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I was out getting coffee the other day when I ran into my friend and community leader, Joe. He was a long-time stock trader and in recent years has worked on a series of neighborhood projects with his old friends Dom and Nick. Joe had lots of questions for me:
Joe: Well, it has been a busy few weeks in Evanston.
W.B.: Yes, always is.
Joe: We now have a Trader Joe’s and are losing two Dominick’s. I knew those promises of increased taxes were never going to happen and now this proves it.
W.B.: Not so fast. Evanston economy is strong. We will replace the two Dominick’s in short order. Trader Joe’s is doing very well.
Joe: Yeah, the developer of the store just sold it, thanks to the $2 million the City gave Trader Joe’s.
W.B.: The City didn’t give any money to Trader Joe’s.
Joe: It didn’t? Well, then the developer that built the property got it.
W.B.: No money to the developer either. A few years back, the City talked to another developer about a Trader Joe’s at another site and agreed to rebate some of the increased sales tax for many years if that project happened. No such deals here.
Joe: Somebody got $2 million, didn’t they?
W.B.: The City spent $2 million to purchase two parcels of land for a City parking lot adjacent to the store. The developer paid to demolish the buildings on the land and build the lot for the City. The City owns the parking lot and will even offer residents permits to park on the lot during off hours starting next year. Neither Trader Joe’s nor developer got any money from the City. In fact, the City collected $50,000 from the developer when the store construction was complete as a one-time parking license fee. The City now owns a parking lot that is worth even more than the $2 million paid for the land, thanks to appreciation of land values in the area.
Joe: So, are you saying the City is ahead on the deal?
W.B.: Yes, the taxpayers of Evanston now own a parking lot worth more than we paid for the land and we got a Trader Joe’s that will generate more than $500,000 in annual new revenue to the City.
Joe: Ah, there you go again, Wally. How can that be with the closing of my beloved Dominick’s Finer Foods? There will be less grocery sales, won’t there? No way you will see more tax dollars.
W.B: The City’s economic development staff is working hard to fill both stores (on Green Bay and at Evanston Plaza). The store on Green Bay is in an attractive location for a grocery store and will likely be acquired by another chain in short order. A new chain will likely bring a better shopping experience, so sales taxes should be comparable, if not increase.
For Evanston Plaza, there are even more opportunities. The center has been anchored by Dominick’s. With the departure of Dominick’s, there may be another grocery store or instead, maybe a new type of retail or commercial business. The revitalization of the center has been a priority for the City for some time. A new and maybe completely different kind of anchor allows for all sorts of possibilities.
Joe: Possibilities. Sounds just like more hooey.
W.B.: Not really – the grocery business has changed a lot in the past 25 years and we are always working to stay on top of these market trends. The Chicago grocery market has a lot of competitors competing for our “food dollars.” This means that the average grocery shopper is going to visit multiple stores in a week to get the things they need.
For years, conventional grocery stores like Jewel or Dominick’s have faced challenges in light of the choices for our “food dollars.” The City collects 1 percent home rule tax on some grocery items and another 1 percent tax (in addition to the home rule sales tax) on many other items. Another 6 percent tax on liquor, wine or beer is also collected. Based on what we know, it is likely that each traditional grocery store is generating between $100,000 and $350,000 annually in local taxes to the City. However, traditional grocery stores in Evanston generally generate half the total annual sales of a store like Trader Joe’s.
Let’s also keep in mind that, just because a grocery store closes doesn’t mean that all of a sudden an Evanston resident will completely stop shopping for those groceries in Evanston and those dollars won’t be spent. Don’t forget, we still have two Jewel-Oscos, three Walgreens, three CVS Pharmacies, two Whole Foods, a Trader Joe’s, a Target, a Food 4 Less, an Aldi, a GFS Marketplace, and a Sam’s Club. In total, these stores make up about 590,000 square feet of grocery and pharmacy business. The two Dominick’s stores account for about 90,000 square feet of grocery store space, or about 15 percent of the City’s total grocery store space.
So, Dominick’s departure from Evanston Plaza could bring another grocery store of a different type or open up new opportunities for different kinds of retail or other experiences. Evanston doesn’t lose in any of these scenarios.
Joe: OK, I’m still not convinced, but what happens next?
W.B.: Trader Joe’s continues to be successful, more tax revenue comes to Evanston and residents enjoy the unique opportunity of shopping at a Trader Joe’s, Whole Foods and Jewel in one location. The City owns a valuable piece of property that area residents soon get to use for off hours parking.
And with the departure of Dominick’s, the City gets two new businesses to fill the spaces. This is especially exciting for Evanston Plaza, as it allows all sorts of possibilities for the old Dominick’s. The City created a tax increment finance (TIF) district here last year to be helpful financially if such an opportunity like this occurred.
Joe: OK, OK. Not such a bad deal for us taxpayers after all. Now let’s talk Harley Clarke Mansion.
We agreed to have coffee to discuss that one soon.