More on that Walmart deal

I admit lease-financing deals isn't something up my alley but my attention has been piqued.  I don't quite understand what's going with this Walmart and TX school trust fund deal, and it's really bugging me.
 
Thanks a bunch to eRobin for providing this link (registration req'd) on this Walmart deal. And thanks to Linkmeister for his link on leasing deals.
 
What I get: 
1.  Walmart wants to build a distribution center on public land.  The deal is: they will buy 240 acres from the state and build a store on this property. This is the weirdest part of the deal.  Why do they have to do this dance of buying the land and selling it back? Why not build somewhere else?
 
Not only that, I'm not sure for how much money the state is selling it to Walmart.  I'm betting it's dirt cheap.  I guess it doesn't matter because the state public education trust fund will then buy back the land and the building for $100 million.  Apparently this is a huge chunk of change to be used for an investment.   

2.  The state will lease the building back to Walmart for 30-40 years.  Over these 30 to 40 years, the state will receive rent payments totalling $187 million.  Anyone think this a good return on investment? 
 
My calculations if I take the numbers above: the state will earn $87 million over 30 to 40 years, which comes out to 2 to 2.9 million  per year in rent (remember, they spent $100 million to buy the land and store back).  I guess I was wrong because the media says rent payments will be around 4.8 million the first five years. 
 
There is a problem with the lease payments,  apparently favorable terms for Walmart especially when you take into account inflation.

Wal-Mart's lease payments would be 6 percent of the estimated $80 million per year for the first five years. That's roughly $4.8 million a year. Every five years, the payments would increase at a fixed rate of 10.4 percent, meaning that in the sixth year the payment would go up to nearly $5.3 million.
Those terms raised alarms for John Pouland, a Clinton administration official who once oversaw federal real estate management in the General Services Administration's Fort Worth office.
Pouland, who reviewed the agreement at the Star-Telegram's request, said the low rate and the failure to tie increases to the Consumer Price Index, as originally proposed, favor the retailer. Should inflation rise higher than 2 percent a year, the payments will lose ground over time.
"I think Wal-Mart worked over the state of Texas pretty well," Pouland said. "I think Wal-Mart clearly got the better end of the deal, all things considered."

3.  At the end of the 30 to 40 years, Walmart will buy the center back.  Not clear if they get the land back. 

After that, Wal-Mart must buy back the building for what the state paid or market value, whichever is higher.

4.  During this 30 to 40 year period, Walmart will be exempt from paying taxes on the land and the building but not on their inventory. Tax break is estimated to be 2 million.

The Permanent School Fund's tax-exempt status will help Wal-Mart save almost $2 million a year in property taxes. More than $500,000 in one-time infrastructure improvements sweetened the deal. At $55 million over 30 years, it's the largest government incentive package Wal-Mart has ever received, according to a national watchdog group.

5.  Note the secrecy involved in the dealmaking, which kept local people out of the loop.

Land officials say all local taxing entities, including the school superintendent, signed off on removing the property from tax rolls -- in identically worded letters whose text was crafted at the land office.
In keeping with the secrecy of the arrangement, the company receiving the concessions was never identified until Wal-Mart made its announcement in February.
Even when the Baytown City Council and Chambers County Commissioners Court authorized spending up to a combined $450,000 in infrastructure improvements in November, the mayor and county judge did not know the identity of the company or how big the eventual tax breaks would be, those officials said.
Nor was there much danger of the story leaking to the local press: Among those signing a confidentiality agreement was the editor and publisher of the Baytown Sun, Wanda Garner Cash, who also sits on the economic-development foundation board, the newspaper disclosed.
The secrecy and the long-term nature of the tax breaks rub Goose Creek school board member Weston Cotten the wrong way. He said he was unaware that the superintendent had signed the letter supporting the deal.
"I am very unhappy that our state government has decided to take away local control," Cotten said. "It affects my board, my school district. I feel like we should have known. These aren't white-collar [jobs]. They're not even middle-class jobs."
Then-Baytown Mayor Pete Alfaro said the school board members were not brought into negotiations because, unlike the Permanent School Fund, they could not offer tax breaks.
"They weren't in the loop," he said. "The only people they [Wal-Mart representatives] were looking for were people who could give them tax abatements."

Strange, strange, and strange.   Walmart is getting a favorable deal in exchange for their business. And this type of thing sounds more like a loan to Walmart and a way for Walmart to get out of paying taxes on their store.  I thought communities could expect some tax revenue from megacorporations to help out public education.  I don't expect megacorporations to need help from public education trust funds to get a business break.  But then, we're dealing with Walmart and with Texas, an unholy combination.