Eight Days of Truth - Day Seven

Today, we are back in the Midwest. Belvidere, IL is a small town of 23,797, almost the same size as Pullman. A Wal-Mart Supercenter opened there in August 2004, over the objections of a vocal resistance group. Belvidere is now enjoying the "Wal-Mart Effect" as so many other cities are doing and opponents are eating crow. Tax revenues are up dramatically, local stores have not been affected, and more shoppers and retail stores are pouring into town. PARD has often asked for hard facts to support Wal-Mart supporters claims of increased tax revenueThis article from the Rockford Register Star, October 9, 2005,gives those numbers for Belvidere and Boone County, numbers that are very similar to what is anticipated for Pullman:

Belvidere Wal-Mart's impact helpful
The city and the county gained a lot in sales taxes.

BELVIDERE -- Ace Hardware store owner Dave Rickabaugh recalls the day Wal-Mart Supercenter opened on the outskirts of Belvidere.

"We were swamped," he said.

The anticipation of the store's arrival, the first of its kind in Boone County, brought a mixed bag of emotions to residents and business owners like Rickabaugh.

Some were delighted.

Others feared the worst.

Since that day in August 2004, Rickabaugh has watched his business fall off by about 15 percent. He attributes some of the loss to Wal-Mart, which forced him to change his lineup of products. The rest, he says, is because of a slow economy.

Despite the worst fears of some, Wal-Mart's impact on Belvidere's retail community appears to have been most helpful.

Boone County Administrator Ken Terrinoni looks at his county budget and believes the county is far better off with Wal-Mart and the other new retail establishments that came with it.

Boone and Belvidere sales tax receipts closed the 2005 Illinois fiscal year up 28 percent and 25 percent, respectively. Wal-Mart's August opening ran almost parallel to the state fiscal year that ended June 30.

What's that mean in bucks?

Boone took in $685,326 more in sales taxes; Belvidere's new dollars totaled $668,567.

The growth in sales taxes for the governments led a growth in their four key tax streams, a Rockford Register Star analysis found. The Boone-Belvidere growth mirrors a statewide trend of more cash coming into local coffers.

Other key government revenues include taxes on income, fuel and corporations. For those revenues in fiscal 2005, Belvidere took in $1,052,713 more than it did in 2004, a 21 percent jump. Boone tallied $987,061 more than it did in 2004, also a 21 percent jump.

Terrinoni said that without the thousands of dollars in increased sales taxes that Wal-Mart and new retail businesses brought into the county over the past year, this year's county budget could have included cuts and fewer new cop cars.

"The consumers that have come here and shopped are to be thanked. They have balanced the budget for the county," Terrinoni said. "The money has helped us keep (sheriff's) deputies on the road, buy 10 new squad cars. We budgeted for four on a lease, but were able to buy 10 thanks to this. Also, it has helped greatly with staffing at the jail."

Belvidere Finance Manager Dick Stegemann says it's the largest such increase in at least five years.

Terrinoni says it's the biggest he's seen in 17 years.

"You are seeing the Wal-Mart effect," Terrinoni said, while also giving a nod to the rest of the Gateway retail complex and Farm & Fleet.

Retail center

The county's first Wal-Mart Supercenter opened on the former site of 87-acre cornfield at U.S. 20 and Genoa Road, near Interstate 90. The $10 million business is part of the Gateway Center, a DareCloud Development of Rockford project that was years in the making by developer Greg Brown and local business magnate Rob Funderburg.

It will include more than two dozen businesses when it is complete in about two years.

DareCloud estimates it could produce $80 million in sales once it is finished.

It wasn't a completely welcome addition.

Once the proposal was announced, a small group of residents assembled, taking their concerns time and again to the City Council, to no avail. Their fears were based on horror stories that surround the opening of Wal-Marts in some other smaller communities. An economic collapse is often linked to the megastore's dominance, once it is up and running.

Tony Dal Pra, a local attorney, businessman and outspoken opponent of Wal-Mart, maintains that with the arrival of Wal-Mart has come a shift in the business environment that he does not believe is all that positive.

However, Dal Pra stopped short of saying Wal-Mart has had a negative impact on Belvidere's business community.

"In our case, we have managed to sustain ourselves and are doing quite well," said Dal Pra, as he talked about Pacemaker grocery in Belvidere, one of his business interests.

"We have a stronger perishable department than Wal-Mart. It has had some modest effect on our business, but our meat and deli sales have actually increased. I believe some of our departments are prospering because of the quality of the products we have."

Downtown Belvidere is another animal. Turnover of small mom-and-pop stores is somewhat common, but thus far it appears that downtown has sustained minimal impact as a result of Wal-Mart.

Stephen Karlson, professor of economics at Northern Illinois University, acknowledges that small businesses where "everybody knows your name" are at a disadvantage when it comes to trying to compete with Wal-Mart. But they often withstand the challenge Wal-Mart presents by creating extremely high standards of customer service and by serving niche markets that Wal-Mart often is not interested in.

It's often the Targets and Kmarts that can suffer greatly when Wal-Mart moves to town, Karlson said.

"When Wal-Mart comes into bigger cities, it's more likely to have an effect on other national chains and less of an impact on smaller businesses because in large suburbs and cities, smaller businesses already are catering to customers that Wal-Mart is not after," Karlson said. "For example, if you are looking to buy an O-gauge model train, or any model train for that matter, you are probably not going to go to Wal-Mart."

Getting bigger

Belvidere Wal-Mart store manager Jason Farmer has increased his staff by 20 percent, to approximately 350 people, since the store opened.

"That is a measuring stick of how our business is growing," Farmer said. "Our customers have increased to more than 30,000 a week; that's up from a year ago."

Farmer recalls the opposition the business first faced when it came to Belvidere. Now, he points to the benefits his store has brought to the county.

"We don't really keep an exact count of who comes from where, but it is definitely a large crosscut," Farmer said. "We are not just drawing from Boone County. We know Cherry Valley, Genoa, Kingston and some other towns nearby are real good draws."

Wal-Mart has become a strong community player as well.

"We strive to be a good neighbor," Farmer said. "I visit a lot of local businesses and I tell my employees to be very respectful of other businesses, and we ask that they support their local economy."

It isn't all Wal-Mart

The Boone-Belvidere boom isn't all Wal-Mart.

Belvidere Mayor Fred Brereton points to three retail sectors he believes have had the greatest impact on local sales tax increases.

"The Gateway Center and the Belvidere Oasis, plus new car sales. We are blessed with a number of successful car dealerships," Brereton said. "I'd say those three areas, plus our population increase, have had the largest impact (on increased revenues)."

Additional tax base, Terrinoni says, has come from retail development in unincorporated areas of the county because of thousands of new residents calling Boone County home.

Developments have popped up near Candlewick Lake and other spots around the county, leading to a 21 percent increase in Boone County's 1-cent sales tax, which is only paid by businesses in unincorporated areas.

"Your businesses across from Candlewick, your Farm & Fleet, there is no evidence that Wal-Mart has significantly adversely affected any of these businesses," Terrinoni said. "In fact, the reverse has happened. The population growth has carried a corresponding sales tax growth; more consumers are coming in, and I believe inflation has played a role, too."

Rickabaugh, meanwhile, has increased his specialty products like plumbing and paint supplies -- and done away with much of his housewares.

"I can't blame the whole thing on Wal-Mart," Rickabaugh said. "There is less traffic downtown, less businesses downtown. Most of the people that have moved here don't even know there is a downtown."

That is something the city and business owners like Rickabaugh are working to change.

The city is moving into new, larger digs downtown where it hopes to better serve people. Things like a downtown commuter train stop, public transportation and a variety of other initiatives are on the table as well.

"There is no way I can compete with Wal-Mart on some things," Rickabaugh said. "But we have expanded some things to make up for those areas we were having trouble in.

"We've kept the specialty stuff, boosted our circulars, and customers know service is our business. When Amtrak and other things take off downtown and the economy comes back completely, I think you'll see us take off. I just have to buy a little time to get there."