Economic development claims are bogus —
Province, city to accelerate capital plans as part of proposed IKEA site.
Winnipeg’s capital plans, however, did not call for the $ 26.5 million worth of work that was eventually conducted. The specific work conducted by IKEA and Fairweather, which included new traffic signals and turning lanes to accommodate future shoppers, did not appear in the city’s capital- budget forecast, the city’s long- term transportation plan or even in Plan Winnipeg, the city’s old long- term planning framework.
The political claim about speeding up nonexistent plans was made simply to avoid the appearance of looking like both governments were doling out straightforward development subsidies. Katz’s office, to its credit, conceded as much when asked to demonstrate which existing city plan called for widening Kenaston to 12 lanes near a future IKEA store.
Doer’s staff, however, insisted vague Plan Winnipeg language about economic- development incentives justified the political claim, even though the actual portion of Route 90 listed as the first priority for widening actually lies between Taylor Avenue in River Heights and Ness Avenue in St. James.
To be fair to Katz and Doer, they didn’t have to make any ridiculous claim. Given the enthusiasm about an IKEA store in Winnipeg, they could have called a spade and spade and suffered no political fallout for eventually agreeing to pay back $ 22 million of the $ 26.5- million infrastructure tab.
By pandering to shoppers, who make up a large component of the electorate, Katz and Doer could do little political wrong. Spending money to bring IKEA to Winnipeg was deemed to be such a popular move, Katz highlighted the IKEA development during the 2010 civic election campaign as his main economic- development achievement and continues to do so. The NDP government, now led by Premier Greg Selinger, gave IKEA prominent play during last week’s throne speech.
On Wednesday, city council’s executive policy committee will meet 45 minutes later than usual to allow Katz and other officials time to attend the IKEA opening. The city is clearly proud of its role in stimulating the Tuxedo Yards redevelopment, which will include not just an IKEA, but other big- box stores and a mall called Seasons of Tuxedo.
The belief at city hall is the subsidy is a good deal, as the development will generate new property taxes. That opinion is based on the assumption there will be no drop in property- tax revenue or business taxes anywhere else in Winnipeg as a result of the IKEA- led development. That is possible but hardly certain, as it would be foolish to assume consumers will not change any shopping habits after IKEA and other nearby stores open.
As uncertain as IKEA’s effects on the retail market may be, a subsidy for a furniture store does not represent a sound economic- development strategy. The next time a developer considers building retail in Winnipeg, will the city and province be just as willing to pony up for the infrastructure costs? Normally, it’s up to developers to pay for the new roads, sewers and watermains.
Like it or not, the IKEA subsidy sets a precedent for retail- district development. The political math would
By James Jewell