A tale of 2 shopping districts: Sunny days for Seasons of Tuxedo, but are others left behind?
The city and province subsidized Seasons of Tuxedo and improved roads at Polo Park, apparently without a plan
Since the opening of Outlet Collection Winnipeg one week ago, thousands of shoppers in this city have spent money at the retail development at Kenaston Boulevard and Sterling Lyon Parkway, on the south side of Tuxedo.
Chances are, so have you — even if you haven't visited.
That's because $22 million worth of city-provincial subsidies helped stimulate the construction of Seasons of Tuxedo, the sprawling development on either side of Sterling Lyon Parkway, west of Kenaston Boulevard.
Nearly a decade ago, then-premier Gary Doer and then-mayor Sam Katz signed off on a plan to offer property tax rebates to the developers, which included anchor retailer Ikea. At the time, the Doer government characterized the subsidies as a means of speeding up the construction of infrastructure that already figured into the city's transportation plans.
This claim was easily debunked, as no city planning or budget document called for the expansion of the Kenaston-Sterling Lyon intersection to 12 lanes. Doer merely used the popular and defensible practice of infrastructure stimulus as a cover for the even more popular but less defensible idea of spending public money to help Ikea come to Winnipeg.
Katz went along with the exercise.
"Ever since being mayor, I've gotten many emails. The top email is from people saying, 'We'd love to see Winnipeg have an NHL franchise again,'" Katz told the Winnipeg Free Press in 2008. "The one right behind that is how people talk about Ikea coming to Winnipeg."
Today, Winnipeg has both the NHL and an Ikea store. The decision to spend public money on the latter doesn't seem unwise, if you look at it in isolation.
As well, the buildout of Seasons of Tuxedo is proceeding ahead of schedule, according to a city report prepared for council's public works committee in April. The total size of the development may even exceed the initial projection of $400 million over a decade.
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This means both the city and province will take in well more than the $22 million spent in subsidies for Seasons of Tuxedo. The question is whether this additional revenue comes at the expense of a loss of economic activity elsewhere in the city — including a few kilometres north, in Polo Park.
In 2012, the city sold the former Canad Inns Stadium site for $30.25 million to Polo Park Holdings, a partnership between Winnipeg developer Shindico Realty and Cadillac Fairview, owner of the nearby Polo Park mall.
To improve the flow of traffic around the neighbourhood, the city and province agreed to spend a combined $40 million to improve intersections and both widen and extend roads in the Polo Park neighbourhood.
The only structure on this lot is a now-closed Target store. Shindico Realty is still actively marketing the site.
"We continue to be in discussions with tenants for Polo and mixed use with retail is desired, but there are issues to deal with," president and CEO Sandy Shindleman said via email. "Now that Outlets is open, perhaps our traction will pick up."
Before you draw a straight line from Ikea to Target, it would be overly convenient to blame the city-provincial spending along Sterling Lyon Parkway for the slow pace of development along Empress Street. That said, anyone who opposes development subsidies on an ideological basis would see this tale of two shopping districts as a policy lesson.
"When you're giving certain breaks to some people and not to others, you're picking winners and losers and that means we're hoping the politicians know more about what's good for the economy than the folks, the entrepreneurs betting their livelihoods on it," said Todd MacKay, the prairie director of the Canadian Taxpayers Federation, in a telephone interview from Moose Jaw, Sask.
"Governments have to get out of the subsidy business. First of all, they're gambling with taxpayer dollars and when those gambles don't turn out, which is often the case — as we're seeing with a big, empty Target store — we're all on the hook for it," MacKay said.
"Secondly, those other businesses who don't happen to get a subsidy — often small businesses, who don't have the resources to lobby big-time politicians — they get the short end of the stick because their tax dollars are paying for these subsidies and they have to compete with the big developers that come in."
The mayor did, however, suggest the city would be unlikely to see such a subsidy in the future.
"I would struggle to envision a scenario where direct subsidies for that sort of investment would be something that I would favour," Bowman said Monday at the annual general meeting for Economic Development Winnipeg.
"But I would want to see the cost-benefit analysis and I would want it done in an open and transparent way, to hold government officials, myself included, accountable for those decisions."
Ivanhoe Cambridge, the Montreal-based firm that owns Outlet Collection Winnipeg, declined to comment.
At the same annual general meeting where Bowman spoke, Economic Development Winnipeg president and CEO Dayna Spiring said her organization will no longer go after "low-hanging fruit" such as restaurant franchises when it attempts to lure businesses to Winnipeg. The focus, she said, will be on better-paying employers that provide jobs in the longer term.
It will be telling see how this well-intentioned economic policy stands up to the pressure of retail politics when the next Ikea or outlet mall comes knocking on the doors at city hall.
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