Merchants question added tax value of Wal-Mart stores

The city of Ozark may follow in the footsteps of other growing communities around Springfield and welcome a Wal-Mart Supercenter.

The big business retailer is dangling its supercenter tax dollars a gain of as much as $300,000 a year in front of city officials via St. Louis developer Tom Walker.

Now Ozark's City Council is at a crossroads.

In pursuit of a clear-cut decision, Ozark Mayor Donna McQuay has requested that Hometown Merchants Association conduct a study to determine supercenters' financial impact on small towns. While the study is not complete, John Morrison, founder of the association, said early data show towns are seeing minimal gains from supercenter sales. It's more a scenario of tax dollars shifting from other retailers, he said.

Yet Nixa City Adminis-trator Brian Bingle said Nixa's sales tax revenues increased by $300,000 in the year following the supercenter's opening. But that also includes additional commercial development such as Applebee's, Schlotzsky's and Subway that closely followed the supercenter opening.

"I think that area was able to function parasitically as a result of the Wal-Mart store locating there," Bingle said of the subsequent developments.

According to Dean Thompson, Republic's city administrator, Republic expects to see a net gain of $300,000 to $400,000 in the first year of its supercenter's operations, even after factoring the anticipated shift in revenue from other grocery stores. The city can better realize its impact at the end of the year, when a full quarter of sales tax records are available, he said.

The bottom line for many cities is the bottom line: "Anytime we see additional (commercial) development ... it certainly is a boost for the city," said Ozark City Administrator Collin Quigley. "When you're talking about 7 million cars a year driving down Highway 65, getting a few more of them off the highway to shop in Ozark is definitely beneficial."

Competitive advantage

Where does that leave the small-town business?

Morrison says out in the cold, because Wal-Mart has "over-stored" the Springfield market.

According to Wal-Mart spokesperson Diana Norman, Springfield has more supercenters (four) than Kansas City (three), Memphis, Tenn. (two), Dallas (two), Phoenix (two) and Tampa, Fla. (one).

Daphne Moore, Wal-Mart's community affairs representative for the southeast region, which includes Missouri, admits to the company's concentrated approach: "What we've found with our supercenters is that similar to a grocery operator in a relatively populated area, the stores can be located two and three miles apart."

She gave no reason why Springfield is so highly concentrated. The result is a larger market share.

But the greater impact is in small towns that rely on one or two grocers, Morrison said; towns like Nevada and Lamar, both of which are planning for supercenters.

"There is only so many dollars of groceries sold in those towns on a weekly basis," he said, and a supercenter will force the local grocers out of business. "There just isn't enough business around for them."

Nixa Hardware hasn't felt the pinch Wal-Mart sometimes brings to locally owned businesses, said co-owner Larry McCroskey. He said the supercenter has generated additional traffic to the city and to his store.

"It brings a lot more people into town," he said.

Far-reaching impact

One thing for certain is that supercenter development often leads to additional retail another important factor for cities.

In Republic, buildings are beginning to pop up on the land around the supercenter, which has been open since August. It has led to a new Bojangles' restaurant, Pinewood Park apartments and strip malls. A new restaurant equates to "a pretty substantial" $14,000 to $25,000 a year in sales tax revenue, Thompson said.

It also affects property values. Thompson said that the 40 acres of commercial and multifamily property near the supercenter is the highest priced land in the city.

No matter what Ozark's City Council decides, it's likely to have its doubters. Should it approve the agreement, local merchants will fear for their future; if it passes on the offer, growth advocates will view it as limiting Ozark's potential.

From a competitor's standpoint, this process is shedding light on different ways to operate, Morrison said.

"The good thing that they're doing is making us aware of a lot of potential financial vehicles that we never knew existed. That's big business," he said. "The point is, if it's right for (Wal-Mart), it should be right for everyone."