Atascadero's cost sharing on new interchange is risky

Atascadero may end up paying about half the cost of interchange improvement, but Wal-Mart should be the one to foot the bill

letters@thetribunenews.comMay 31, 2012 

The city of Atascadero may put itself on the hook for advancing roughly half of the $4.5 million needed to improve the Del Rio Road/Highway 101 interchange. The improvements are needed to accommodate a future Walmart retail store, along with The Annex and other commercial development expected in the area.

While the city stands to benefit if a Walmart is built — sales tax revenue and jobs would be two of the biggest gains — we don’t like this new cost-sharing arrangement. Not only is there an element of risk for the city, it also contradicts what the public had been led to believe.

Back in 2007, Wal-Mart and The Annex indicated they would fund the freeway improvements and be repaid as other commercial projects developed in the area. However, that was never nailed down in writing — one city official referred to it as a “gentlemen’s agreement.”

Unfortunately, that gentlemen’s agreement fell apart. Wal-Mart and The Annex failed to come to terms on how they would share the costs. And more recently, the developer of The Annex lost most of the Atascadero property in a foreclosure. The bank that took over the property is proceeding with the application, but there’s no guarantee of when or whether the project will be built.

Meanwhile, the city is considering a new cost-sharing proposal for the interchange upgrade — one we find far less palatable. If approved, the city will advance roughly $2.2 million for the work, with the remainder coming from Wal-Mart.

Atascadero officials point out that, under state law, the city can only require Wal-Mart to pay its proportional share of the interchange costs. Besides, city officials are optimistic that there will be more development in the area in the not-too-distant future, and as it occurs, Atascadero’s coffers will be reimbursed.

That may be, but given the fiscal challenges that all cities face, we question whether it makes sense for Atascadero to assume the financial risk — however slight it may be.

At the very least, we would be more comfortable if the city negotiated a deal to be reimbursed by Wal-Mart at some future date, in the event that The Annex and other commercial development fail to materialize in a reasonable amount of time.

It would be even better if Wal-Mart seized this opportunity to earn a lot of goodwill by stepping up and honoring its “gentlemen’s agreement” to front the interchange improvements and be repaid later.

As we said last year: “Wal-Mart would not be building a store of any size unless it was sure it would be profitable. For it to quibble now over a relatively insignificant amount of money is only going to re-ignite the controversy that has divided the Atascadero community for far too long.”

That’s still our position.

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