Gardendale Mayor Stan Hogeland is one of the city officials who work to attract retailers of all shapes and sizes – and their sales taxes.
He said he spends time trying to bring in retailers “every single day.” His city now is in the early stages of working with the developer of a new shopping center. That development will be built in what was a residential area on Odum Road, next to a block of retail stores that already includes one of the busiest Walmart Supercenters in the state, and with an excellent view of Interstate 65.
The new site became available when the city bought up the houses along Odum Road, then resold them to the developer. It’s also near another development, which will soon feature a stand-alone emergency room, the first such medical facility in northern Jefferson County.
According to figures provided by City Clerk Melissa Honeycutt, Gardendale derives 70 percent of its tax receipts from sales taxes. Business licenses, occupational taxes and the like provide the rest. Unlike most cities, Gardendale does not have an ad valorem property tax that goes toward general city purposes, and until five years ago it collected no property taxes at all. The city’s portion of property taxes were designated for the city’s unsuccessful effort to form its own school system.
Walmart is still the biggest tax producer in Gardendale by a wide margin. Hogeland couldn’t comment on tax receipts from individual businesses but did give an idea of how much the store means to city coffers.
“That one store brings in more than that new whole shopping center in Fultondale,” he said, referring to the 11-year-old Promenade Fultondale. That center, which fronts I-65, includes Target, JCPenney, Ashley Furniture and Ross Dress for Less stores plus several restaurants, including the first metro Birmingham location of Mobile-based Wintzell’s Oyster House.
Alabama cities frequently offer incentives for new retailers to locate in their boundaries. The minutes of council meetings are scattered with resolutions that rebate a part of the sales taxes collected back to the new business for a fixed period, usually the first three to five years, and other similar enticements.
“If you’re not willing to work with these folks, they’re just going to go down the road to the next city that will,” Hogeland said. “Historically, the mindset was, ‘We’re a thriving city, come join us and build your business here.’… Now you’d better do what you can to go get ‘em. It’s just so competitive.”
Gardendale has also seen closings by other established businesses, though their cause may not necessarily be traced to Walmart. Later this month, one of the city’s original supermarkets will close when Food Depot, originally named Western Supermarket and still owned by the same company, shuts its doors. Gardendale’s Kmart location, the last remaining one in metro Birmingham out of a peak of five in the 1990s, was shuttered as part of owner Sears Holdings’ continued contraction across the nation. Its building on Decatur Highway stands vacant.
While Gardendale and other metro Birmingham cities have benefitted greatly from Walmart’s sales tax revenues, another city has seen those revenues come and go, leaving the community in financial peril.
When Walmart Leaves
Fairfield was once a thriving city that was home to a massive U.S. Steel factory complex and numerous shopping centers. Over the years, the city has been home to a mall, two other shopping centers and as many as nine large retail stores: Kmart, which moved from adjacent Midfield; JCPenney; Loveman’s department store, which was later taken over by the Pizitz chain; Sears; Woolco, a discount store that was a division of the Woolworth’s variety-store brand; HomeQuarters home improvement; Home Depot; a Winn-Dixie supermarket; and a Food World market. When Woolco closed, that store then became Fairfield’s first incarnation of Walmart, which later closed.
Economic issues in the steel industry, combined with increasing crime and shrinking population, struck body blows to Fairfield’s economy, and many of the major stores shut their doors. A flirtation with electronic bingo casinos in 2010 gave the city a short-lived boost, filing those empty stores with row upon row of slot machines — each of which was subject to a $100-per-month license fee. But a crackdown on the machines throughout the state under the administration of Gov. Bob Riley put an end to Fairfield’s aspirations as the next Biloxi.
Fairfield officials persuaded Walmart to give the city another chance, and the retailer did just that when it opened a new supercenter in 2006.
The new Walmart provided Fairfield a steady stream of sales tax revenue, which was necessary as U.S. Steel shut down part of its huge complex and other stores closed. It was the town’s only grocer, as well, and served by Max buses with a stop near the front door, a boon to many residents without their own transportation. The store was also within walking distance of Fairfield’s largest public housing complex.
That all ended in 2016, as Walmart announced a series of store closings. Nearly all of the closed stores were from a small-store format meant to compete with Dollar General, but the format never took off. A dozen stores to be closed were supercenters, though.
Fairfield’s store was one of them.
The company never explained why that specific store was shuttered. Some workers were moved to a store that had opened about three years earlier in Hueytown, about three miles away. But Fairfield residents were left without a major retailer and grocer; the closest remaining supermarket is a Piggly Wiggly store in adjacent Midfield.
City records aren’t clear about just how much tax revenue Fairfield lost when Walmart closed, but current Mayor Ed May II said the loss was about $1.4 million a year, amounting to almost a third of the city’s overall tax revenue. It was a major loss for an already-struggling city.
In addition to Walmart, a Burlington Coat Factory store that had gone into the old Loveman’s/Pizitz location also shut down, leaving Western Hills Mall without a major anchor store. A charity thrift store operates in the former Sears building. Home Depot, located on a hill off Interstate 20/59 and below a vacant U.S. Steel administration building, is now the only large retailer left in Fairfield.
The city’s tax receipts took another hit last year when a tornado damaged or destroyed several stores near the closed Walmart. Express Oil Change, KFC and an ABC state liquor store were all closed for repairs for several months. All three have since reopened. Western Hills Mall also made headlines in February when two groups of men engaged in a shootout outside the mall in broad daylight. Anthony Alberigi, the mall manager, was caught in the crossfire and killed.
Shortly after Walmart’s closing, Fairfield voters turned away all but one of six members of the City Council, most of whom had engaged in very public feuds with then-Mayor Kenneth Coachman, who did not seek re-election. May, the son of a former Bessemer mayor, was thrust into a role of trying to fix the city’s problems, many of which are rooted in a lack of money in city coffers. Since then, he has also found himself in a battle with the new council, which has attempted to strip May of much of his mayoral powers.
Still, he’s trying to fill some of those big, empty spaces left by retailers that left town. So far, he has a commitment to open a climate-controlled mini-storage facility in the former Kmart building, which was last used for electronic bingo and a flea market. And he’s hoping to fill the empty Walmart building with something that isn’t available elsewhere in the metro area, such as a Kroger supermarket. That company had a major presence in Birmingham in the 1960s but left because it couldn’t compete with the then-dominant local Bruno’s chain.
“We’ve got people who have told us they are interested in coming, if we can just keep ourselves out of the headlines,” May said.
While Walmart stores provide the sales tax revenues that fuel many Alabama city budgets, they also can bring their share of problems.
Their popularity with shoppers sometimes comes at the expense of existing businesses in a community.
“When Walmart left, they left an economic sinkhole,” May said. “They came, they soaked up all the money from surrounding competitors with more product, lower price and a central location … . They even killed off some of the smaller businesses. Once they got all the money soaked up, they up and take it next door to the city of Hueytown.”
May added that he hopes that a new large retailer will help attract small and medium-sized stores to build a foundation, “so that we don’t have this happen again.”