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Health & Fitness

Costco – Wheaton's Silver Bullet?

Retail giants fail to deliver on economic promises.

The controversy surrounding the $4 million taxpayer subsidy to Westfield Group for their Wheaton mall Costco expansion project is growing.  What little was promised to the surrounding neighborhoods as part of the grant’s good faith negotiations never materialized, but what of the promises to the greater Wheaton community and Montgomery County as a whole?  The answer will make your blood boil.

In the summer of 2009, Costco broke off negotiations with Lee Development Group for their Aspen Hill site now slated for a Wal-Mart – Bruce Lee via Gazette: “Costco was interested until Montgomery County enticed them to Wheaton with $4 million.”  Steve Silverman, the County’s Director of Economic Development, shepherded the project through a closed Council session, and the deal was announced in the winter of 2010 – Gazette: “Despite the promise, Silverman said Westfield decided the rate of return on Costco wasn't worth the extra $4 million in construction costs,” – for a “deal that could reinvigorate the struggling shopping center” that was actually Westfield’s second most profitable mall in the U.S.

The propaganda campaign continued through the summer of 2010 – The Washington Post: “[Silverman] said the county's contribution is akin to the $6 million in public funding allocated to build a parking garage to lure Macy's to Wheaton mall in 2005.”  The County touted Macy’s a success, but Hecht’s left shortly after Macy’s moved in because they are owned by the same holding company that did not want two stores in one mall, so the County’s idea of economic development in Wheaton was to spend millions more to replace the old Hecht’s building with a Costco mall wing at taxpayer’s expense.

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With these claim debunked, the County doubled down in the winter of 2011 – Gazette: “…Silverman said the Costco project offers other benefits, such as jobs and long-term tax revenue. Each of the projects considered for program funding must meet job creation and retention goals.”  Wheaton is an Enterprise Tax Zone that provides tax breaks – Costco would have generated more revenue for the County in Aspen Hill.  So how many jobs did Costco, a company with a history of inflating job projections, create in Wheaton?  Nobody knows because, despite Steve Silverman’s claims, the job creation & monitoring clause was magically removed from the Economic Development Fund grant.

The County’s last resort was to sell Costco as a silver bullet for Wheaton’s woes – Gazette: “"Right now, small businesses in Wheaton don't have a way to fully market what they're doing," [Silverman] said.  If Costco is approved, Westfield also will invest more in the small-business community, Silverman said. For the next five years, Westfield will offer kiosk space in the mall for small businesses to market themselves…”  Fast forward to 2014 and, instead of a kiosk that “will provide Wheaton and its vicinity critical foot traffic to support the area’s small businesses,” tucked behind some fake plants, there is a mural of the region’s highway map including Reston, VA… where Wheaton is marked with three simple words in red font “YOU ARE HERE.”

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So if the kiosk was promised “…in accordance with criteria and guidelines to be determined by Westfield and approved by the County,” and “Any waiver, amendment, or modification of any provision of this Agreement must be in writing and signed by both parties,” where is the paper trail?  Who determined that a mural of a highway map provides “critical foot traffic to support the area’s small businesses?”

It would be good to have the answer before primary elections in a supposedly progressive County that, despite studies to the contrary, promotes corporate welfare, subsidizes big-box stores and 20th-century shopping mall business models.  Westfield, the largest retail real estate property holder on the planet based out of Australia, will undoubtedly ask for more taxpayer money from this County government that has already given Westfield, a single company, one third of the County’s Economic Development Fund dollars – more than whole industries, like IT and BioTech, combined.

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