Wal-Mart corporate officials have pulled a fast one on Gilroy by
opening a new store in Morgan Hill
Let’s hope that Gilroy city officials learn some important lessons from news that Wal-Mart will be opening a new store in Morgan Hill.
Wal-Mart spokesman Kevin Loscotoff said the reason for the new store is to help Morgan Hill customers avoid the drive to the 220,000-square-foot Wal-Mart Supercenter in Gilroy.
“We have customers in Morgan Hill that are driving to our Gilroy store. We’ve heard from the community the desire for a grocery store in (the Morgan Hill) center,” Loscotoff said, “So we have taken the opportunity to better serve our customers.”
The new Wal-Mart store will open in the 80,000-square-foot space formerly occupied by Target on Cochrane Plaza. Morgan Hill officials offered no incentives for Wal-Mart to open a store there.
The first lesson, obviously, is that Gilroy doesn’t need to offer incentives for retailers to locate in our community. Geographically and demographically, Gilroy is far more attractive to retailers than smaller, more northerly Morgan Hill.
Despite that, Gilroy offered more than $400,000 in infrastructure subsidies for Wal-Mart to open a Supercenter in town. Those were offered despite the fact that Wal-Mart already had a store in Gilroy – a big box fronting U.S. 101 that remains empty years later, and despite promises from store officials that a new tenant would be found for the old store quickly.
Other retailers, who were new in town, were given other incentives, such as fee waivers, when they agreed to open stores in Gilroy.
Perhaps incentives were needed more than a decade ago when Gilroy was just gearing up as a retail Mecca, but clearly they were not needed for the shopping centers on Pacheco Pass.Â
But that’s not the only lesson to be learned.
By constructing a store less than 12 miles away that is designed to draw customers that were shopping at the Gilroy store, Wal-Mart is directing sales tax dollars away from Gilroy and toward Morgan Hill.
Gilroy officials should be hopping mad. Mayor Al Pinheiro said, “It doesn’t make me happy. When we approved the Wal-Mart, we didn’t expect them to open a Wal-Mart up there.”
The lesson is that those expectations need to be put into writing. Incentives, infrastructure subsidies, and the like for retailers should include a clause that restricts retailers from opening another store within a specific radius – say 30 miles for big-box stores – for a set number of years.
Our community needs to understand its central location and the fact that Gilroy is a powerful retail center. Retailers ought to pay full freight for the privilege of locating here.
What we do need is diversification. Our city is overly reliant on sales tax revenue. Incentives for non-retail companies that bring jobs with living wages are clearly needed. But even those should be carefully crafted to ensure that companies entrusted with those incentives can’t undermine the incentive’s purpose.
