Missouri is the "show me the money" state -- where using public funds to bail out billionaires is considered good business.
An entrepreneur who married into Sam Walton's extended family, and is listed high up on the Forbes Wealthiest Americans list, is asking Missouri taxpayers to help him build a bigger Wal-Mart.
Enos Stanley Kroenke married into a fortune when he wed Ann Walton, the daughter of Sam Walton's brother "Bud." But Kroenke, already a successful businessman before his marriage, now apparently needs millions in public welfare to carry out his latest development plans.
Owner of the Denver Nuggets basketball team, and hockey's Colorado Avalanche, Kroene is part owner of the St. Louis Rams and the English soccer team Arsenal. His development firm, THF Realty (the acronym stands for "To Have Fun") has asked for a Tax Increment Financing (TIF) deal to build a Wal-Mart supercenter in the tiny community of Bridgeton, Missouri.
THF Realty 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." But THF needs a little TIF from its public friends.
Kroenke is the 117th richest American, with an estimated worth of $2.7 billion in 2009. According to the St. Louis Business Journal, in 1995, Kroenke bought a major stake in the Rams and relocated them from Los Angeles to St. Louis. Five years later, Kroenke blocked out former Broncos quarterback John Elway to purchase the Nuggets, the Avalanche, and the Pepsi Center arena. The 61-year-old Kroenke owns a piece of the Colorado Rapids soccer team, and the stadium they play in, plus the Colorado Mammoth lacrosse team. Six years ago Kroenke went live with the Altitude Sports & Entertainment network, a 24/7 TV network that broadcasts the Colorado teams that Kroenke owns.
The use of state tax breaks by billionaires is emblematic of the 'bail out' mentality that still pervades the real estate industry in America. Kroenke's Wal-Mart plan for Bridgeton, Missouri is not a form of economic development. There already are 19 Wal-Marts within 25 miles of Bridgeton, including a Wal-Mart that sits on the border of Bridgeton and St. Ann. Bridgeton is a city that has lost 15% of its population since 1990, and any revenue it gains from another Wal-Mart will come from its neighbor, St. Ann.
The existing Wal-Mart on the St. Ann border will shut down if Kroenke builds his superstore, draining the city of at least $100,000 in sales taxes. When Bridgeton officials issued a bid for development of the former Value City property on St. Charles Rock Road, Kroenke responded. The proposed supercenter will be 159,000 square feet -- only 40,000 square feet larger than the existing Wal-Mart store located just minutes away. THF says the supercenter will employ around 300 workers -- but most of these workers are already employed at the "old" store.
Building Wal-Marts is a family affair for Kroenke. Over the years, Kroenke and THF have been at the center of many controversial Wal-Mart developments in St. Peters, Columbia, High Ridge, Maplewood, and North St. Louis County, Missouri, as well as Glen Carbon, Illinois, Wheeling, West Virginia, and Buffalo, Minnesota.
In January of 2010, Kroenke's group presented Bridgeton with a plan requiring as much as $8 million in Tax Increment Financing to build a Wal-Mart. According to Kroenke, the Wal-Mart project will generate roughly $7 million in sales and property taxes. But this welfare deal is not without its detractors. Officials in neighboring St. Ann are not pleased with the project. The "old" Wal-Mart initially was entirely within Bridgeton -- but when Wal-Mart expanded its store, the footprint stepped across the line into St. Ann. Bridgeton's gain will be St. Ann's loss.
Tax Increment Financing has been used by municipal officials nationwide for years to try to lure developers away from neighboring communities. To discourage this form of retail pilfering, the Missouri state legislature in 2007 changed the power to grant a TIF to require cities to use a countywide approach to granting TIFs -- rather than a town-level process only. The use of this financing "gift" to developers since the reform 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.
But 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 Post Dispatch. The TIF has to pass muster with the Tax-Increment Financing Commission, which is a combination of county, city and other officials. "In my judgment," the Mayor told the Dispatch, " 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 says this supercenter cannot happen without TIF money because of the demolition costs on the site -- which the city failed to get from the former property owners. Now city officials want taxpayers to foot the bill for the billionaire Kroenke. 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 could have used to pay for the on-going police and fire protection that this new superstore will demand.
"The point is," Mayor Bowers told the Dispatch, "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. As far as I'm concerned it's the correct use of a TIF." Even if the TIF Commission says No to Kroenke, the Bridgeton City Council gets the final say. If the City Council can muster a two-thirds vote to override the TIF Commission, the billionaire gets his bail out.
Over the years, Wal-Mart has swallowed hundreds of millions of dollars in federal, state, and local subsidies -- a form of welfare not available to its smaller competitors and Main Street businesses. The use of such public funding has been criticized as a blunt tool for economic development, because in the end, the TIF investment produces little or no jobs -- and low-paying jobs at that.
St.Ann officials were rattled earlier this month when they learned that in addition to the potential Wal-Mart closing, their community was one of only 5 towns in the country that was losing its Macy's store. The St. Ann Macy's was located in the huge 1.8 million square foot Northwest Plaza -- which is now in jeopardy of losing more tenants.
Kroenke's group has told Bridgeton officials that it is ready to move dirt immediately if the TIF is approved. This unnecessary superstore built with welfare funding could be open for shoppers by the fall of 2011.
Given the foul mood the public is in regarding bail outs for the rich, it's a wonder this proposal has any legs left.
Al Norman is the founder of Sprawl-Busters. His website is http://www.sprawl-busters.com. He has been helping communities fight big box sprawl since 1993. He is the author of Slam Dunking Wal-Mart.
Follow Al Norman on Twitter: www.twitter.com/SprawlBusters