In bid to build Sam's Club in St. Petersburg, Wal-Mart returns to well of tax breaks

Published May 13, 2012

ST. PETERSBURG — It seemed as if the developers of a Sam's Club on 34th Street had hit upon some misfortune when they discovered chlorinated pollutants in the groundwater last year.

"Sam's Club has incurred and will continue to incur additional costs" because of the contamination, wrote Michael Goldstein, an attorney representing the project.

Goldstein requested that Florida kick in at least $240,000 in tax breaks to help the project "overcome the economic barriers" caused by the pollution from a nearby dry cleaner. For that to happen, St. Petersburg's City Council must designate the 14-acre site as a "brownfield" area — an official label that qualifies developers for up to a $2,500 tax refund for each job created to build in places beset with pollution and blight.

Although Goldstein characterizes the pollutants as an accidental complication, it's not the first project where Sam's Club's corporate parent, Wal-Mart Stores Inc., has built on foul ground.

Just four years ago, Goldstein represented Wal-Mart when it applied for the same tax credits to build a Supercenter at 34th Street and First Avenue N in St. Petersburg. The site was about a fifth of a mile from an existing brownfield area, and the council — at the urging of then-Mayor Rick Baker — expanded the boundary to include the store.

As with the current Sam's Club project, which is 16 blocks north, Wal-Mart said that the site had polluted groundwater. Without the tax breaks, the project, including the creation of "hundreds of new permanent jobs," would be unable to move forward, lawyers said at the time.

Last year Wal-Mart was awarded $512,000 in brownfield tax credits for a project in Miami after coming across contaminated water from another nearby dry cleaner. It applied for the same credits to turn around a blighted area in Boynton Beach.

Wal-Mart has been awarded $18 million in state incentives since 2000, mostly for building on these less than ideal sites, according to a report released last month from Integrity Florida, a nonpartisan research institute. Of that total, about $12 million has been awarded so far.

It's not just in Florida that Wal-Mart is building on problematic land.

In Charlotte, N.C., Wal-Mart signed a brownfield agreement in 2009 that gave the company a three-year break on property taxes for cleaning up the property. Oklahoma's first brownfield site, a former zinc smelting site, is now a top-selling Wal-Mart SuperCenter.

"Wal-Mart is a smart company," said Dan Krassner, the executive director of Integrity Florida. "When they decide to build a facility, they've done their due diligence and they know the market is there. So the cake is baked already. They knew how much it will cost. They typically come in at the last second and get tax breaks, which to them is the icing on the cake."

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A Wal-Mart spokesman, Daniel Morales, said in a statement that the company is just one of many to take advantage of the program.

"This incentive is a valuable tool that promotes environmental restoration on an accelerated basis, encourages economic development, increases the value of nearby real estate, generates additional tax revenue, adds jobs and improves neighborhoods," Morales said.

Yet the jobs added are of the low-paying variety.

In 2008, Wal-Mart promised to create 125 full-time jobs that paid an average salary of $20,000, said Joseph Bell, program manager with Enterprise Florida. A $312,000 refund was awarded and is set to be paid for the first time at year's end, he said, after Enterprise Florida reviews the project.

Unlike other tax incentives offered to companies that create high-paying jobs from emerging high-tech industries, the brownfield program is meant to encourage the economic development of blighted areas, Bell said.

"There are no wage requirements," Bell said.

But Krassner said the economic benefits are dubious, at best.

"If Florida taxpayers end up giving tax incentives to bring jobs here, but then the company doesn't provide jobs that have health care or are high paying, then what have we gained?" Krassner said. "How many of these employees will have to rely on services that are financed by taxpayers? How much are these big box retail stores undermining retail districts elsewhere? These are fair questions the public needs to ask."

Residents will have their chance to discuss the Sam's Club tax refund at 6 p.m. Thursday during a meeting at the St. Petersburg Main Library. These meetings are required so that the public knows about the refund, but typically don't draw much interest. One person attended the 2008 public meeting on the Walmart on 34th Street.

Council members are set to vote on the Sam's Club brownfield designation in June. If approved, it would become the city's fourth brownfield area, and second with a Walmart or Sam's Club.

Unlike his predecessor, Mayor Bill Foster hasn't recommended approval of the tax refund. Asked about it last week, Foster said he'd have to review it more closely before he could comment.

But at least one council member, Karl Nurse, said he's wondering how Sam's Club can qualify for the refund. He points out that before Sam's Club — which already is near completion — there was an Office Depot at that location. And before that, a Home Depot.

"I can't figure out what this has to do with a brownfield site," Nurse said. "If there are contaminants, it didn't seem to bother Home Depot or Office Depot. I'm pretty skeptical about this."

Michael Van Sickler can be reached at (727) 893-8037 or