On the same day that Wal-Mart planned to formally announce the construction of a multi- million-dollar, 150,000 square foot Super Wal-Mart store on the north edge of Storm Lake, the company's officials instead decided to put the project on hold indefinitely.
Plans for a voluntary annexation discussion of the former sale barn area off Business Highway 71 with city officials was also dropped, but Wal-Mart representatives do plan to attend the January 10 city council meeting in hopes of enlisting some local government help for a potential project.
"It was our hope that we were going to actually announce today that we had nailed down the Supercenter to replace the existing Storm Lake store, but unfortunately that is not the case," said John Bisio, Wal-Mart manager of community affairs, on Thursday.
"I would say the status is definitely on hold at the moment. Recently, upon examining the viability of the store and the feasibility of the project, we have come to learn that the development costs are a lot higher than we had anticipated," Bisio said.
While Wal-Mart officials are declining to specify what costs have derailed the plan, Bisio said that road access, utility, site and off-site costs along with other elements of the project are all part of the cost of a project that company officials fear might not be able to break even in the foreseeable future.
Wal-Mart is now looking to the city council to see what they might have to offer in terms of assistance or ideas, Bisio said. "I don't really know what we would be looking for from the city that will make this happen. We aren't dictating to anyone, but we would like to hear any ideas in terms of what could be proposed locally, or something that could result in a different formula in terms of economics of the project."
Storm Lake city officials were surprised by the announcement that the project had stalled, and are reluctant to promise incentives.
City Administrator John Call said he feels the annexation of the sale barn site is probably not a "dead deal" and predicted it would be coming back before the city at a future time.
Call said tax breaks and other financial incentives are limited for retail developments. "The council never wanted to provide too many incentives in that area (retail) because of the competition it involved," he said.
Tax abatements are the major financial assistance the city could provide to such a retail development. Tax abatements are available for all new residential and commercial construction in city limits.
There are both two-year and five-year schedules. For the two-year schedule, taxes are 90 percent exempt both years. The five-year schedule is set up on a sliding scale.
Call said incentives for retail are limited, adding that there are more for industrial jobs.
In regards to the old sale barn site, Call said city water and sewer would have to be extended to that location with the developer covering the costs.
Wal-Mart officials say that the Storm Lake Supercenter plan is driven by customer demand. "We were driven by the feedback we hear from customers in Storm Lake every day. They are asking for the bigger store. They travel and become familiar with the Super Wal-Mart concept elsewhere, and wonder why they don't have it in their town, Bisio said.
Wal-Mart research indicates that some Storm Lake residents take their business to Spencer because of the Super Wal-Mart there, Bisio said, but he admitted that there is no hard data available on the specific community to indicate how a Super Wal-Mart would effect the community's retail "pull" or power to attract shoppers from inside and outside the city.
"The project did not go on hold because the town couldn't support a Super Wal-Mart. It is really not about the number of people in Storm Lake, its trade area or even the economic conditions, but simply about the costs of this particular development," he said, adding that the north Storm Lake site is the only one the company has found that could provide the combination of space, convenience and accessibility from all directions.
"It is just a matter of seeing if there could be some other formula, something to make the costs less than they are, or to help us be able to afford the costs of the development. It is important to us to try to be as creative as possible to still try to make this happen in Storm Lake. We have associates at our store who have been working since 1990 for our customers, and we would like to build this for them as well as a direct response to our customers' needs," Bisio said.
Company officials have been surprised to find that some individuals and other businesses in Storm Lake might not welcome such a store.
"In a community like Storm Lake, it is not at all uncommon for a Super Wal-Mart to expand your trade area, which is good for everyone. It is a concept that can be a real draw," Bisio said.
If the Storm Lake Super store is built, it will be 150,000 square feet, compared to the current store's 55,000 square feet. It would add about 200 new jobs.
The store would feature a large grocery, a tire-and-lube express auto shop, probably a vision care office, and several third-party tenants - which typically include such things as hair salons, banking, floral shops, one-hour photo developing lab, dry cleaning and package mailing.
No deadline has been set for a final decision on the Storm Lake Super Wal-Mart yet, Bisio said.