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A few nagging questions 
about the Shoppes
Plan is good, but ...

By PETE KENNEDY

May 3, 2008

I headed down Sunset Drive the other day, past Home Supply.

That store has been there 50-plus years. But will it last another five?

Probably. It seems to have a loyal customer base. Yet it’s a legitimate question based on what might (literally) be coming down the road: The Shoppes at Fox River.

The Shoppes is a new development, and will be at the former Fleming site on Sunset Drive, near the Fox River (hence the name). It likely will include popular stores such as Target and Lowe’s hardware store.

This is a big deal - and, overall a good thing. But I have these two nagging questions.

1. How active a role should the city play in bringing competition to existing businesses - businesses that have been around, and paid taxes, for decades? (More about that later.)

2. Are we ridding ourselves of blight, only to create more blight? In other words, will we clean up the Fleming site, only to create blight to the west (Fox Run) and the east (Kmart and others)?

Mayor Larry Nelson has worked hard on this and other developments, and part of him wonders why his friendly neighborhood columnist finds the dark side of a project with a seemingly bright future. He expects the Shoppes to make everything around it better - sort of like Brett Favre did to receivers.

"The Fox Run Shopping Center is going to have a great opportunity," Nelson said. "If they’re smart, the owners will decide, ‘Hey, let’s upgrade so we can compete and get people to stop here before they go to the Shoppes. Fox Run has a great location."

He also pointed out that Pick ‘n Save, on the other end of Sunset Drive, is upgrading. "Obviously they want to compete," he said. "They realize more competition is coming." (A grocery store could be part of the Shoppes, though that has not been confirmed.)

OK, that’s fine. We’ll all get more competitive. But we only need so many groceries (besides Pick ‘n Save, there is a Sentry at Fox Run) and home improvement stores. Someone has to lose.

Will it be Home Supply, should Lowe’s come to town? How about Tomchek Ace Hardware, next to Kmart? Both Home Supply and Tomchek have been around for years - and paid taxes for years.

Here’s where I have to make a disclaimer: I am not someone who wrings his hands every time a Wal-Mart goes up (which, by the way, is happening at West Avenue and Highway 59). It’s a tough, competitive world out there. Businesses like Wal-Mart don’t show up unless there’s a need. In my opinion, it’s mostly up to the little guy to find a way to compete.

Having said that, the newcomer shouldn’t be given an advantage - especially after the little guy paid taxes for decades.

Now, Nelson swears up and down that the newcomers aren’t catching any breaks from the city, and to a certain extent he’s right.

First, those businesses aren’t getting any money; there is no direct tax subsidy. "The tax incremental finance money is not going to Lowe’s, it’s not going to Target, it’s not going to the developer," Nelson said.

The TIF is only used for improvements - in this case demolition of the existing building, environmental cleanup and road work (such as adding turn lanes).

TIF funding is complicated, but TIFs are a financing tool and they are created and supported by the city. The city gets the money back, blah, blah, blah. But the bottom line: A TIF is a government program. At the very least, the value of the improved property (in this case the Fleming site) doesn’t count on the tax rolls for years. That means the rest of us have to pay more than we would if that property did count.

So there is a financial element. And there’s something else: Nelson talks about a standard for deciding when to implement a TIF. It is: "But for the TIF, the development wouldn’t occur." In other words, the city will only implement a TIF when the business won’t come without it.

Of course not having that newcomer arrive would be just fine for some of the existing businesses. It has to be hard for them to hear the standard, and then not feel like the city is aiding a competitor.

Here’s another thing: The existing businesses are paying taxes that help make the TIF possible. That means those businesses (to a certain extent) pay to fund their potential bankruptcy.

Nelson sees it a little less dramatically. OK, a lot less dramatically.

First, there is an organized group of Sunset Drive businesses that is on record as supporting the Shoppes - TIF and all, the mayor said.

And then there are the other benefits. According to the mayor, they include:

* Enormous tax implications. The cleanup etc., is expected to cost a few million. By 2016, the value of the Shoppes is likely to be on the tax rolls - at an estimated $62 million. That’s a very nice addition to our tax base.

"It’s a good return on your investment," said Steven Crandell, director of community development.

* Convenience. The developer and various retailers have done studies of the south side. The studies showed that residents often go to Highway 83 or even Muskego to shop.

"These (retailers) don’t just go anywhere," Nelson said. "They go where there’s a need." Nationally, the stores have reduced the number of developments, yet Waukesha remains in the picture because Sunset Drive is so ripe for those types of stores. (Just about anyone on the south side is ready for a Target.)

* Competitiveness. The existing stores will have to improve to compete. When they do, we’ll all benefit. "Fox Run, have they done anything in the last 20 years to upgrade that?" Nelson asked. The same can be said for Kmart, according to Nelson.

When they do improve, "Sunset Drive, for the first time, will become a shopping destination," Nelson said. And if Fox Run, Kmart and others close, there will be replacements lining up for that space because the whole Sunset strip will be more desirable, according to Nelson.

* Blight removal. Don’t forget: A huge, empty building (Fleming) will be gone and replaced with a shiny new building.

I get all that. And I think the little guys (if you can call Pick ‘n Save a "little guy") have to learn to compete.

So yes, on balance, I support the Shoppes. That whole stretch of Sunset Drive could use some serious improvements. I see that. Anyone who lives here sees that.

But I have a few misgivings.

First, if I was a little guy, I’d be bitter about the city paving the way for competitors. Second, I’m hoping that in a few years we aren’t talking about removing blight through the "Kmart TIF" and the "Fox Run TIF."

(Longtime Waukesha resident Pete Kennedy is a former Freeman editor. His column runs Saturdays in The Freeman. Reach him at kennedycolumn@yahoo.com)

 


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