On January 17, 2010, Sprawl-Busters reported that government bail outs were alive and well in Missouri — the ‘show me’ the money state. One of the Walton family members on the Forbes Magazine Wealthiest Americans list was asking Missouri taxpayers to help him build a bigger Wal-Mart with nearly $8 million oof taxpayer subsidy.
E. Stanley Kroenke, who inherited a fortune in Wal-Mart stock when he married the daughter of Sam Walton’s brother, now needs public welfare to carry out his development plans.
Kroenke, who owns the Denver Nuggets basketball team, hockey’s Colorado Avalanche, is part owner of the St. Louis Rams and the English soccer team Arsenal, has asked for a Tax Increment Financing (TIF) deal to build a Wal-Mart supercenter in the tiny community of Bridgeton, Missouri.
Kroenke is 117th richest American, with an estimated worth of $2.7 billion in 2009. The use of state tax subsidies by billionaires is emblematic of the ‘public bail out’ mentality now gripping the nation.
On August 22, 2009, Sprawl-Busters noted that there are 19 Wal-Marts within 25 miles of Bridgeton, including a Wal-Mart right on the border of Bridgeton and St. Ann, and 7 miles away in St. Charles, Missouri.
Bridgeton is a city that has been losing population. Compared to 1990, the population in Bridgeton has dropped 15%. The St. Louis Business Journal reported in 2009 that the city was going to issue a request for redevelopment proposals for some vacant properties formerly occupied by the retailer Value City, which went out of business, and other tenants along St. Charles Rock Road. One of the most prolific Wal-Mart developers in the country, Kroneke-owned THF Realty, fronted by an affiliate, proposed a Wal-Mart supercenter on the Value City property.
THF Realty of St. Louis, was founded in 1991. It owns 100 properties comprising more than 20 million square feet of leaseable area in 23 states. A concentration of THF properties exists in Missouri, Illinois, Pennsylvania and West Virginia. The company says its mission is to be the “best private developer in America.”
Stan Kroenke is the Chairman of THF. Building Wal-Marts is a family affair for Kroenke. His wife, Ann Walton Kroenke is one of the richest women in America, with an inheritance valued at $2.6 billion.
Over the years, Kroenke and THF have been at the center of many controversial Wal-Mart developments in places like St. Peters, Columbia, High Ridge, Maplewood, and North St. Louis County, Missouri, as well as Glen Carbon, Illinois, Wheeling, West Virginia, and Buffalo, Minnesota.
Last January, Kroenke’s group presented to Bridgeton a proposal to receive as much as $8 million in TIF benefits to build a Wal-Mart superstore. According to Kroenke, the Wal-Mart project will generate roughly $7 million in sales and property taxes, based on projected sales at the Wal-Mart of $82.5 million per year.
But the welfare deal was not without its detractors. Officials in neighboring St. Ann, where part of an existing Wal-Mart would likely be shut down, are not pleased with the project. The “older” Wal-Mart discount store actually sits on the border of St. Ann and Bridgeton — so it is a partial source of sales tax revenue for St. Ann. The “old” Wal-Mart initially was entirely within Bridgeton — but when Wal-Mart sought to expand it, the store’s footprint expanded into St. Ann.
Tax Increment Financing has been used by Missouri officials for years to try to lure developers away from other communities. In 2007, the power to grant a TIF was changed by the state legislature to require cities to use a countywide approach to TIFs, rather than a town-level process only. Since the TIF changes were adopted, the use of this financing “gift” to developers has dropped dramatically. Kroenke’s request for a subsidy is only the second in St. Louis county since the law became effective in January of 2008.
Bridgeton Mayor Conrad Bowers has been promoting Kroenke’s scheme for months. “The store is going be larger, and have many more products, and the sales will be higher,” the Mayor told the St. Louis Dispatch. The proposed supercenter would be 159,000 s.f. — only 40,000 s.f. larger than the existing Wal-Mart store just minutes away from the new site on Harmony Lane.
THF says the supercenter will employ around 300 workers — but most of these workers are already employed at the “old” store. Despite the fact that local officials have watched Wal-Mart shut down several ‘old’ discount stores and Sam’s Clubs in the Bridgeton area — Wal-Mart told the Dispatch that it has no formal policy of closing older stores and building larger stores nearby. But this process of replacing discount stores with more profitable, larger supercenters, has been going on for more than 15 years.
A Wal-Mart spokesman said a supercenter in Bridgeton would “add full retail-grocery service and make it a modern Wal-Mart. That’s the crux of it. There’s a real need for it in the Bridgeton-St. Ann area and it’s a way of better servicing our customers.” He added that the ‘old’ store would not be demolished — but Wal-Mart Realty would try to sell or lease it — just like the 200 other ‘ghost boxes’ that Wal-Mart has up for sale nationwide. “We have a very good track record of marketing our buildings,” the retailer’s spokesman said.
Mayor Bowers appears to be the project’s biggest cheer leader. “In my judgment, I think that it (the supercenter) will happen because I really believe it’s good for the area, it’s good for the county. It’s not like we’re stealing this from another area; the store is in Bridgeton.” The Mayor said the supercenter cannot happen without TIF money in part because of the demolition costs — which the city failed to get from the former property owners — so now they want the state taxpayers to pay for it. The $8 million in sales and property taxes that will be given back to the billionaire developer in the form of site infrastructure costs, is money the taxpayers will never get to help pay for the on-going police and fire protection that this new superstore will demand.
“The point is Wal-Mart is going to build a Supercenter and I’m pleased they want to be in Bridgeton and at a site that needs to be redeveloped,” the Mayor said in defense of this give away. “As far as I’m concerned it’s the correct use of a TIF.”
The TIF Commission recently voted 6-6 on the TIF plan — with all six St. Louis County appointees on the commission voting against the bailout. A tie vote rejected the TIF. But the City Council has the final say, and must pass the TIF with a “super majority” vote of 6 out of the 8 members. If 3 council members vote No, the TIF is dead, and the billionaire loses his bail out.
This controversial project was in the media again this week. Mayor Bowers told a local radio station that the reason he supports Wal-Mart is because he’s afraid Wal-Mart will leave if it doesn’t get what it wants. “What people forget,” the Mayor said, “this Wal-Mart that they’re going to replace, this one that they’re going to close is in Bridgeton. Why not relocate the new one in Bridgeton?”
But the City Council reports this week that members are being deluged with “programmed phone calls and extreme lobbying pressure” against the TIF vote. The flurry of calls against the TIF are being orchestrated by a private marketing firm, some Councilors told the Post Dispatch.
One City Council member complained that she also had received “several postcards” against the tax increment financing that do not identify who is paying for them. The Councilor also complained that a website was created by a group called Citizens for a Better Bridgeton, but it is not clear who is funding it. Another Councilor said she felt the Wal-Mart opponents were running a “clandestine” phone campaign. “It’s one thing when people are against something but I don’t appreciate when they do it secretively. It’s a big empty ugly place now. And is anybody else standing in line to redevelop it?”
Mayor Conrad Bowers continues to insist that the Wal-Mart project and its billionaire developer cannot make the project happen without public welfare. But Charles Dooley, a St. Louis County Executive say the Mayor and council should “stand together and protect the public from these strong-arm tactics” by Wal-Mart. One radio stations said Wal-Mart had “bullied” the Mayor into supporting the welfare subsidy for THF.
One Bridgeton city councilor told the newspaper, “I can’t say I’m in love with this company, but I don’t want us to have two big holes where one Wal-Mart was and another could have been.”
On the other hand, officials from St. Ann warn that their city will lose a major sales tax source if the ‘old’ Wal-Mart shuts down. St. Ann gets a 10% slice of the sales tax revenue generated by the current Wal-Mart.
The United Food and Commercial Workers (UFCW) Local 655 has testified against the new Wal-Mart and the welfare deal for Kroenke. “We have numerous concerned members here who live in Bridgeton,” a UFCW official told the Post Dispatch. “Giving $7.2 million in tax dollars to the richest corporation in America… ..It doesn’t make sense we rezone and bow down” to Wal-Mart.
There are six dead Wal-Marts in Missouri today. The company had to demolish its store in Blue Springs, Missouri. But stores in House Springs, Kansas City, Maryville, Raytown, and Town & Country, are all still up for sale. The dead store in Town & Country, at 154,453 s.f., is almost as big as the proposed supercenter in Bridgeton.
Even though Mayor Bowers thinks this TIF deal is “a correct use,” the readers of the Dispatch saw through the ruse. “If building the supercenter will be such a good deal for Wal-Mart, why don’t they finance the project instead of begging the customers to build it? TIF has become the de facto standard for construction retail projects in the St. Louis area. It doesn’t create tax base, it shifts it around, postponing its effectiveness for a decade or more.”
Another reader wrote: “Does Bridgeton realize that tax revenue from Schnucks, Target, Kmart and Best Buy will drop when Wal-Mart moves in? There won’t be this huge net gain.”
A third reader noted: “How could this possibly help stores that compete against Wal-Mart, that don’t get the benefit of TIF? This shows exactly how TIFs are being used in ridiculous ways. Stores pit one city vs. another — opening one store to close another. The net result in taxes on a regional scale is minimal as the new stores simply cannibalize others in the area — but individual cities are hurt by the loss of stores and/or the reduced taxes they bring in as the money is diverted to developers.”
Another commenter said: “Many people for TIF’s say it’s a long term benefit for an area and helps create jobs, construction, etc. These TIF’s help to eliminate competition as I got a special deal where you didn’t, so I can charge lower prices and still make a profit and you can’t — putting you out of business. It’s not fair competition unless all similar businesses also get a TIF, which is why I’m against all TIF’s in the first place. If taxpayers get to keep their own money instead of it going to private projects, that’s a long term gain and will also result in created jobs and businesses as now people have more money to spend and it will be a more free market and efficient use of funds. Eliminating TIF’s would mean these funds are spread out over all taxpayers rather than just benefiting one corporation. Therefore, TIF’s should be eliminated as they are, once again, legal robbery of the taxpayer.”
Readers are urged to contact Bridgeton Mayor Conrad Bowers by emailing the city’s Administrator at: [email protected] with the following message: “Dear Mayor Bowers, Your small city, with its declining population, already has 19 Wal-Marts within 25 miles of your city hall office. Your residents have plenty of discount stores to get their cheap Chinese products. The merchants who will be most affected by this superstore will be grocers like Schnuck’s or Royal Food. THF may have convinced you this is an economic development project — but its not. It’s just about shifting market share from existing merchants — including Wal-Mart’s own discount store.
Rather than create new jobs and new revenues, a Wal-Mart superstore will simply transfer sales from stores already in business. Many of your constituents realize that THF has the financial wherewithal to build this project without a government bailout.
If Wal-Mart cannot use an existing store at 120,000 s.f. to reformat into a supercenter, make them use their own money for this new project, and don’t rob the taxpayers of $8 million to pay a billionaire’s bill.
This is a welfare bailout, pure and simple, and as Mayor, you should want no part of it. The public is fed up with bail outs for billionaires. All your need is three people with the guts to say no to corporate welfare. As Mayor, you should lead the way and be one of those three dissenting votes.”