. Its modest sales per square foot is more than offset by its relatively low property value, which minimizes its property taxes. Westfield’s aggressive assessment appeal strategy further minimizes its tax liability. And since the assessment of Westfield’s main parcel has just dropped by almost 11%, Westfield’s property taxes will fall even more. Neither the administration (which knows better) nor the MSM have questioned Westfield’s characterization of its finances. Nor have they discussed Westfield’s hypocrisy in seeking a subsidy for itself while opposing tax breaks for its tenants.
On Wednesday, January 20, Council President Nancy Floreen arranged for the nine council Chiefs of Staff to be lectured about “leaks” by a council attorney. This provoked much amusement in the council building, as well as – of course – multiple leaks. With due respect to the Council President, she is missing the point on two counts. First, the “leaks” began with the Executive Branch, which operated in bad faith with the council by launching a selective community lobbying campaign just hours after the supposedly secret closed session. And second, what government officials call “leaks” we call “public information.” This process should never have been closed to begin with.
At the moment, the administration is having problems rounding up majority support for the subsidy on the council. Economic Development Director Steve Silverman, displaying the competitiveness that served him so well in his years on the County Council, is still trying to push the deal through. (We hope he applies the same energy to landing Northrop Grumman.) Anything could happen. The subsidy could be reduced, eliminated or restructured. Or Westfield and Costco could decide to go ahead with the move with no public money, just as Best Buy did successfully in 2006. Costco told the Wheaton small businesses that they have 62,000 members in Central Montgomery County. Are they really going to walk away from those members over a measly $4 million? And in the future, both the Executive Branch and the County Council will be sure to be more cautious about discussing matters like this in secret.
You will read none of the above in the MSM. Its performance on this issue has proved to be just as dismal as its coverage of the 2009 District 4 special election. Make no mistake - the local MSM contains several fine reporters who break stories and turn out good work on a daily basis. But the Costco story reveals several general truths about most members of the local MSM press corps. Very few of them have any investigative research skills. They shy away from financial data. They do not aggressively hunt scoops. They do not have large source networks, especially outside the narrow ranks of government officials. They do not continuously try to expand, develop and diversify their source networks. They do not write with history or perspective. They dispense with creativity in favor of formula. They are complacent with being late, or in not covering issues at all.
And they wonder why we won’t pay for newspapers.
Thursday, January 21, 2010
ACT: Use Costco Subsidy to Prevent Bus Cuts
Action Committee for Transit (ACT) has written the County Council urging them to use money intended to subsidize Costco in Wheaton to support the Ride-On bus system instead.
County Executive Ike Leggett has proposed reducing or eliminating 27 Ride-On bus routes as part of a mid-year $70 million budget reduction package, a move that would wipe out 52 bus driver positions. That idea has encountered significant resistance inside the County Council, with Valerie Ervin calling it "a mess of epic proportions." ACT President Ben Ross is now asking the council to use money intended for Costco to prevent those cuts:The $4 million subsidy for a Costco store near the Wheaton Metro is ill-advised, and the money would be far better spent on Ride-On service. Furthermore, building the Costco store as designed would undercut the county's economic development strategy. The Washington area, like the rest of the United States, has a surplus of regional shopping malls and an undersupply of housing in mixed-use areas near mass transit. The construction business can only be restarted by encouraging the supply of product for which there is unmet demand. That is transit-oriented development, especially housing. We need to propel the county economy forward by encouraging the transformation of Wheaton Plaza into a lively urban center that will enhance its surroundings and stimulate more economic growth... We should not waste money trying to prop up an obsolete and economically unsustainable form of land use that is incompatible with its urban surroundings.
ACT joins MPW contributor (and your author's wife) Holly Olson and smart-growth blog Greater Greater Washington in arguing against the subsidy on the grounds that it is incompatible with transit-oriented development in Wheaton. Now the Costco subsidy was intended to be disbursed in FY 2012, so it is not directly related to the current Ride-On cuts. But we hear FY 2012 is projected to be worse than FY 2011 so those bus routes are definitely in danger next year - which also happens to be the year after the next election.
Readers may ask why a county that is full of politicians who proclaim allegiance to "smart growth" would want to subsidize a Bigbox near a Metro station. No, dear readers, we don't understand that either!
We reprint ACT's letter below.
Tuesday, January 19, 2010
Environmentalists Start to Push Back Against Costco Subsidy
We are beginning to hear rumors that environmentalists and perhaps smart growth advocates are starting to push back against the Costco subsidy in Wheaton. This email to the council from a Wheaton resident who is a long-time environmental activist may only be the beginning.-----Original Message-----
Ambler wrote this as an individual, but she has been a leader on environmental issues in the county for over a decade. If someone of her background is raising questions about the subsidy, could the rest of the environmental movement be far behind?
From: Anne Ambler
Sent: Tuesday, January 19, 2010 11:22 AM
To: Elrich's Office, Councilmember; Andrews' Office, Councilmember; Floreen's Office, Councilmember; Knapp's Office, Councilmember; Ervin's Office, Councilmember; Berliner's Office, Councilmember; Leventhal's Office, Councilmember; Trachtenberg's Office, Councilmember; Navarro's Office, Councilmember
Subject: Please do NOT pay Costco to come here!
Dear Council President Floreen and Councilmembers:
I have just learned that County Executive Leggett has proposed paying Costco $4 million to open a store at Westfield Shopping in Wheaton. With all due respect, this is a flagrant waste of our county's scarce resources. If Costco wants to come, it will, with no bribe. Research has shown that such payments do not work well long-term for the communities that pay them.
But why would we want Costco to come here anyway? It would undercut the stores already in the mall, possibly drive Target out, and then there we are again with an empty store. I'm sure if we have an extra $4 million floating around, there are far better ways to spend it. How about creating jobs in energy retrofitting? Or stream protection? Or keeping classroom size down? Or even filling the potholes in the roads.
I urge you not to spend any of our scare funds on trying to lure Costco to Wheaton.
Sincerely,
Anne Ambler
Wheaton
Costco Subsidy Heads to Secret Straw Poll (Updated)
The Executive Branch is conducting a secret straw poll of the County Council on its $4 million subsidy for Westfield’s Costco project that will be due by noon today. This is another sign that the subsidy is on a fast track regardless of public input.
Reasonable people can disagree in good faith on whether the county should be subsidizing a Bigbox retailer at Westfield’s ultra-profitable Wheaton mall. But we continue to be disappointed by the lack of openness in the process. Our sources tell us that the administration asked the County Council for immediate concurrence in its closed session on January 12, but the council wanted to study the issue further. Then the administration had supporters call and email the council in support of the project just hours after the closed session while continuing to withhold details from the general public. MPW forced the administration’s hand by breaking the story wide open last Friday, prompting a public defense from Director of Economic Development Steve Silverman.
In his remarks, Silverman promised public scrutiny of the proposal. But just last night, Silverman made a closed presentation before small businesses who are members of Local First Wheaton. No public notice was given and while Costco and Westfield appeared, the press was not invited.
Now the Executive Branch is asking each County Council Member to indicate a preference for or against the subsidy in private communications due by noon today. It is unclear whether this straw poll has any meaning other than merely providing a sense of where the council is at the moment. But what is clear is that if the administration had its way, only its handpicked supporters would be providing input to the council at this point.
Our demands for open government are not unlimited. We acknowledge that secrecy is in rare circumstances a necessary evil. For example, Montgomery County and the State of Maryland are in competition with Virginia to attract the headquarters of Northrop Grumman. If the internal deliberations of the county and state became public, that would give Virginia an unwarranted edge. Maryland’s Open Meetings Act recognizes this by stating that public bodies may close meetings to discuss “proposals for a business or industrial organization to locate, expand, or remain in the State.” But in the case of Costco, Montgomery County is not in competition with any other jurisdiction. The proposal will rise or fall on its own and so there was never any reason to make it secret.
The administration’s control of information gives it an unfair advantage in promoting its project. One example is Silverman’s claim that the project will be a “money-maker” through receipt of property taxes, income taxes and impact fees. Impact fees are, of course, needed to pay for infrastructure improvements necessitated by the project’s construction. The county’s impact fee levels are way too low to pay all of those costs. And in terms of income taxes, the county’s analysis – which it has never released publicly – assumes that every single Costco store employee will be a county resident. That is difficult to imagine considering that the average employee salary is projected to be $38,000 per year. So some workers will have to be imported while others may have to live in poverty. In any case, the county will not capture anywhere near all the income taxes generated by the store.
Another example of insufficient information has to do with the corporations’ finances. MPW has already revealed that Westfield’s Wheaton mall is the company’s second-most profitable mall out of the 55 properties it owns in the U.S. A casual glance at Costco’s 2009 annual report shows that its 527 stores average $133 million in sales each. That means that a typical Costco store could afford the equivalent of the county’s $4 million subsidy with just 11 days of sales.
Finally, the county does not want to talk about the experience of the Best Buy store that opened on Georgia Avenue just south of Westfield Mall in 2006. Best Buy did not ask for a public subsidy and opened despite the fact that a Circuit City branch was then located right up the street on mall property. Best Buy does a brisk business and shows no sign of failure. If you like Bigboxes and do not worry about what they do to local small businesses, Best Buy’s success proves you can have one for absolutely free – even in Wheaton.
Defenders of this process say that the county has been doing business this way for a long time. We do not recognize the merit of that argument. It is a sad, sad state of affairs that a mere blog has provoked public debate in a way that has so far not been encouraged by our elected and allegedly democratic government. Regardless of the outcome of this particular proposal, this blog will continue to pursue freedom of information and open discussion – even going so far as to publish remarks from officials who disagree with our views - whether our government wants it or not.
Update: A Gazette reporter showed up at the Local First briefing last night. The reporter was allowed to stay only if she agreed that everything that was said was to be kept off the record. This is yet another victory for transparency in Montgomery County government.
Monday, January 18, 2010
Ike’s Grand Idea for Wheaton
By Holly Olson.
At first blush, the thought of a Costco in Wheaton might be exciting. No more trekking out to Beltsville or Gaithersburg to stock up on bulk goods at low, low prices! But before you jump on the “Let’s Bring Costco to Wheaton” bandwagon, I want to share with you how Bigbox stores like Costco and Wal-Mart can affect local economies. What a bore, you might say. But this type of economic development has huge implications for Wheaton, so community members that care about the future of Wheaton should listen up.
The story goes something like this: Bigbox retailer comes in. Everyone is excited because the Bigbox brings convenience. People from all over the County come to Wheaton to shop at the Bigbox — and then they leave Wheaton after they finish shopping at the Bigbox. No going to the small retailers on the triangle, no going to any of the local restaurants. Get in and Get OUT. The local retailers continue to lose business, the restaurants don’t see any additional customers, traffic on University and Veirs Mill becomes exponentially worse, subsidies that could have gone to support local business owners go to the Mall instead, and the County gets a bunch of low-paying jobs for workers that don’t even live in the County — thank you very much.
With that said, let’s take a look at two major questions regarding this project:
1. How does adding another Bigbox impact the local business community?
2. Is this the best use of taxpayer money to create economic development in Wheaton?
As interest in developing local economies has increased, so has the research on how Bigbox stores affect them. While you can always find a study to support your point of view, there is a growing body of research suggesting that Bigboxes are not the economic panacea that they are made out to be.
In a December 2009 a study from the Center for Urban Research and Learning at Loyola University Chicago, by Davis et al called, “The Impact of an Urban Wal-Mart Store on Area Businesses: An Evaluation of One Chicago Neighborhood’s Experience,” looked at local employment, wages and sales in an inner city area after Wal-Mart opened. It surveyed retail establishments within a 4 mile radius of the Wal-Mart location. The study concluded that the closer a retail establishment was to Wal-Mart, the greater the likelihood that the establishment would go out of business. For each mile out, the probability of closing dropped by 6 percent. (It should be noted that not all types of retail establishments were affected equally.) When employment was examined, the study found that the addition of Wal-Mart did not lead to a net gain in jobs. Rather, any employment gains created by Wal-Mart were offset by employment losses from the surrounding businesses. Finally, the study looked at the impact of Wal-Mart on retail sales by zip code. In Wal-Mart’s own zip code, there was no evidence of an increase in sales. When the 18 months before and after Wal-Mart opened were examined, the data showed a decline in sales.
In a 2007 discussion paper, “The Effect of Wal-Mart on Local Labor Markets,” Neumark, Zhang, and Ciccarella reported in their findings that Wal-Mart resulted in a decline of non-Wal-Mart employment. They concluded that each new Wal-Mart store reduced county-level employment by about 150 workers, or 1 Wal-Mart worker replaced 1.4 non-Wal-Mart retail workers.
We can also examine the effect of Bigbox stores in terms of how much economic activity they generate. Most research has concluded that locally owned businesses generate as much as two to three times the local economic activity that chains do. In a joint study by the groups Urban Conservancy & Civic Economics, “Thinking Outside the Box: a Report on Independent Merchants and the New Orleans Economy,” they examined two models for returning commercial services to New Orleans. The suburban model included large format retail on large parcels, anchored by Bigbox retailers and augmented with a mix of medium and smaller stores. The urban model involved the restoration of urban commercial corridors. Civic Economics projected that if Orleans Parish customers shifted 10 percent of their economic activity from chains to local merchants, it would result in $60 million dollars being re-circulated into the local economy that otherwise would have left the area. At the metropolitan level, the same shift would result in an additional $235 million into the local economy. The study also showed that local retailers generate twice the annual sales, re-circulate revenue at twice the rate, and have four times the economic impact on a square foot basis when compared to leading chain competitors. Their conclusion was that in order to stimulate growth, the city should maximize local businesses in new and revitalized developments.
My second question deals with whether the County is spending its $4 million dollars wisely, particularly in relation to other projects that could be funded in Wheaton. This question is rather difficult to answer, because the County lacks an economic development plan for Wheaton. If the County did have a plan, it would be easy to assess how the $4 million dollars should be used to further Wheaton economic goals and objectives. Without a plan, the County risks spending money on projects that do not represent the best use.
If we use the Sector Plan goals as a paradigm for measuring effectiveness, then the project certainly fails. In no way does a Costco support smart growth principles, transit-oriented development, or a more walkable urban district. And just to clarify, the mall is not the urban district.
If we assess the $ 4 million dollar subsidy in terms of job growth, the project also will likely fail. As indicated above, research has shown the potential for zero net growth in jobs, and in fact may lead to a slight decline in employment. If this is the case, then MoCo will suffer from a double whammy. Not only will the Costco jobs go to those outside the county (because few people can afford to live in MoCo on a Costco salary), but we will lose local business owners that are likely to be residents of the County.
What this deal smells of is a County Executive desperate to show that he has accomplished something in Wheaton. But I for one had hoped for something a bit better than a Bigbox retailer. Wheaton deserves better, and so do its small businesses.
Holly Olson is a former Chair of the Wheaton Redevelopment Advisory Committee.
Westfield Opposes Tax Credit for Wheaton Small Businesses
Westfield, the giant mall owner that is requesting a $4 million county subsidy to attract Costco to Wheaton, is on record opposing a tax credit that would help small businesses in Wheaton – including its own tenants. Folks, this story never seems to end.
The Wheaton Central Business District (CBD) has been designated an “Enterprise Zone” by the state and Montgomery County, which enables property owners to be eligible for property tax credits that are percentages of the increases in the assessed value of their properties. Westfield owns six parcels in Wheaton that together comprise the mall property. Over the last five years, the company has appealed the state’s assessments twenty times out of thirty opportunities. The company’s aggressive assessment appeal strategy is designed to lower its overall property tax liability and not to take advantage of the Enterprise Zone tax credits.
Westfield is a huge international conglomerate, and its Wheaton mall is the second most profitable mall out of the 55 malls it owns in the U.S. But Westfield is not the only business in the Wheaton CBD. The CBD contains well over a hundred small businesses, some of whom are Westfield tenants. Many of them are not property owners and are not directly eligible for property tax credits. Delegate Al Carr (D-18), who represents Wheaton, introduced both a 2009 statewide bill and a 2010 local bill that would enable the county to allow tenants to claim tax credits based on the jobs they create. That would open up the Enterprise Zone tax credit program to every business in the CBD.
But Westfield opposes Carr’s bill. In a letter to the Montgomery County statehouse delegation, the company said, “While we recognize the need to encourage small business growth, we believe that the bill as written would result in efforts to reallocate Westfield’s property tax credit to its tenants.”
So Westfield would like the small businesses in Wheaton to contribute to its requested $4 million county subsidy for its Costco tenant – a tenant that would damage and perhaps close some of them. Yet, Westfield opposes a tax credit that would help those small businesses survive.
This raises a real question of fairness.
Costco's Lil Monkey
Costco may have a long history of litigation, but one problem the company prevented from turning into a lawsuit involved a dark brown baby doll it was selling last summer. The doll came with a monkey and wore a hat that said “Lil Monkey.” Costco hurriedly junked the doll after receiving complaints from customers who branded it racially offensive. Fox 8 in High Point, North Carolina broke the story and has posted video. 
Examine the picture of the doll above. The baby and the monkey came with bibs, bottles, a banana and a diaper which could be worn by either one. The baby’s hat and bib clearly say, “Lil Monkey.”
What does it say about Costco management that they allowed such a product to make it through their supply chain and onto their shelves? Is this the kind of culturally sensitive company that will fit into an ethnically diverse community like Wheaton? What reaction would Wheaton have had if Costco had sold a doll like this there?
And what would that reaction have been if the people of Wheaton knew they were paying for that doll with a $4 million subsidy?
NBC 4 Covers Costco in Wheaton
NBC 4 has reported on the Costco subsidy. They picked four issues to spotlight: the number of jobs that may be created, the low wages those jobs pay, the objections raised by small business owners and the inherent contradiction in subsidizing a big box retailer in a Central Business District planned for smart growth. So far, the coverage and links on the issue have spotlighted one aspect of the story over others: the complaints of Marchone's owner Filippo Leo, who has said, "If Costco comes here, we will not survive."
Interestingly, neither the Post nor the Gazette have reported on the story yet and it is four days old. While local papers other than the Examiner have been silent, the story has made its way across the U.S. and even as far as India.
Costco’s Shocking Legal History
Your author has been a corporate researcher in the labor movement for over fifteen years and has encountered some of the most troubled companies in North America. But few of them compare to Costco, a company with epic legal problems that are so voluminous that they require hours of research to even begin to document. This is the company that will benefit from a $4 million subsidy proposed by the Montgomery County government to lure it to Westfield Wheaton.
Costco has been plagued with numerous class action lawsuits over the years. The company is currently a target of a $50 million class action suit filed in California for failure to pay overtime. The specific allegations involve the locking of employees inside stores after closing:Mary Pytelewski, the person who filed the lawsuit, claims that Costco has required its employees to stay for 15 minutes inside the store even if they have already clocked out for the day. The employees were not allowed to go outside the locked store while the supervisors finish closing the store.
This suit follows another class action by Costco managers alleging that the company “intentionally and improperly designated department managers as ‘exempt’ managers for its warehouses in order to avoid payment of overtime wages and other benefits.”
“Costco makes the false claim that locking these employees inside its warehouses until store managers and supervisors complete their closing routines is necessary for store security,” Pytelewski’s attorney said.
The lawsuit seeks financial compensation from Costco and to stop the policy of forcing employees to stay after clocking out.
Costco is the target of yet another class action alleging gender discrimination in promotion. According to the plaintiffs’ lawyers:The suit claims that senior management of Costco is virtually all male. Nationwide, less than 16 percent of General Managers are female. Promotions into Assistant Manager and General Manager positions are not based on any stated qualifications or criteria; openings for those positions are not even posted. Nor is there any application procedure for such positions. Instead, such promotions are based on a “tap on the shoulder,” a tap almost always made by a man.
Only two of Costco’s fourteen Directors are women and neither are members of its management team.
In 2003, Costco had to pay a $507,901 judgment to a Seattle-area female employee who alleged that a male co-worker “had a long history of making disgusting comments and gestures to his female colleagues, and on one occasion exposed himself to [her].” Costco did nothing to stop the behavior. The judge found that the male worker “frequently boasted of his sexual prowess, leered and made suggestive noises and gestures with his tongue, among other offensive behaviors” and exposed himself from the waist down to the female employee at 4 AM.
Just last year, Costco had to pay a $420,000 judgment to a former employee in Los Angeles “who was retaliated against for complaining of mistreatment because he is gay and HIV-positive.” When the employee complained about the General Manager’s use of the term “queers,” “his work load was doubled and his pay was cut.” The plaintiff was later stripped of benefits and demoted to cashier, after which he left the company. The plaintiff’s lawyer said, “He’s unemployed and has no health insurance, and that’s a death sentence for someone who has HIV.”
In its 2009 annual report, Costco’s disclosure of pending legal liabilities goes on for six pages. Costco has been sued over a sweeping variety of issues, including sales of gasoline, organic milk, farm-raised salmon, shrimp and even waffles. Additionally, the company admits that it is the target of many active government investigations, including:On October 4, 2006, the Company received a grand jury subpoena from the United States Attorney’s Office for the Central District of California, seeking records relating to the Company’s receipt and handling of hazardous merchandise returned by Costco members and other records. The Company is cooperating with the inquiry and at this time cannot reasonably estimate any loss that may arise from this matter.
So here’s a question for the county. Of its $4 million subsidy, how much will go towards legal defense of the newest lawsuits against Costco? And what happens if one of them is filed by employees or consumers who are Montgomery County residents paying for the company’s special deal?
The Environmental Protection Agency (EPA) issued an Information Request to the Company, dated November 1, 2007, under the Clean Air Act. The EPA is seeking records regarding warehouses in the states of Arizona, California, Hawaii, and Nevada relating to compliance with regulations concerning air-conditioning and refrigeration equipment. On March 4, 2009, the Company was advised by the Department of Justice that the Department was prepared to allege that the Company has committed at least nineteen violations of the leak-repair requirements of 40 C.F.R. § 82.156(i) and at least seventy-four violations of the recordkeeping requirements of 40 C.F.R. § 82.166(k), (m) at warehouses in these four states. The Company has responded to these allegations, is engaged in communications with the Department about these and additional allegations made by letter dated September 10, 2009, and has entered into a tolling agreement.
An Information Request, dated January 14, 2008, has also been received concerning a warehouse in New Hampshire. Substantial penalties may be levied for violations of the Clean Air Act. In April 2008 the Company received an information request from the South Coast Air Quality Management District concerning certain locations in Southern California. The Company has responded to that request. The Company is cooperating with these inquiries and at this time cannot reasonably estimate any loss that might arise from these matters.
The Company has received notices from most states stating that they have appointed an agent to conduct an examination of the books and records of the Company to determine whether it has complied with state unclaimed property laws. In addition to seeking the turnover of unclaimed property subject to escheat laws, the states may seek interest, penalties, costs of examinations, and other relief.
Sunday, January 17, 2010
Costco Story EXPLODES (Updated)
MPW's Costco coverage has exploded across numerous media outlets, including one in India. It is clear that the Montgomery County government has come under nearly unprecedented scrutiny for its consideration of a subsidy for the giant big box retailer and its even bigger sponsor, Westfield.
The Dallas Morning News carried objections to the project from Filippo Leo, owner of the beloved Wheaton Italian deli Marchone's.
Business Week linked to our post on Filippo's anti-Costco remarks.
USA Today covered Filippo's comments as well.
Daylife Publishers in New York City also linked to our post on Filippo.
Maryland on My Mind, a blog from Ocean City, is keeping close tabs on the story.
And most shockingly, the story has even been linked by a website in India.
This story is still in its early stages. What will be the reaction to what we print tomorrow?
Update: Twitter has erupted with links to our posts, especially the post describing the opposition to Costco from Wheaton small business owner Filippo Leo.
Response to Blog
By Steve Silverman.
The article above raises legitimate questions about the Costco initiative. Here are some answers.
The County Executive’s proposal to invest in bringing Costco to fill the now four-year-long hole left at Westfield Mall when Hecht’s went out of business is first and foremost about jobs.
The initiative would produce 475 permanent jobs, at a time when the County has lost thousands of jobs due to the economic downturn. It would create an additional 250 to 300 construction jobs. And it would leverage more than $50 million more in private investment.
Additionally, the County would receive property taxes, income taxes, and impact fees – and the State of Maryland would receive sales tax – from the Costco operation. Right now the empty Hecht’s is generating zero.
As with all investments from the County Economic Development Fund, this is a “money-maker,” not a money-taker.
Here’s how the process works: The County Department of Economic Development explores possibilities for investment of the County’s Economic Development Fund. It brings those possibilities to the Council, meeting in closed session. It is closed session because these are negotiations involving proprietary information, public disclosure of which, at that point, would compromise the County’s negotiating positions and possibly affect County negotiations with other companies.
The Executive seeks the Council’s advice. If the Executive decides to move forward, a formal proposal is sent to the Council, which involves public hearings and scrutiny from Council committees and the Council as a whole in public session.
Concerns about Wheaton’s central business district are legitimate. This development would strengthen the County’s vision for Wheaton. The mall is a given. It will be there whatever happens to a “Town Center” vision for the rest of Wheaton. This is part of an overall, ongoing effort to improve Wheaton, while retaining its unique character. The County Executive has just announced a “Request for Qualifications” to search for and choose a development partner to redevelop acreage owned by the County and Metro in downtown Wheaton toward that end (click here to view). And the County Executive’s recommended Capital Budget includes more than $7 million additional in Wheaton infrastructure.
But the success of that revitalization vision – and private investment in that vision -- rests on the mall being successful. Unlike the Costcos in Beltsville and Gaithersburg, shoppers will have to enter the mall to patronize Costco, just like with J.C. Penney and Target.
Since it would be filling up an already existing space in an already existing shopping mall, there would be no changes or public transportation investment necessary to facilitate the project.
The article above raises the question of possible impact of Costco on small businesses in the Wheaton area. In fact, Westfield businesses and many other businesses in Wheaton are already supportive of the Costco possibility. Why? Because every business in Wheaton needs more customers, more boots on the ground, more patrons.
And, in central Montgomery County alone, Costco has more than 12,000 business members. Small businesses shop at Costco for supplies the same way contractors depend on Home Depot for the materials they need. In fact 92 percent of businesses in Central Montgomery have Costco memberships.
The County’s economic development strategy is broad – including major efforts on expanding our biotech efforts, work to retain and expand federal job presence, and forging new ground in green technology. Incentives are only one factor among many in corporate decisions to locate. We continue our efforts on a broad array of opportunities, including, but not limited to Northrop Grumman.
As a matter of fact, in 2000, then-County Executive Duncan proposed, and the County Council unanimously approved, a $6 million incentive to bring Macy’s to this very same Westfield.
Counterposing the possible layoff of 44 bus drivers to the incentive being discussed is your classic false choice. One could pick any item of a County budget of $4.3 billion and juxtapose it to reductions being proposed by the County Executive to close a $608 million budget gap in the coming fiscal year.
Again, the investment by the County in a successful company such as Costco would create jobs, strengthen Wheaton revitalization, and provide individuals and small businesses with increased consumer choices.
And Montgomery County needs all kinds of jobs at this time of economic downturn, including retail jobs, in order to meet the varying employment needs of our residents. Costco, it should be noted, does provide health benefits for employees working 20 hours a week or more – and for their families.
It would, again, be a money-maker that would strengthen the County’s tax base and, thus, help maintain critical County services.
We look forward to working with the Council to advance this initiative and, more broadly, to move the ball forward on Wheaton revitalization.
Steve Silverman
Director, Montgomery County Department of Economic Development
Costco Story Picked up by Dallas Morning News
The Costco story has now gone national. The Dallas Morning News has linked to our original post that broke the story.
We wonder how the mainstream media, as well as Montgomery County residents, will react to the new revelations we will be publishing all day tomorrow.
Wheaton Small Business Owner: "If Costco Comes Here, We Will Not Survive"
The Examiner is the first mainstream media outlet to do original reporting on the county's plan to give a $4 million subsidy to create a Costco store in Wheaton. No County Council Member would speak about it on the record, but Director of Economic Development Steve Silverman defended the project.
The Examiner article carried two quotes from Marchone's owner Filippo Leo:
We've been over here 54 years and I can testify for so many businesses who are trying to make ends meet with this economy today... If Costco comes here, we will not survive. It's like Wal-Mart. Wherever these big chains go -- mom and pop stores, they die off.Filippo is a very respected business owner in Wheaton. He has served as a county advisory committe member and helped to create Local First Wheaton, the area's small business association. Marchone's, an excellent Italian deli, is one of Wheaton's most beloved independent businesses. The County Council should heed Filippo's words carefully.
Why doesn't the County Council give the $4 million to us? To the people who created jobs and paid taxes here all these years? Why don't they be loyal to the county? We are Wheaton-loyal people. Wheaton is my home.
Costco Story Picked up by USA Today
USA Today has linked to our last post on Costco in Wheaton and site traffic is pouring in. This story is on the verge of getting out of control and the revelations are just beginning.
Revelations Mount on Costco in Wheaton
Last week, MPW broke the story that the county was secretly considering a $4 million subsidy to bring Costco to Westfield Wheaton. This story is moving rapidly as new facts are emerging. Here are just a few.
1. Westfield Wheaton is one of the company’s most profitable malls in the U.S. Yet, it has asked repeatedly for county subsidies.
Westfield Group is a giant retail owner and developer based in Australia. It owns properties in its home country, New Zealand, the U.K. and the U.S. In the first half of 2009, Westfield reported operational earnings before interest and tax of $1.446 billion, an increase of 18.1% from the prior year. Comparable shopping center net operating income actually grew by 3.0% despite the worldwide recession.
The conventional wisdom that Westfield Wheaton is an underperforming mall is untrue. In fact, Wheaton is one of Westfield’s most profitable malls in the U.S. According to Westfield’s last filing with the Securities and Exchange Commission, Wheaton had an estimated initial yield (a measure of operating profitability) of 8.71% on 6/30/09, up from 7.11% on 12/31/08. That ranked second of Westfield’s 55 U.S. malls and was significantly higher than both Westfield Annapolis (6.16%) and Westfield Montgomery (6.38%). Westfield has successfully persuaded the Executive Branch to subsidize one of its most profitable assets. We reprint all of the U.S. mall yields below.
How many small businesses in the Wheaton Central Business District (CBD) have a positive eight percent net profit rate or greater right now? Maybe zero. How many of them are getting four million dollars from the county? Definitely zero.
This would not be Westfield’s first subsidy. Westfield obtained a $6 million parking garage expenditure from Montgomery County for its Macy’s project in 2003, which was completed in 2005. The property also earned a $2.6 million property tax credit over ten years. The Post carried this quote from one of the subsidy’s supporters:“Getting the Macy’s is a huge boost to downtown Wheaton,” said County Council member Steven A. Silverman (D-At Large), chairman of the council's economic development committee. “It will draw thousands of people to Wheaton. Wheaton is an area that is the second target for the county, after redeveloping Silver Spring.”
Silverman is now the county’s Director of Economic Development who is in charge of negotiating Westfield’s newest subsidy. If the last subsidy worked out so well five years ago, then why are we doing it again?
2. Costco needs a special change in zoning rules for its planned gas station.
Costco invariably includes gas stations on its store sites. It wants to build a gas station at its Wheaton location, but is not permitted to do so by the zoning on Westfield’s property. So it must obtain a Zoning Text Amendment (ZTA) from the County Council to get around the restriction.
The Wheaton CBD already has five gas stations. Why does the county need to spend money and change its zoning rules to create another one? And why does one of the county’s most attractive potential smart growth sites – an area targeted for the creation of a pedestrian-friendly downtown – need a sixth gas station?
3. The project may undermine labor standards in the county.
It is true that Costco pays more than Wal-Mart or Dollar General. Still, saying that Costco is not as bad as Wal-Mart is akin to saying that a politician is not as bad as Saddam Hussein: it’s a very low standard of comparison. Only 13,500 of Costco’s 142,000 employees are union members, and its unionized stores are solely a legacy from a prior company that merged into Costco. Costco opposes provisions for card check and mandatory arbitration contained in the Employee Free Choice Act. The Teamsters once accused Costco of requiring employees to circulate petitions on behalf of a California ballot initiative that would have made it harder to collect workers compensation benefits. Separately, the company has an immense legal history of overtime and discrimination lawsuits that we will chronicle in a future post.
According to the Bureau of Labor Statistics, the hourly mean wage in the Bethesda-Gaithersburg-Frederick Metropolitan Division, which includes Montgomery and Frederick Counties, was $26.37 in May 2008. The administration has estimated that Costco’s average wage in Wheaton would be $18 per hour, with starting wages as low as $11. So the county is prepared to subsidize a project that could actually lower its mean wage level. How can this be an acceptable use of public funds?
If the county was sincerely interested in creating high-wage jobs, it could make its subsidy contingent on Westfield’s use of a project labor agreement to construct the Costco building and on use of card check or mandatory employer neutrality in the event that Costco employees decide to organize a union. That would assure that all of the construction workers would receive adequate wages and benefits, and that Costco would not undercut the unionized Giant next door on the basis of cheap labor once the store is built. Neither of those requirements are part of the current deal.
4. The administration selectively leaked certain details of the proposal to a handful of individuals to build support for the subsidy while keeping it secret from the general public.
Administration representatives first formally briefed the County Council on the $4 million Costco subsidy in closed session on January 12. The session was closed ostensibly because economic relocation incentives are often competitive matters with other jurisdictions and the county would not want to show its bid to its rivals. However, no other jurisdiction is competing to land this Costco branch. After the session, the administration insisted on keeping the proposal details secret from the general public for an indefinite period thereafter.
However, they immediately contacted at least three members of the community whom they believed would be supportive of the proposal and had them contact County Council Members to express that support. One of those individuals began leaving positive phone messages within twenty-four hours. Two more sent emails of support on January 14. It is unclear whether any of these people were told about the cost of the subsidy or if they were only told of Costco’s arrival. No information was released to the general public until this blog broke the story on January 15 at 7:00 AM. The story received especially strong traffic since it was the only public report on the issue and it will almost certainly finish in our top ten posts of the month.
Clearly, the administration gamed the closed session process to build support for its plan to the point where it might have a fait accompli in hand. But that support was based on incomplete information that was released to only a few. This selective, need-to-know secrecy is a serious departure from the standards of open government typically embraced by Montgomery County.
Not only is the goal of this proposal questionable given the above revelations, but the process of reaching it has been tainted because of how the information was circulated, controlled and exploited. It is time for the Executive Branch to release all information in its possession about the project.
