BATAVIA – The impending closure of the local Sam’s Club store has put a $1 million hole in the city of Batavia’s budget.
City Administrator Laura Newman said the staff will meet this week to discuss budget cuts and then present recommendations to the Batavia City Council at a committee meeting Jan. 23.
“This is a huge chunk of our operating budget,” Newman said.
Finance Director Peggy Colby said the city will lose numerous sources of revenue from Sam’s Club including electric, water and sewer, utility taxes, liquor taxes, property tax and, of course, sales tax.
Specific sales tax figures are proprietary business information, Colby said. However, all of the taxes and fees paid by Sam’s Club total about $1 million a year, she said.
“That’s a big impact,” Colby said. “We really have to sit down and look at what we can live without. I’m still reeling a little bit.”
No wonder. The announcement last week that Sam’s Club would be closing 63 stores nationwide came just two weeks into the city’s new budget year for 2018. The operating budget stands at about $83 million.
The closing of the Batavia store at 501 N. Randall Road will result in the loss of about 150 jobs.
It also means that the city will delay the hiring of two new employees, including a police officer and a building inspector.
“We have put those positions on hold until we can determine how we are going to revise the budget in light of the loss of revenue,” Newman said. “And both are really important positions."
One area where the city may attempt to save money, Newman said, is by delaying vehicle replacement.
Asked if the city may be forced to cut personnel, Newman indicated such a move is not being contemplated.
“In my opinion that is a last resort,” Newman said, noting that the city staff is still smaller than it was in 2011, after cuts were made in response to an economic downturn.
The decision to close the Sam’s Club was puzzling for city officials.
“We’re still scratching our heads,” Mayor Jeff Schielke said. “They just spent a lot of money to upgrade that building.”
Schielke noted that many of the Sam’s Club store closures are taking place in locations where a Sam’s Club is in close proximity to a Walmart, as is the case in Batavia. Sam’s Club is part of Wal-Mart Stores Inc.
Newman said Walmart officials have informed the city that they intend to sell the Sam’s Club property. Schielke said the building should “obviously continue as retail.”
The closure of the store will have implications beyond revenues for the city.
“The loss of jobs in the community is very unfortunate,” Colby said.
While the city staff and aldermen work on budget cuts, the wheels of city government will keep on turning.
“We have healthy reserves, so in the short term we’ll be fine,” Colby said.
After almost 20 years in town, the Sam’s Club store is scheduled to close Jan. 26. The building covers 127,933 square feet on a piece of land measuring 769,269 square feet.
The value of the building and the property is nearly $9.8 million, according to records on file with the Geneva Township Assessor’s Office.
Word of the job loss was sent to the city of Batavia the morning of Jan. 11 in a WARN notice, known as the Worker Adjustment and Retraining Notification Act of 1988. It is a federal labor law that requires most employers with 100 or more employees to give a 60 calendar-day, advance notification of plant closings and mass layoffs.
"Of course, we are shocked and disappointed. It is one of our largest retailers in this city," Newman said. "And by all appearances it was a very popular store with a lot of shoppers and a full parking lot. We are very shocked."
According to the WARN notice, employees were notified of the closure Jan. 11. All management employees at the Batavia facility will be terminated as of April 13, and all of its hourly employees will be terminated as of March 16.
"We expect the employment separations to be permanent," the notice stated. "There is no union representative, recall or bumping rights. However, all separated employees have the opportunity to apply for open positions at other Sam's Clubs or Walmart facilities."