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The ticking fiscal time bomb hiding in plain sight—and what planners and code officials can do to stop it
There’s a strange irony playing out across North America. Cities continue to greenlight massive retail developments that not only gut their downtowns but quietly bleed their municipal budgets dry. Big box stores—those sprawling, single-story rectangles surrounded by oceans of asphalt—may promise tax revenue and jobs, but the long-term math tells a different story. They are often a fiscal black hole disguised as progress.
Let’s start with what we know. These stores are typically enormous, clocking in at 50,000 square feet or more. They’re almost always one-story, built with the cheapest materials possible, devoid of windows or architectural character. Their physical footprint is matched by massive parking lots, because minimum parking requirements embedded in local zoning codes often dictate it. This car-centric layout requires enormous public investment in infrastructure: road widening, turn lanes, traffic signals, stormwater systems, and water and sewer extensions. But while the public foots the bill, the private benefit almost always flows in the opposite direction.
That gap becomes even more concerning when you consider how long these buildings are expected to last. Big box retail structures are typically designed for a 15-year lifespan. In many cases, they are abandoned even sooner, as retailers relocate to newer sites farther down the road, often on cheaper land, repeating the cycle. The old site sits empty, generating even less tax revenue, while the infrastructure that supported it must be maintained indefinitely. The city loses again.
To attract these stores, cities began offering subsidies: discounted property taxes, fast-tracked permitting, utility connections, even direct cash incentives for job creation. In the United States, these incentives add up to an estimated $65 billion annually. But the jobs often pay poorly, the stores cannibalize existing small businesses, and the revenue barely covers the new maintenance burden.
A 2012 study in Ohio found that even when accounting for sales taxes, a typical Walmart-sized store produced a net fiscal loss of 44 cents per square foot per year. For a 50,000-square-foot building, that’s over $20,000 in annual red ink. That’s before considering things like increased policing costs—one Walmart in Port Richey, Florida was responsible for nearly half of the city’s total arrests.
In Marquette, Michigan, a Lowe’s store argued in court that its building should be assessed at a dramatically lower value because it was not intended to be resold or leased. If accepted, that logic means a big box store can lower the value of a piece of land simply by building on it. Cities are left with the same maintenance cost, but far less tax revenue.
Many of these properties are deed-restricted to prevent future use by competitors. If the retailer moves down the road, they can legally prohibit another store from moving into the same space—even if the city wants it. In some cases, the retailer simply continues to pay the lease on an empty building rather than risk a competitor benefiting from the infrastructure they left behind.
When Walmart leaves—and they do leave—the damage is severe. In Oriental, North Carolina, a grocery store that had served the community for 40 years closed after Walmart arrived. Less than two years later, Walmart shut down their own store, leaving the town with no grocery store and no pharmacy. Property values fell, and residents were forced to travel for basic needs.
It’s not just local communities that lose out. Walmart uses 22 shell companies in Luxembourg to avoid taxes. The very same company draining your city’s budget is routing its profits through a country you may never visit, a country that, incidentally, provides free public transit nationwide.
Walmart attempted to enter Germany in the 1990s and failed. Local chains like Aldi and Lidl crushed them, not just because of pricing but because of worker protections, union strength, and customer preferences for vibrant, walkable shopping districts. Germans did not want the one-stop-shop model. They preferred specialized stores and human-scaled urbanism. Ironically, groceries in Germany remain cheaper than in the United States.
Planning and zoning departments need to:
Fixing broken sidewalks and supporting small businesses may not come with ribbon-cuttings and giant scissors, but it is the only path to financial stability and local economic resilience. As planners, building officials, and policy makers, we owe it to our cities to stop subsidizing decline and start building smarter, fairer, and more fiscally responsible places to live and work.
Let the ribbon stay in the drawer. Let’s cut the losses instead.
There’s a strange irony playing out across North America. Cities continue to greenlight massive retail developments that not only gut their downtowns but quietly bleed their municipal budgets dry. Big box stores—those sprawling, single-story rectangles surrounded by oceans of asphalt—may promise tax revenue and jobs, but the long-term math tells a different story. They are often a fiscal black hole disguised as progress.
Let’s start with what we know. These stores are typically enormous, clocking in at 50,000 square feet or more. They’re almost always one-story, built with the cheapest materials possible, devoid of windows or architectural character. Their physical footprint is matched by massive parking lots, because minimum parking requirements embedded in local zoning codes often dictate it. This car-centric layout requires enormous public investment in infrastructure: road widening, turn lanes, traffic signals, stormwater systems, and water and sewer extensions. But while the public foots the bill, the private benefit almost always flows in the opposite direction.
The Per-Acre Problem: Why Bigger Isn’t Better
Cities need to stop measuring tax revenue in absolute terms and start looking at return per acre. Research from Urban3 has repeatedly shown that traditional downtown buildings—multi-story, mixed-use, human-scaled—generate exponentially more property tax per acre than suburban big box developments. In Asheville, North Carolina, for instance, a modestly sized downtown building produced nearly 100 times more per-acre property tax than a suburban Walmart. The reason? Density. Height. Utility. Cities are paying the same, if not more, to serve the infrastructure around a Walmart, but earning dramatically less in return.That gap becomes even more concerning when you consider how long these buildings are expected to last. Big box retail structures are typically designed for a 15-year lifespan. In many cases, they are abandoned even sooner, as retailers relocate to newer sites farther down the road, often on cheaper land, repeating the cycle. The old site sits empty, generating even less tax revenue, while the infrastructure that supported it must be maintained indefinitely. The city loses again.
Zoning Incentives and the Cost of Political Convenience
This did not happen by accident. It was built into the system. Many municipalities, under pressure to balance budgets without raising residential property taxes, embraced policies like California’s Proposition 13, which severely restricted property tax increases on homes. This led cities to chase commercial tax revenue wherever they could find it. Big box retail, with its high sales volume, seemed like a golden ticket.To attract these stores, cities began offering subsidies: discounted property taxes, fast-tracked permitting, utility connections, even direct cash incentives for job creation. In the United States, these incentives add up to an estimated $65 billion annually. But the jobs often pay poorly, the stores cannibalize existing small businesses, and the revenue barely covers the new maintenance burden.
A 2012 study in Ohio found that even when accounting for sales taxes, a typical Walmart-sized store produced a net fiscal loss of 44 cents per square foot per year. For a 50,000-square-foot building, that’s over $20,000 in annual red ink. That’s before considering things like increased policing costs—one Walmart in Port Richey, Florida was responsible for nearly half of the city’s total arrests.
The “Dark Store” Loophole and Weaponized Depreciation
It gets worse. Big box retailers have learned how to game the property tax system through what’s known as the “dark store” theory. The idea is simple: assess the property as if it were empty, because these buildings are allegedly so specialized and so poorly built that they have no resale value. That’s the argument being made in courtrooms across the country—and they’re winning.In Marquette, Michigan, a Lowe’s store argued in court that its building should be assessed at a dramatically lower value because it was not intended to be resold or leased. If accepted, that logic means a big box store can lower the value of a piece of land simply by building on it. Cities are left with the same maintenance cost, but far less tax revenue.
Many of these properties are deed-restricted to prevent future use by competitors. If the retailer moves down the road, they can legally prohibit another store from moving into the same space—even if the city wants it. In some cases, the retailer simply continues to pay the lease on an empty building rather than risk a competitor benefiting from the infrastructure they left behind.
Subsidizing the Competition of Local Businesses
When big box stores enter a market, their goal is clear—dominate it. Walmart’s internal strategy reportedly aims for 30 percent market share in every community they enter. This means undercutting prices, often using loss leaders—products sold below cost—until local competitors are pushed out of business. Once that happens, the community becomes reliant on a store that is loyal only to its shareholders.When Walmart leaves—and they do leave—the damage is severe. In Oriental, North Carolina, a grocery store that had served the community for 40 years closed after Walmart arrived. Less than two years later, Walmart shut down their own store, leaving the town with no grocery store and no pharmacy. Property values fell, and residents were forced to travel for basic needs.
The SNAP Scam: A Closed Loop of Subsidies
Big box retailers often pay their employees so little and offer so few hours that many qualify for food stamps, now known as SNAP benefits. The twist? Walmart and similar stores are among the largest recipients of SNAP spending. They profit by selling groceries to the very people they underpay. Walmart reportedly receives over 25 percent of all SNAP dollars, meaning your tax dollars subsidize their labor model and their retail profits at the same time.It’s not just local communities that lose out. Walmart uses 22 shell companies in Luxembourg to avoid taxes. The very same company draining your city’s budget is routing its profits through a country you may never visit, a country that, incidentally, provides free public transit nationwide.
The European Alternative and What We Can Learn
This is not how retail must work. European cities have large-format stores—hypermarkets—but they are constrained by sane urban planning. Regulations prevent the use of loss leaders, discourage sprawling development disconnected from transit, and ensure that infrastructure costs are not socialized while profits are privatized.Walmart attempted to enter Germany in the 1990s and failed. Local chains like Aldi and Lidl crushed them, not just because of pricing but because of worker protections, union strength, and customer preferences for vibrant, walkable shopping districts. Germans did not want the one-stop-shop model. They preferred specialized stores and human-scaled urbanism. Ironically, groceries in Germany remain cheaper than in the United States.
What Planners and Code Officials Must Do
We need to stop pretending this is just about consumer preference. Culture follows policy. We built this environment with our zoning codes, incentives, and approval processes—and we can unbuild it the same way.Planning and zoning departments need to:
- Reform zoning codes to encourage walkability, mixed-use infill, and smaller parcel development
- Eliminate or scale back minimum parking requirements that force car-dependent site layouts
- Tie development incentives to long-term value rather than short-term political optics
- Incentivize adaptive reuse of existing structures and restrict single-use commercial construction
- Audit fiscal return on investment for all proposed development, not just sales projections
- Promote import replacement strategies that prioritize local business ecosystems over outside corporations
In Closing: The Choice is Ours
The story of big box retail is not about poor decisions made in the past. It is about ongoing decisions being made every day in planning and zoning departments across the country. This model is unsustainable. It siphons money from your downtown, undercuts your tax base, and leaves a trail of abandoned shells across your community.Fixing broken sidewalks and supporting small businesses may not come with ribbon-cuttings and giant scissors, but it is the only path to financial stability and local economic resilience. As planners, building officials, and policy makers, we owe it to our cities to stop subsidizing decline and start building smarter, fairer, and more fiscally responsible places to live and work.
Let the ribbon stay in the drawer. Let’s cut the losses instead.
