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Hillsborough has the retail hook

Pinellas is losing sales taxes as residents go to Tampa to shop.

By MARK ALBRIGHT, On Retail
Published December 5, 2007

Somebody is watching the rising number of Pinellas County shoppers who cross Tampa Bay to hit International Plaza, buy furniture or play rival auto dealers against one another.

Yep, St. Petersburg and Pinellas County government officials have discovered Hillsborough County's wider shopping choices are siphoning off bigger chunks of their sales tax income. And one fix is a subtle but big wrinkle in the quilt the Tampa Bay Rays pieced together to get them a waterfront baseball stadium in St. Petersburg.

Government policy wonks call it "retail leakage." That's not some lower GI tract ailment, but an affliction that cost the city of St. Petersburg $2.2-million and Pinellas County about $12-million this year in sales taxes - collected in Hillsborough.

Nobody's begrudging Hillsborough's success as a regional retail hub stocked with stores adjacent counties don't have.

But the merchandise and apparel sales deficit between Pinellas and Hillsborough just hit $1.3-billion. So keeping up with the Joneses matters.

"Unfortunately, Pinellas is built-out and a hodge-podge of development with higher-income neighborhoods next to lower-income ones, which dilutes the income demographics many retailers want," said Mike Meidel, economic development director for Pinellas County. "But if we matched Hillsborough's ability to keep retail sales in its boundaries, that's a $1-billion-a-year opportunity."

Instead, the gap is widening. Hillsborough's population is 20 percent larger than Pinellas'. But Hillsborough will collect 40 percent more sales tax this year, 13 percentage points more than a decade ago. As a percentage of per-capita household buying power, Hillsborough stores capture 95 percent of household disposable income, according to Demographics USA. In Pinellas it's 87 percent. Hernando is 78 percent. And Pasco is 71 percent, though that will improve with three big retail centers rising in Wesley Chapel.

Why the big disparity? Tampa government aggressively treats shopping as a quality-of-life necessity. For years, St. Petersburg and Pinellas treated retail development as a necessary evil.

The spending shift started long ago. High-end apparel shoppers flocked to Tampa since the heydays of Old Hyde Park Village and to furniture stores absent from Pinellas but operating in North Tampa's new suburbs. Tampa leaders subsidized International Plaza, helped recruit Ikea opening in Tampa in 2009 and handed WestShore Plaza lucrative zoning to lure Saks Fifth Avenue.

In contrast, St. Petersburg in the 1970s told a national mall developer its retail hub will be Gateway Mall, not his preferred Intersection of I-275 and Roosevelt Boulevard. So the developer built Pinellas Square Mall in Pinellas Park. Today, Gateway Mall is a handful of big boxes, and many St. Petersburg shoppers drive to Pinellas Park to shop. Except for the retail sprawl in the Tyrone area, many popular big box stores are missing in action across the rest of St. Petersburg.

Despite its 924,000 residents, Pinellas County has only two malls left to Hillsborough's five. And for the second year in a row, not one enclosed regional mall is under construction in the country as developers build Main Street projects with big box stores flanking a parking lot.

St. Petersburg Mayor Rick Baker two years ago made more retail a goal. The Rays seized on that in their new pitch to sell Tropicana Field to developers for a mixed-use project driven by up to 1.2-million square feet of retail.

"That will help address the city's retail leakage issue," said Michael Kalt, the Rays vice president of business development.

Baker is noncommittal about a Rays deal, but not retail.

"Having people live closer to where they shop is good thing, gets us sales tax and is now a standard of good urban planning," he said.

The Rays followed the Wall Street script by trying to "unlock the value" of an illiquid asset. In this case, they want to capture it all: even future property taxes from development to pay for their new stadium.

Sold to developers, the 85-acre site of what is now Tropicana Field would becomea mixed-use project with housing plus restaurants, mall retailers and big box stores like Bass Pro Shops, Kohl's and Target.

It would be the third mall-sized, mixed-use project negotiating with Pinellas local governments. The others are Largo's choice of Weingarten Realty Trust to redo the flattened Crossroads Mall as a Main Street of big boxes and apartments, and the county government's sale of 240-acre Toytown landfill. Two Toytown bidders want 1-million square feet of retail.

None offers the prospect of the high- end merchants drawing people to International Plaza. That door closed when high-end department stores chose IP over St. Petersburg's Bay Plaza downtown mall.

So any new upscale store movement in St. Petersburg will be gradual. Indeed, folks leasing downtown retail space at Parkshore Plaza, the Ovation condo and the former Progress Energy Power Station hope to fill that demand.

The market reality is these projects are more about bringing stores closer to people used to driving across town or across Tampa Bay to shop.

That may take some of the fizz.

But without developers offering new choices, stores that do bring Pinellas anything different will be even more limited.

Mark Albright can be reached at albright@sptimes.com or (727) 893-8252.

[Last modified December 4, 2007, 22:50:15]