Aldermen approve Wal-Mart agreement

by Diane Rarick

SBJ Contributing Writer

Republic's Board of Aldermen voted Sept. 27 to sign a developer agreement with Wal-Mart Stores Inc. to build a Wal-Mart Supercenter on approximately 28 acres at the intersection of Highways 60 and 174.

"Republic will benefit by cleaning up the site and improving storm drainage, plus having the additional sales tax revenue. It is definitely needed and will benefit the community as a whole," said city Administrator Dean P. Thompson. Republic's existing Wal-Mart has operated for 10 years near the site of the future supercenter.

The agreement calls for Republic to issue $500,000 in bonds to reimburse Wal-Mart for infrastructure improvements to the site.

The site is an excellent commercial/retail location, but it's an "eyesore that contains dumped building materials, sinkholes and geotechnical challenges," Thompson said.

It will require $500,000 worth of improvements to the drainage system before construction of the approximately 152,000-square-foot store can begin.

Wal-Mart has not yet given its final approval to that deal.

The agreement calls for Republic to pay back the bonds issued to reimburse Wal-Mart from sales tax revenue generated in the first five to seven years of the store's operation.

Republic's total sales tax rate is 7.1 percent, 2 percent of which is the city's portion. Thompson said collection data will assure sales-tax revenues used to pay off the bonds are properly drawn from increases attributable to the supercenter and not merely shifted revenue from store to store.

Thompson's staff analysis for the Board of Aldermen stated that "The city will also incur approximately $25,000 in costs for issuance of the bonds. Proceeds from the bonds will be placed in a trust account and paid to Wal-Mart upon completion of the supercenter.

"The agreement further stipulates the supercenter will open by February of 2002. Wal-Mart has projected that the net gain of additional sales tax to the city will be approximately $300,000 to $400,000 annually. The city will use half of the new sales tax increment to pay off the principal and interest on the bonds. Based on Wal-Mart's projections, it will take five to seven years to retire the debt."

A strip center and free-standing pad for a restaurant or other business are also planned for the site, according to Thompson.

Site improvements will take nine to 12 months, with construction of the store set to begin in 2001.

The Republic Wal-Mart Supercenter will be similar to the one that opened in Nixa Jan. 27.

The only improvements the city of Nixa did to prepare for that store were adding a traffic light on Highway 160, increasing the size of turn lanes and upgrading the water lines, according to Mike MacPherson, Nixa city administrator.

Republic native Mike Murphy is general manager of the Nixa Wal-Mart Supercenter.

He said that the addition of the Nixa store has not hurt sales at the other area supercenters.

"Total Wal-Mart sales from this area have increased. And the way that building is going on, we don't know what the capability of the area is. There are a lot more people here than we realize," he said.

Even with competition from the new Dillon's store on South Campbell, sales at the Nixa center continue to grow, especially in the grocery area, Murphy said.

Nixa is also home to Albertson's and Price Cutter stores, as is Republic.

Murphy calls the economic impact of the Nixa Wal-Mart a "gold mine" for the city, making possible many improvements to the park system and other city services.

Murphy said the inventory of the current Republic Wal-Mart will likely be transferred to the supercenter, with the old store closing soon after the new one opens.

Springfield attorney Carl Yates, of Yates Mauck Bohrer Elliff Croessmann and Wieland PC, was hired by Republic to write the developer agreement with Wal-Mart.

Yates is an expert in this type of financing arrangement, according to Thompson.

"Within 30 days of Wal-Mart's completion of the site improvements, it would notify the city, which would have 60 days to issue the certificates of participation to provide money to pay for the improvements made on behalf of the city," Yates said.

He has been working on the project for three to four months and expects Wal-Mart to respond to the city's proposal "right away."

Steve Lohkamp, president of the Republic Area Chamber of Commerce and a member of the Republic School Board, said that he has heard more positive than negative comments about the new supercenter.

"Some folks in direct competition are a little apprehensive. But all in all, it's a very positive thing for the city's tax base and for the schools," he said.

Lohkamp said that the added retail opportunities will help keep up with Republic's residential growth, which has lately outstripped its commercial growth.

"The chamber knew that commercial growth would come eventually. Now it's imperative that the people who live here also shop here," Lohkamp said.

"The vast majority of our working-age population work in Springfield, shop in Springfield and get their entertainment in Springfield. We're hoping that changes," he added.