SuperCenters have super impact

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Published: July 10,2000

At cities small and large across Mississippi — and the rest of the nation — Wal-Mart continues to replace its smaller stores with Wal-Mart SuperCenters. The large stores can have a big impact on local sales tax revenues.

Take D’Iberville, for example. Since the opening of a Wal-Mart SuperCenter near Interstate 10 in D’Iberville, the city’s sales tax collections have nearly doubled. Collections returned to D’Iberville in May 1999 were $106,515 compared to $207,632 in May 2000.

“We’re thrilled,” says City of D’Iberville city manager Alan Santa Cruz. “We’re basically taking those revenues and putting them into infrastructure projects. We’re doing a lot of drainage projects and that sort of thing.”

But will D’Iberville’s sales tax collection bonanza continue now that a new SuperCenter has opened in neighboring Ocean Springs? Prior to the opening of the SuperCenter in Ocean Springs, many residents of the west Jackson County found it convenient to hop on I-10 to visit the SuperCenter in D’Iberville.

Santa Cruz said that the impact of the Ocean Springs SuperCenter on D’Iberville sales tax collections isn’t known yet. But because those revenues are new and could be impacted by openings of other stores, the city isn’t considering them a permanent source of income. Instead, they are using the revenue for one-time infrastructure investment rather than permanent expense items such as hiring more employees.

D’Iberville used tax increment financing (TIF) bonds to fund infrastructure improvements needed for the Wal-Mart SuperCenter and other planned developments at Lakeview. With TIF bonds, revenues from property taxes are used to pay costs of providing roads, streets and drainage needed for the new developments.

Santa Cruz said that prior to the development, taxes on the land zoned agricultural were less than $20 per acre per year. The city spent about $2.5 million for infrastructure, and received a Community Development Block Grant to pay for $500,000 of that. The city’s payments on the TIF bonds are $300,000 per year, Santa Cruz said, and the development is generating about $100,000 in property taxes per year. Projected income from sales taxes was $725,000 per year but is now running about $820,000 per year.

Santa Cruz said that means the city is ahead about $500,000 per year. “That’s significant for a city of any size,” Santa Cruz said. He adds that revenues will be even higher after a Lowe’s under construction is completed. A number of other retail stores and restaurants planned for the area would also increase sales tax revenues.

Santa Cruz said that Wal-Mart said it wouldn’t build the SuperCenter without the city paying for infrastructure improvements. Ocean Springs didn’t use TIF bonds for its Wal-Mart SuperCenter, but did receive a Community Development Block Grant. But there were also fewer infrastructure improvements needed in Ocean Springs.

Ocean Springs was seeing an increase in sales tax revenues even prior to the opening of the Wal-Mart SuperCenter in April. The impact on sales tax revenues is not yet known, nor the impact on existing retailers in the city. Since the new SuperCenter has a grocery store, grocery stores in Ocean Springs are expected to see the greatest impact. Even a casual survey of the number of cars at the older stores reveals a drop off in customers.

Ocean Springs Mayor Seren Ainsworth said he has heard concerns from some retailers.

“You are naturally going to have it drawing from existing retail,” Ainsworth said. “But I think when everything settles down, they’ll continue to do well. I think where we are going to see the increase is more people coming into the city of Ocean Springs and shopping. That’s what I’m hoping. I have heard that people are driving from Moss Point, Pascagoula and Vancleave to the Super Wal-Mart.”

The City of Gautier could take a big hit from the Wal-Mart SuperCenter since it is located on the east side of Ocean Springs near Gautier. Gautier sales tax revenues were down even before the SuperCenter opening. Sales tax collections for Gautier in May 2000 were $189,725 compared to $212,175 in 1999. Sales tax collections received are for the period two months earlier.

Jim Allan, city manager of Gautier, attributed the lower sales tax revenues to the impacts of Hurricane Georges. For the year after Georges, sales were higher due to buying materials for hurricane recovery. Now that repairs have been completed, sales taxes have gone down.

“Our overall collection last year was 26% above what we projected because of the hurricane,” Allan said. “Our sales taxes this year are on target with what we projected, a 4% increase over last year.”

Allan said the Gautier Economic Development Council has said the Wal-Mart SuperCenter in Ocean Springs would not have any impact on Gautier.

“Wal-Mart is probably going to have a greater impact on Ocean Springs than Gautier,” Allan said. “It will probably have a negative impact on one or two of the five grocery stores in Ocean Springs.”

Contact MBJ staff writer Becky Gillette at mullein@datasync.com or (228) 872-3457.

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