Pavlack Calls Ellisville’s TIF Commission on Walmart a ‘Sham’

The former councilmember suggested Monday night’s meeting was pointless prior to the commission’s vote against a recommendation to create a special tax district meant to lure a Walmart Supercenter.

Despite the decision’s relatively small impact on whether a Walmart Supercenter will be built in Ellisville, a crowd of more than 100 people at the city’s late Monday erupted into applause following a commission’s decision to vote against the creation of a TIF district.

The commission’s 7 to 4 vote against recommending the creation of a Tax Increment Financing district, which would allow Walmart’s developers to retain half of the newly-created sales tax dollars generated on the site, means the final decision by Ellisville’s 7-member council will require 5 votes for approval rather than a simple majority. That decision could be called for a vote within two weeks of Monday's meeting.

Jim Sansone, principal developer with the Sansone Group, said the development cannot take place without the creation of a TIF.

“So it's vitally important that this recommendation happen,” Sansone said prior to Monday’s vote.

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Former Ellisville councilmember and commission member Charles Pavlack told the public that the commission to review the special tax district was a “sham,” expressing disbelief that the commission’s majority of members, who represented the interests of St. Louis County, would vote against the proposal.

Fellow commission member Michael W. Jones was among the majority opposing the TIF, arguing that because the county’s population has been flat for the last 20 years, no truly “new” revenue will be created by the store.

“Therefore any new projects built anywhere in St. Louis County that uses TIF dollars are not creating new taxes,” said Jones, who serves as an adviser to St. Louis County Executive Charlie Dooley. “We’re just moving sales and activities from one part of the county to another.”

“So what you’re saying effectively is this entire exercise has been a sham,” Pavlack told Jones prior to the vote. “There will never be a positive recommendation if the county doesn’t support TIF at all.”

If the TIF eventually is approved, half of all sales tax dollars created by the proposed site exceeding current sales tax revenues generated there, as well as 100 percent of increases in real property values, will be allotted into a fund under the developer’s control earmarked for infrastructure improvements to the surrounding area. The TIF would expire after a default length of 23 years, although that timeframe could change.

Despite its ability to capture revenues from real estate values as well as sales tax dollars, special counsel to the City of Ellisville Mark Grimm said the issue’s real fiscal impact revolves around sales.

“The impact on the property tax jurisdictions is pretty small,” Grimm said. “It’s not like you’ve got a green-field site with nothing on it. You have existing developments on this property … So the new dollars are all coming from sales tax.”

The targeted redevelopment space falls under the surrounding Manchester and Clarkson roads, which includes a total of 32 parcels of various sizes. The area presently includes Westgate Animal Hospital, Valvoline and LC Auto Service, as well as Clarkchester Apartments, an adjacent 100-unit complex.

The TIF stands to impact more than a dozen local tax bodies, including the Metropolitan Sewer District, St. Louis County libraries, the Metro West Fire District and Rockwood schools.

Nearly 20 residents spoke out against the TIF district, with comments ranging from concerns about “corporate charity” and the business ethics of Wal-Mart to the relocation of residents in the Clarkchester Apartment complex.

Ellisville resident John Whittier questioned why the development was necessary following last year’s , which was in 2010 as a potential alternative to bringing in a “big box” store to generate sales revenues.

“But now we’re being told that we need to bring another large business into Ellisville because we need the tax money,” Whittier said. “Something about the story we’re being told just doesn’t fit.”

The Ellisville City Council may vote on the proposed TIF district as early as the city’s March 21 meeting at .

Suzanne Gundlach March 06, 2012 at 02:38 PM
If I read this article correctly, seems that Sansone is the primary benefactor of the proposed TIF. Not Ellisville, not the county. Can anyone educate me further?
ALBERT N.EARLS March 06, 2012 at 03:21 PM
Why should anybody get a TIF allowence,the whole TIF is a SHAM,the Business makes all the Money,and give nothing back to the community,Walmart is one of the biggest Money makers already,they want to make moore,and give nothing in return. In the mean time our Taxes go up to support them,Fire Dept.Police,all the city Provides,They should give us the TIF where we Profit from the Business..
Suzanne Gundlach March 06, 2012 at 04:29 PM
Over 10% sales tax is the kicker. I already avoid shopping in other communities due to the higher sales tax rates, I would hate to avoid my own neighborhood for the same reason - especially on big ticket items.
Michael Rhodes March 06, 2012 at 07:49 PM
Just to clariy a couple of points (please tell me if I am wrong): 1. TIF would be paid by shoppers as sales tax at what ever stores (Wal-Mart, Best Buy, Ted Drewes, any business) that would locate in the TIF district. The developer would only get the tax amount over the currentl tax rates. So, if the tax rate is 7% the developer get the remaining 3.5% to offset the infrastructure costs? Is that correct? If the developement doesn't happen would Ellisville be on the hook for these upgrades to lure business to the location? 2. This is a huge area to develope. If not Wal-Mart (and the other businesses it brings with it (look at Manchester and 141) than what is going to be done with what currently is a crumbing park lot with buildings sitting on it? Who would want to develope that and for what? A strip mall? 3. Currently dispoable income is not going up so any business that opens is going to take tax dollars (business) from other businesses, be they in Ellisville already or another city. Doesn't matter if it is Walmart putting the final nail in the coffin to Kmart or a Wendy's taking business from McDonalds. 4. What to do with the Kmart site when (if) it fails? Ellisville could end up with both sides of Manchester Rd being empty. I like Wal-mart and do shop there. If Ellisville builds one I would probably shop there. The extra 2 to 4% on my bill would easily be offset by the savings in gas for me not having to drive to another Wal-Mart.
John March 06, 2012 at 09:26 PM
Charles Pavlack, Yes, the commission was a sham. Commission members are supposed to look at the facts and opinions of all the speakers. Weigh the evidence. The overwhelming majority of the people who turned out were against the TIF. Seven commission members voted against it. The sham was with you and the other two Ellisville members who voted against the residents wishes and for the TIF. John
Suzanne Gundlach March 06, 2012 at 09:35 PM
Has anyone actually talked to K-Mart? Several years ago, when I lived in St Louis Hills and our Target, needed an upgrade, the neighborhood people were very involved. At that time, St Louis Hills wanted a smaller footprint store than was the current Target prototype, these negotiations took awhile but were well worth it and the outcome was win/win for everyone. Big lessons learned from that experience are to have open communication with the store companies (not just developers) and to keep working for the greater vision - don't give in to another idea just because it sounds easier, remember you have to live with the outcome for a long time!
Michael Rhodes March 06, 2012 at 10:06 PM
Leaving would be a huge concern, but I believe that when new contruction is done the lease is usually quite a bit longer than 5 to 7 years. Walmart is not building "Walmarts" anymore. They only build Super Walmarts so they wouldn't fit into the Kmart. Also, the state that building is in I doubt anyone would want to move in. Would have to be a major overhaul like they did at the Nissan dealership. Not to mention the parking lot would be to small to support the store.
Michael Rhodes March 06, 2012 at 10:08 PM
Should Walmart (or any other business created with a TIF) fold or leave wouldn't the developer be on the hook for the money? Is Elisville going to give the developer the TIF money upfront for the work? I thought the developer got loans and then used what ever TIF money they received to pay off those obligations. I do not know much about the TIF process.
Michael Rhodes March 06, 2012 at 10:12 PM
Has there been any interest from business in the Town Center (like Wildwood correct)? I am guessing you would want a grocery store to act as an anchor to avoid the box stores.
Michael Rhodes March 06, 2012 at 10:15 PM
My opinion is based off of Kmart (Sears) well known financial problems. They have been closing locations for a couple of years now. I have not seen any updates being made to the current Kmart, nor do I know if it is one of their profitable locations. The few times I have been in there it seemed dirty and dark with only a few customers.
Michael Rhodes March 06, 2012 at 10:17 PM
Adam, what is the estimated cost of the project? You also mentioned bonds, what would those before? Sorry for multiple posts.
Michael Rhodes March 06, 2012 at 10:21 PM
And one last question. I looked at the picture and can only see RPA1 listed. What part is RPA2? In the picture it looks like RPA1 runs all the way to Clarkson Road.
Mark Duecker March 06, 2012 at 10:39 PM
Biggest point we all are missing are the comments from Mike Jones concerning the economic conditions for St Louis County. Therefore if growth is flat do we need the high salary Dooley cronies in office including Mike Jones?
ALBERT N.EARLS March 06, 2012 at 10:43 PM
ALBERT N.EARLS March 06, 2012 at 10:46 PM
we already have enought problems trying to maintain Ellisville ,
Chase Castle March 07, 2012 at 12:16 AM
Glad to see a lively discussion. Please keep in mind that the primary reason Ellisville city leaders sought this project was to create additional revenue for the city (and in turn, prevent something like additional sales tax referendums in the future). The projected dollar amount the project would raise for the City was not available Monday or Tuesday, but that figure will be posted as soon as it becomes available.
Michael Rhodes March 07, 2012 at 04:08 AM
Wasn't at the meeting, but I wonder how many people against this were there just because it was Walmart. Some people have a stong dislike for Walmart and that could be their soul motivation to prevent it. If Sansone where to want to develope it for a new Apple Store I wonder if we would hear the same objections. Also, keep in mind that just because the people at the meeting were mainly opposed that does nto mean a majority of residents would be as well. The only survey was listed as unoffical poll. Maybe a more indepth survey should be conducted.
Michael Rhodes March 07, 2012 at 04:11 AM
If I read this right are you proposing leaving that are undeveloped? I woud disagree with that plan as that area only real use would be for commercial developement. I saw that there was also some thought of high density residential (apartments). Not sure how that would work out being surrounded by businesses. I wouldn't want to live there.
Michael Rhodes March 07, 2012 at 04:15 AM
I think this is a very important point. Could this developement be a "cash cow" for the city or another drain on it's economy. I wonder what impact the Manchester/141 Walmart had on the tax base there.
Michael Rhodes March 07, 2012 at 04:17 AM
Still trying to wrap my head around this TIF process myself. The one thing I have figured out is that the city (and county) still would get their full tax rates. What happens is an extra percentage tax is paid by shoppers at stores in the TIF district. By state law that money is then used to pay for infrasturcture upgrades. I am guessing that is probably for turn lanes, street lights, traffic signals, etc...
John March 07, 2012 at 09:41 AM
Michael, I wasn’t at the meeting either. Just speaking for myself I have a problem with the TIF. If Sansone and Walmart think this land would make a good development, they should build it. Just no TIF and no Eminent Domain and with any zoning issues Ellisville has. I don’t know why Walmart thinks just because they want to build a store they should get special tax breaks no other business in Ellisvillle got. John
Michael Rhodes March 07, 2012 at 02:12 PM
John, I read through the TIF link that Adam provided. I think what everyone is missing is Walmart is not building anything, they have just agreed to lease space should it be built. Sansone Group (a locally owned eveloper) is who would own the land and receive the TIF money. If the TIF is not used the cost to develope the area would effectively price out all renters from that develeopment. This is why TIF is used in large projects so often. This ia a 48 million dollar project not a single store being built for 500k. According to the TIF if it is not used the developer would have to charge such high rents that no business would locate there. The only other option is to leave the area as is and hope it gets deveoped piece meal. Since it is such a large area I doubt a single business would wnat o build over there. Would be like being on an island by yourself. I think I am for the plan, but would like the Part 2 to be addressed quicker than the 10 years stated in the agreement. Even with that timeframe I wonder if we would see anything on that in the next 10 years without the TIF.
Michael Rhodes March 07, 2012 at 02:17 PM
One more point. When McDonalds relocated across the street the City of Ellisville seized the private street that was located there to allow the McDonalds to be built. No one came forward to claim ownership so it wasn't as big of a deal. In the end they still used eminent domain on that small project. Not sure if any further concessions where granted as well. I also don't like the use ED for commercial projects (not a big fan when it is taken for city/state use either).
ALBERT N.EARLS March 07, 2012 at 10:36 PM
ALBERT N.EARLS March 07, 2012 at 10:47 PM
Alexandra April 20, 2012 at 06:48 AM
50% of the sales tax revenue gets cut off the top and goes straight to the developer.
Charles Pavlack April 20, 2012 at 12:29 PM
Technically, 50% of the NEW sales tax revenue comes off the top and goes to the developer to repay bonds which they issue to cover the cost of infrastructure improvements related to the site. This is not done forever, only until the bonds are paid off. Under the TIF agreement, this could take up to 23 years, but normally it's done in much less than that. None of the taxing districts will receive less than they're receiving now, and there are provisions in this agreement to pass on some of Ellisville's revenue from the TIF to other taxing districts as well.


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