When it comes to the building of "big box" stores -- Kmart, Wal-Mart, Sam's Club, Home Depot -- with their acres of parking lots out front, it's a developer's market these days. They pick the location, and they demand millions in public subsidies from the municipality. And unless you're a Ladue or a Clayton, you bend over and assume the position.
Nothing illustrates this better than the latest proposed development in Maplewood. Like so many other cities, Maplewood (population 9,228) lives and dies by the fate of large retailers because they generate millions in sales-tax revenue. Sales taxes pump about $1.4 million into Maplewood's coffers, more than twice the revenue from property taxes. And so, like many other cities, Maplewood needs the big-box stores like a junkie needs his fix.
Marty Corcoran, a friendly, fast-talking fatherly type, knows this better than anyone else, having served as Maplewood's city manager since 1983. He has seen the city's coffers swell and shrink with the opening and closing of big-box stores, but the city's leaders have always managed "to keep our heads above water," he says. In '91, he worked with developer THF to put a Wal-Mart and Sam's Club near the intersection of Manchester Road and Big Bend Boulevard, only to see the deal fall apart when Wal-Mart bought out the Pace chain, which already had a store farther east on Manchester, inside the St. Louis city limits. In the late '90s, he put together a tax-subsidized deal to move the 36,000-square foot Shop 'n Save grocery store into a 67,000-square-foot space at 7355 Manchester Rd. That deal, he says, "was a break-even project at best," but it helped preserve Maplewood's downtown, such as it is.
In 1997, the Venture department store in Deer Creek Plaza closed after the company went bankrupt, and Corcoran scrambled to help a Kmart move into that space in November 1998. The Kmart alone pumped $400,000 a year into the city's budget, which hovered around $5.5 million. Two years later, in December 2000, Kmart closed up shop, citing lower-than-expected profits.
The closing prompted a renewed hunt for another development. Corcoran and other city officials held informal conversations with developers, went on a retreat to brainstorm, hired consultants and then made their move. "We had a severe financial crunch, and we needed to do something about it," says Corcoran. "We discussed this with the City Council. We were frank with them: We didn't have any fish on the line."
On May 23, they put out the customary request for proposals, seeking developers -- except this RFP had an unusual feature: Any chunk of the fully occupied 1.5-square-mile city was up for grabs, as long as the development brought in big bucks. Not surprisingly, two developers -- Pace Properties and THF -- proposed big-box stores in the same area: along Hanley Road, between West Bruno and Folk avenues. It's the closest Maplewood gets to Highway 40.
On July 3, the City Council picked Pace Properties' proposal -- a $60 million development that would yield a mammoth 148,000-square-foot Costco store and a 105,000-square-foot Home Depot Expo store, along with a restaurant or two, a bank and a gas station. The deal called for a $19.5 million public subsidy under the state's tax-increment-financing statute, perhaps the most abused state law in Missouri history. Crafted to cure blighted areas in inner cities by offering tax incentives, it has primarily been used to subsidize malls and other retail projects in high-rent areas in the 'burbs.
The trouble with the Pace proposal is that the 30-acre morsel in Maplewood the developer wants to chew up isn't vacant land; it contains an established working-class neighborhood of about 130 homes, along with a handful of commercial plots.
And so the predictable battle began.
Two things upset Dawn McCoy. The first was the manner in which the city gave her the bad news. "You can't just send a person a letter in the mail and say, 'We're taking your home and it's a done deal,'" she says. "You can't do that to people; it's not fair. A lousy letter in the mail?" McCoy and her husband, Ron, live in the 7800 block of quiet, tree-lined Alicia Street, where kids aren't likely to be run over by fast-moving cars.
The second thing that irked her was when Pace made its offer to buy their house for $107,000. The McCoys have five years left on their mortgage and, if forced to move, want to buy a new home outright. After several contentious meetings and exchanges, Pace has upped its offers to most property owners, saying it will pay about 2.6 times each home's appraised value on St. Louis County books. That amounts to between $150,000 and $200,000 for most homes, along with $3,000 in moving costs. The higher offers also increased the public subsidy to $25.5 million from $19.5 million.
(To complicate matters, the losing developer, THF, has been handing out sales contracts offering between $180,000 and $225,000. Some residents are apparently working with THF and its lawyer, but their purpose is unclear, given that Maplewood has designated Pace the developer. Neither THF nor the few residents are eager to talk about their plans.)
The story in the McCoys' neighborhood is playing out as it has in dozens of other St. Louis County neighborhoods erased to make way for retail projects: anger, sadness, confusion and, of course, in-fighting among the neighbors. A lot of the street talk centers around how to get the best price for a house: Sign a sales contract now for the offer on the table, or wait it out and possibly take on a court fight later? Like the sword of Damocles, the threat of the city's invoking its eminent-domain rights and taking their property hangs over the homeowners' heads.
The McCoys -- Ron is a sheet-metal worker and Dawn runs her own painting company -- did the smart thing and turned to Tracy Gilroy for help and legal advice. Gilroy, a past president of the Bar Association of Metropolitan St. Louis, has been dealing for 17 years with eminent-domain issues, representing homeowners like the McCoys. She has seen developers scare homeowners into accepting low bids, intimating that if they don't accept the offer, it could go down or, worse yet, they'll end up in court and get whatever value the county assessor's office has on the books. Gilroy's advice: "The people who should be afraid of court are the developers, not the homeowners."
Gilroy says that if matters end up in court, the issue boils down to "fair market value," and that has nothing to do with the county's property assessment -- in the McCoys' case, a paltry $53,700. "Fair market value includes, under the law of eminent domain, the highest and best use of your property," Gilroy says. "And the highest and best use of this neighborhood and each individual property there is obviously not residential." The market value, she says, is what the property is worth for a big-box commercial development. After all, it isn't the home the developer wants; it's the ground beneath it.
For the McCoys -- who, in the last few years, have added rooms, redone the kitchen and built a workshop for Ron in the back yard -- the eventual buyout and destruction of their home, and their neighborhood, makes them angry and sad at the same time. "My husband and I had no intentions of moving," says Dawn McCoy. "They're missing the point that we don't want to leave. We're being forced to leave. We didn't ask for this. We're being forced to leave so they can make money off of us.
"It's kinda like this: I know I'm in a centrally located area and eventually someone's gonna buy me out -- there's no doubt in my mind," she adds. "We're sitting right on a goldmine. I'm at a point now where I know it's going to happen, so I just want them to be fair."
For the McCoys, no matter what price they end up getting for their home, the project represents something far less. "I know it's good for the city, but you kinda feel like you've been sold out by your own city," she says.
Marty Corcoran, meanwhile, is pleased as punch about the new development. He says he feels bad about the homeowners' being uprooted, but he sees no other option for the city to improve its financial condition and provide better services.
He is sold on the idea that the anchor stores -- the Costco, a membership club similar to Sam's; and the Home Depot Expo, an upscale interior-decoration place -- aren't the kind that will pack up and leave on a moment's notice, as a Wal-Mart or a Sam's Club might. And he has done the math to know that the development will be a boon for the city when it opens in the summer of 2003. Projections indicate that consumers will spend about $130 million at the stores in the first year, generating about $3.7 million in incremental taxes (sales, property and utility). After five years, total sales will jump above $200 million annually and taxing districts will get nearly $6 million a year.
For the city (and other local taxing districts), this means about $1.8 million a year during the first year and about $2.8 million a year after five years.
For Corcoran, who has seen neighboring Richmond Heights join the ranks of wealthy cities because of the St. Louis Galleria and watched Brentwood reap the benefits of Brentwood Square, the Pace development means Maplewood's time has come. The project represents no less than an opportunity to revitalize the city and provide better services to its residents.
So what's wrong with this picture?
The developer and the stores profit from a great location, Maplewood gets more money and even the homeowners may come out ahead. It all looks good if one is concerned simply about Maplewood.
Step back from it all, and there's plenty wrong. First, we have come to the point at which malls and retail projects occupy the status a new highway or public school once did -- a high enough public purpose to justify the government's use of its power of eminent domain to force the buyout of homes. Second, perfectly good neighborhoods -- no blight, no vacant lots -- are being uprooted to make way for big-box stores. Last, it is simply unfair for large, profitable corporations such as Costco, Wal-Mart and Home Depot to get public subsidies that are not made available to small businesses. If Bobby's Restaurant, a successful anchor at the heart of Maplewood's struggling downtown, asked for a public subsidy to expand and provide better parking, the city wouldn't go for it.
The public-subsidy game is reserved for developers of large retail projects -- or stadiums -- and erasing neighborhoods and ignoring small businesses is now considered an acceptable price for it. It's a developer's market, all right.