Ken Larsen's web site - Subsidizing Wegmans in Chapel Hill

      

In 2016 Chapel Hill, NC is trying to entice the upscale grocery store Wegmans to build a store in Chapel Hill.  The town and county are considering offering incentives which total $ 4M spread over several years. 

 

Negative side

 

My first reaction was to disagree with their plan.  My reasons were:

 

  1. There are already five different grocery stores in Chapel Hill:  Whole Foods, Trader Joes, Harris Teeter, Food Lion, and Fresh Market (Glen Lennox).  To aid one financially and not the others will siphon customers away from the others.  That's not fair.

  2. I'd rather see money spent to pursue other needs like affordable housing, flood mitigation, traffic mitigation, or parks.  Currently there is debate about the Legion Road property.  A developer wants to build 400+ apartments there; citizens want a park.  We may not get a park, because Town leaders are whining about not having enough money to buy it.  If that's true, then how can they dole out $ 4M to give to Wegmans?

  3. I've heard that Wegmans has or plans to have two stores in Cary, and this was done without incentives by Cary.

  4. If we're going to subsidize a business, it should be to a business which Chapel Hill doesn't already have and only if they pay their employees an ample wage ... so those employees can actually live in Chapel Hill.

  5. It looked like the deal was made behind closest doors with minimum opportunity for the public to comment.

 

Belong is my Wegmans letter ("4 Reasons to have voted no") along with two others as they appeared in the October 23, 2016 Chapel Hill News print edition:

 

 

Here is a related excerpt from the Roseanne show.

 

Here is the proposal from the Town.

 

October 17, 2016:  The Chapel Hill Town Council voted unanimously to approve the Wegmans subsidy.  During the discussion a Wegmans representative divulged that the majority of Wegmans employees are part time and not eligible for benefits.  Their pay will be near minimum wage.

 

 

Positive side

 

October 25, 2016:  I learned the following via a phone conversation I had with Mayor Pam Hemminger.  This makes me feel better about the Wegmans decision.

 

  1. Wegmans would be the highest sales tax producer in Orange County.

  2. Without the incentive, Wegmans would likely build in Durham. [in New Hope Commons according to Will Raymond]  Chapel Hill would then get the traffic but not the tax revenue and jobs.

  3. Wegmans is a family owned business that has been consistently voted one of the top ten employers in the country.

  4. They've won awards for hiring people with disabilities ... particularly people with Down's syndrome.

  5. Market analysis says that we don't have enough grocery stores for the population.

  6. Wegmans is different than other grocery stores in that they sell more products which are sales tax generators.

  7. If we don't land Wegmans, that site will likely become a used car lot and then another apartment complex.  The landowner would have the right to put a used car lot on that site as it fits the allowed uses currently.  The likelihood of it becoming an apartment complex is high due to the current makeup of the Town Council.  We likely don't have enough votes to stop it from becoming an apartment complex.

  8. Wegmans has opened 92 stores, and they've all been vastly successful.

  9. We would not be giving Wegmans $ 4M up front.   Instead, Wegmans would pay sales and property taxes to the town and county, and those payments would be rebated to Wegmans if they meet agreed up numbers.  This would continue until we've rebated them $ 4M or 5 years has passed. 

  10. Wegmans believe they can reach the $ 4M target in less than 5 years.

  11. After five years we should collect approximately $ 600K/year just from their property taxes.

  12. Wegmans is expected to draw people from as far away as 25 miles ... which would be Mebane.

  13. The Town/County hired an independent company to do market analysis of Wegmans moving into an area which already had other grocery stores.  The conclusion was that there would only be disruption for the first 3-4 months.  [According to Will Raymond, Chapel Hill Economic Development Officer Dwight Bassett only got a few sentences on an outside consultant's opinion, so there was no real study.  Nonetheless, we will have to pay for it.  Cost = TBD]

  14. The Town/County has been looking for commercial components, but retail is harder and harder to find due to the growth of online sales.

  15. An effort was made to try to get a Wegmans at Obey Creek or Caraway Village ... to reduce the traffic impact ... , but Wegmans was adamant about the 15-501 site based on their own market analysis.

  16. There is concern about soil remediation, because this site was an auto parts store; however, any cleanup cost will be borne by the Wegmans developer.

  17. The Wegmans developer will also make any necessary road improvements.

  18. Wegmans in Chapel Hill would increase the opportunity to "buy locally".

  19. The Wegmans deal has not been finalized.  It may take an entire year to go through the entire review process.  [According to Will Raymond, the incentives side is a done deal contingent upon the land use approvals.  The Town can't tank those approvals just to get out of the deal.]

 

I thank Pam for her feedback.  She read a letter from me that was published in the October 23rd Chapel Hill News, and she called me.  It's nice to hear from a politician in a non-election year [Town elections are in odd-numbered years].  :-)

 

(January 18, 2017 email from Bonnie Hauser)  I did confirm that Wegman’s will contribute immediately to the 1/2 cent sales tax for transit (and the 1/4 cent for ED and Schools).  Those taxes cannot be applied to incentives. 

 

Wegman’s is expected to start producing taxes in 2019.  On a very rough basis - Wegman’s will produce about $300,000 a  year in transit taxes in year 1.  4% growth on $5 million is $200,000.  It's a big plus for GoTriangle.  Of course sustaining that level of growth is tough but Wegman’s gives them a head start.  While GoTriangle is spending Wegman’s tax money, we’ll be deferring funds for schools and other priorities to support Wegmans. 

 

 

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