Big box stores anti-competition agreements

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Realstreets
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Big box stores anti-competition agreements

Postby Realstreets » May 14th, 2015, 7:32 am

http://www.twincities.com/localnews/ci_ ... t-building

"Home Depot (NYSE: HD) closed the store back in 2008, and it's been empty since. After several potential buyers passed on the property, the city wants to buy it — but Home Depot says it won't sell unless the city agrees to keep any competitor out of the space for 15 years. (The nearest Home Depot is in Inver Grove Heights.)"

"Originally, Home Depot was the anchor for the mall and negotiated an agreement with the city barring any competing stores nearby. This was a common stipulation, Bailey said.

But officials didn't realize the ban would be pushed after the Home Depot closed. And Bailey was stunned to learn about the company's new position: It would sell to the city only if the ban continues for another 15 years."

There needs to be an common understanding between suburbs that they will not accept agreements with these clauses, which just creates a race to the bottom.

go4guy
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Re: Big box stores anti-competition agreements

Postby go4guy » May 14th, 2015, 10:36 am

While it is disappointing, I think Home Depot has every right to do this. I would assume a reason they closed the Cottage Grove one is because it was taking a bit of business from the IGH and Woodbury locations. Obviously the city wants to buy it and lease it to a Lowe's or a Menard's, and that is bad for business for Home Depot. The city can turn it into a hundred other stores, just not a competitor of Home Depot. They are still paying taxes, and the property appears to be kept up, so they really dont have a leg to stand on. My opinion, the Cottage Grove mayor should be more like the Lakeville mayor.

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FISHMANPET
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Re: Big box stores anti-competition agreements

Postby FISHMANPET » May 14th, 2015, 10:47 am

Reading the article, they don't want it to be a Lowes or Menards, but because of the wide variety of things Home Depot sells, so many things are "competitors" of Home Depot.

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Avian
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Re: Big box stores anti-competition agreements

Postby Avian » May 14th, 2015, 11:24 am

Non-compete clauses are enforceable in Minnesota but 15 years could be deemed unreasonable by a court.

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Re: Big box stores anti-competition agreements

Postby twincitizen » May 14th, 2015, 11:26 am

There's a newish Menards down the road, and Lowe's is unlikely as well. Cottage Grove isn't pissed because they want to attract a Home Depot clone/competitor, I think they're pissed because of the incredibly broad language which purportedly would keep out any tenants which sold any product lines at Home Depot. That's pretty dangerous and the City has every right to be pissed. The options for filling this space are extremely limited already...it sounds like the agreement Home Depot wants moves it closer to impossible.

Hindsight 20/20, a better outcome would have been to deny the Walmart going in a couple miles down 61 (on the old Cottage View Drive-In site) and figuring out a way to put it here instead. A Walmart Supercenter (or Hy-Vee I guess) could've taken the whole site. Problem was Rainbow Foods was still open when that deal went down...

Cottage Grove's big box "center of gravity" is really a mile further down Hwy-61 at Jamaica, not here at 61 & 80th St. Looking to the future, the best option might be to seek County/Met Council funding to acquire the whole Rainbox/HomeDepot site and hold for a few years until a mixed-use village type of thing is feasible. There's a District 833 office building / support center property adjacent to the east that could be brought in as well. If built out close enough to 80th/Pt. Douglas, it would be a reasonably short stroadwalk to a Red Rock BRT Station at 61/80th.

go4guy
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Re: Big box stores anti-competition agreements

Postby go4guy » May 14th, 2015, 11:52 am

Why doesn't the city just stay out of this and let the market determine what goes here. If a developer can buy it from Home Depot, they can deal with the demands. Until then, the city and county are still getting paid taxes from Home Depot. I have never understood why some cities feel the need to act as a developer.

David Greene
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Re: Big box stores anti-competition agreements

Postby David Greene » May 14th, 2015, 11:59 am

twincitizen describes one reason right above: the city can act as a land bank and hold the site for something better than a big box store. This part of Cottage Grove could actually make a reasonable mixed-use development. The high school is right there along with reasonably dense (for the suburbs) neighborhoods. The whole area obviously needs a lot of work but with Red Rock at least probably viable as BRT, it's worth putting in some public investment here.

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Re: Big box stores anti-competition agreements

Postby go4guy » May 14th, 2015, 12:04 pm

Very true. I just dont like the idea of goverment spending millions of dollars on a parcel, with no guarantee of getting that full amount back, while also loosing the property taxes from that parcel because it is no longer owned by a private entity.

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Realstreets
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Re: Big box stores anti-competition agreements

Postby Realstreets » May 15th, 2015, 7:45 am

I would assume a reason they closed the Cottage Grove one is because it was taking a bit of business from the IGH and Woodbury locations.
This highlights a huge advantage cities have over businesses asking for incentives when developing a store. A company looking to open a store is very strategic about where it's located, they don't want to poach too much from their other stores, demographics nearby, proximity to highway or other destinations. If cities understand this they can leverage it to obtain more concessions on design or through community benefit agreements. Maybe this isn't possible in Cottage Grove where the store can be plopped down just over the board in un-incorporated township but it MPLS or St. Paul or even the inner-right suburbs where developable land is at a premium and potential customers are dense, this holds true.

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Re: Big box stores anti-competition agreements

Postby David Greene » May 15th, 2015, 11:17 am

Very true. I just dont like the idea of goverment spending millions of dollars on a parcel, with no guarantee of getting that full amount back, while also loosing the property taxes from that parcel because it is no longer owned by a private entity.
Government doesn't exist to make money.

One of the biggest problems with our society is the extreme focus on money.

RailBaronYarr
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Re: Big box stores anti-competition agreements

Postby RailBaronYarr » May 15th, 2015, 2:04 pm

Maybe someone can give a compare/contrast for why it's cool to hold on to a big box lot waiting for the right tenant or redevelopment opportunity but not some single family lots in N Mpls?

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Realstreets
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Re: Big box stores anti-competition agreements

Postby Realstreets » May 15th, 2015, 3:25 pm

I'm not sure I understand your statement but I think with Home Depot they still pay taxes where as (and correct me if I'm wrong) properties in NE are tax forfeited? Actually, everyone talks about houses being demolished in NE yet I can't find any information on the internet about it.


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