Another Billionaire Bailout for Wal-Mart Developer

07/09/2010 07:58 am ET | Updated May 25, 2011

Kroenke Gets Millions In Public Welfare

Bridgeton, MO. On July 7, 2010, one of the richest people in America was given millions in public welfare to build an unnecessary Wal-Mart. This "bailout for Billionaires" was the work of the Bridgeton, Missouri City Council, where economic illiteracy trumps common sense.

Developer Enos Stanley Kroenke, sports mogul, Walton family son-in-law, and sprawl-developer, was actually paid more than $7 million in public funds to bring low-wage jobs to this community which describes itself as the "strong and viable economic engine for the St. Louis metropolitan area."

As a result of public subsidy, Kroenke's development company, THF Realty (the "THF" stands for "To Have Fun") will build a new Wal-Mart roughly two miles away from an existing, smaller Wal-Mart on the same road. The smaller store will close -- leaving another "dark store" by the roadside.

The Bridgeton City Council voted 6-1 to pay Kroenke to leave them with an empty Wal-Mart. Only one city councilor dissented, arguing that Wal-Mart should have to pay its own way, and not be subsidized. The development agreement with Kroenke also allows the city to use eminent domain powers if necessary to complete the project.

This tax bailout came over the objection of officials in St. Louis County. A state-mandated 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. The city was able to overturn the TIF Commission with a supermajority vote of its members.

The Mayor of Bridgeton, Conrad Bowers, warned that if Wal-Mart and Kroenke were not given what they asked for -- Wal-Mart would leave Bridgeton entirely, dragging with it a million dollars in tax revenue from its "old" store just minutes down the road. "We got the best deal for the city we could get," the Mayor told The St. Louis Post-Dispatch.

But it is Kroenke who got the best deal. Kroenke inherited a fortune in Wal-Mart stock when he married the daughter of Sam Walton's deceased brother Bud. Kroenke's wife, Ann Walton Kroenke is one of the richest women in America, with an inheritance valued at $2.6 billion. Kroenke owns the Denver Nuggets basketball team, hockey's Colorado Avalanche, is part owner of the St. Louis Rams and the English soccer team Arsenal. He was the 117th richest American, with an estimated worth of $2.7 billion in 2009. He could have built a new Bridgeton Wal-Mart without one penny of Tax Increment Financing, but the money was there for the taking.

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 answer to the city's economic stagnation is not to build more retail stores that make nothing, and sell Chinese everythings.

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." They are quite good at spending public money.

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.

Add officials in neighboring St. Ann, Missouri to that list. Part of the "older" Wal-Mart store sits on the border of St. Ann and Bridgeton--so it was a partial source of sales tax revenue for St. Ann. Officials in St. Ann warn that their city will lose a major sales tax source when the 'old' Wal-Mart shuts down. St. Ann gets a 10% slice of the sales tax revenue generated by the current Wal-Mart.

Mayor Bowers said the supercenter would not happen without TIF money because of the site's demolition costs---which the city failed to get from the former property owners. So now the Mayor wants taxpayers to pay for it. The $7.2 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.

But Charles Dooley, a St. Louis County Executive said the Mayor and council should "stand together and protect the public from these strong-arm tactics" by Wal-Mart. One radio station said Wal-Mart had "bullied" the Mayor into supporting the welfare subsidy for THF.

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.

A spokesman for THF Realty, told the Bridgeton City Council that the debate over the TIF agreement was not unusual. "These are the same issues facing many communities," he said. "It happens to cities who rely on sales taxes for their budgets. If you want to take any comfort, you're not alone." Because cities like Bridgeton are chasing sales tax revenue, instead of planning for sustainable land use, mistakes like the Bridgeton welfare deal get made -- and neighboring towns get hurt.

To build a Wal-Mart you have to be rich. Kroenke is beyond rich. His small business competitors will never get a TIF to open a store on Main Street. The real estate market in America today is an insider's game played by the wealthy. Public subsidies to the big players are just one more incentive that leaves the smaller merchant at a competitive disadvantage. TIFs should never be used for retail. But for now, THF is "having fun" with its TIF -- at taxpayers' expense.

Al Norman is the founder of Sprawl-Busters. He has been helping communities fight big box sprawl for 16 years. He is the author of "The Case Against Wal-Mart."