Finance and Economic

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WARRENTON • A billboard along Interstate 70 encourages drivers to stop in Warrenton and stay awhile.

But with just a handful of shops left at the Warrenton Outlet Center, there are fewer reasons for St. Louisans to make the trek to this city, about 60 miles west of downtown.

The Gap Factory Outlet and Dress Barn have jumped ship, finding apparently sunnier pastures last year at a strip center in Wentzville. The Levi’s Outlet Store, G.H. Bass & Company, and the Famous Footwear Outlet shuttered their locations last month.

And the Nike Factory Store, one of the last major retailers left, is closing in April and moving to the Meadows at Lake Saint Louis.

Elsewhere around the country, many outlet malls continue to thrive, and developers are rushing to build more of them. But Warrenton’s outlet center, operating under an increasingly outdated model, never managed to reach its full potential.

Now the beleaguered center will suffer an ignoble fate shared by other retail properties on the decline: the auction block.

The 200,000-square-foot outlet center will be put up for sale in a three-day online auction starting Monday morning. The minimum starting bid is $375,000.

The listing at auction.com notes that the center was 35 percent occupied in November. But that was before some of the recent departures.

The center opened in 1993 during a national boom in outlet mall construction. It once boasted many notable stores such as Mikasa, Nine West and Jones New York — some names of which are still barely visible above vacant storefronts. At one time, it had upward of 45 stores. Now, only about 10 stores remain.

“Even a few years ago, it was still a vibrant center,” said Michelle Schlenther, Warrenton’s director of economic development. “People would come out and make a day trip out of it. The dad would go play a round of golf while the wife shopped.”

So what happened?

“It’s an older center,” said Linda Humphers, who tracks the outlet mall industry for the International Council of Shopping Centers as editor of Value Retail News. “It’s only 200,000 square feet, and it’s probably a little too far out of town.”

Older outlet malls like Warrenton were built about 40 to 50 miles outside cities because retailers objected to having discounted merchandise so close to their regular-price stores.

But that model has begun to change with newer outlet malls creeping closer and closer in. For example, two proposed outlet mall developments are duking it out to come to Chesterfield within a stone’s throw of Chesterfield Mall.

NOT A DESTINATION

Steve Etcher, executive director of the Boonslick Regional Planning Commission, said the Warrenton outlets never grew to be large enough to be a true shopping destination. A third phase for the center, which would have taken it to more than 100 stores, never materialized.

“You had drive-by shopping but not enough to sustain it,” he said. “It’s not a bad location — you’re right on 70, but it’s not necessarily destination. To me, Lake of the Ozarks is destination. But this ended up being more of an along-the-way thing.”

It didn’t help, he said, that ownership of the center changed hands several times. And then when St. Louis Mills opened in 2003, offering a mix of outlet and regular price stores, that took some wind out of Warrenton, too.

Schlenther also traced some of the decline to several years ago when a number of stores went bankrupt or underwent massive restructuring such as KB Toys, Liz Claiborne and Big Dog Sportswear.

“So a lot of what closed there closed not only in Missouri, but across the nation,” she said quick payday loan. “And it just happened that we had a lot of those in one facility.”

Things got worse when the property fell into receivership a couple years ago, Schlenther said. At that time, the owner was Ariel Preferred Retail Group, which had a portfolio of about seven outlet malls.

“Stores just don’t want to come in and put an investment in because they don’t know when it’s bought what the new owners are going to do,” she said.

Texas-based Woodmont Co. is the receiver that’s managing the property. An on-site outlet manager referred questions to Fred Meno, a Woodmont executive. Meno did not return requests for comment.

Despite the troubles at Warrenton, Humphers said the prospects for an outlet mall in Chesterfield are rosier because the developers behind both projects are large, reputable mall developers.

In November, Simon Property Group, the owner of St. Louis Mills, announced it was joining forces with Woodmont and EWB Development on that proposed outlet project to be called St. Louis Premium Outlets. The project previously went by the name Spirit of St. Louis Outlets.

The other proposed outlet center — Chesterfield Outlets — is being spearheaded by Taubman Centers. The city of Chesterfield has approved its zoning request. And its plans for a 472,000-square-foot upscale outlet center will go before the city’s architectural review board next week.

Aimee Nassif, the city’s planning and development director, said she’s expecting to receive the section plans from the other project any day.

“They are literally kind of racing to the finish line,” she said. “It will be very interesting.”

OTHER USES

But Donna Boehringer hasn’t given up on the Warrenton outlets yet. She has operated her Corner Quilt Fabrics store in the center for about seven years after moving there from another location in town.

The move was good for business. A billboard she has along the interstate also has helped. She estimated about 60 percent of her customers are from out of town.

“Quilters seem to have this sixth sense of quilt shops,” she said. “If there’s one around, they will stop by.”

Boehringer did have her worst year in sales last year, but she attributed that more to the economy than to less traffic at the center. She’s in the process of renegotiating her lease.

“My plans are to stay right here,” she said. “I’m trying to be optimistic because I’d like to see something else come in. But we’ll see.”

Jan Olearnick, executive director of the Warrenton Area Chamber of Commerce, thinks the property holds promise for a mixed-use project. An education center, a health facility and a technology incubator are some of the ideas that have been thrown around.

“It would take a forward-thinking person to try and revive it, but we’re ready,” she said. “Warrenton is definitely a good location for any industry because of our proximity to I-70 and to the railroad — and even to the river.”

On top of that, the city recently got federal approval to build an interchange just west of the outlet center, making for easier access to the site. But the project’s funding source has not yet been determined.

In the meantime, other enterprises have been popping up in the region — though they are not necessarily retail.

A billboard next to the entrance to the outlet center advertises one of them a bit farther west: zip line tours.

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Millionaires can be just like everyone else. At least when it comes to paying taxes.

Mitt Romney released records this week that show he pays a tax rate of about 15 percent of his income. The relatively low figure is raising eyebrows because it’s on par with the rate paid by many middle-class households. That’s despite the Republican presidential candidate’s impressive income of $45 million over the past two years.

The disparity seems to fly in the face of the basic rule that tax rates move in tandem with wages; the more you earn, the more you pay. So Romney’s disclosure may stir suspicions that the system is tilted toward the rich.

In his State of the Union speech Tuesday night, President Barack Obama focused on the issue by noting that a quarter of all millionaires pay lower tax rates than millions of middle-class households.

“We need to change our tax code so that people like me, and an awful lot of members of Congress, pay our fair share of taxes,” Obama said in a speech that repeatedly touched on the gap between the rich and poor.

On average, the wealthy pay taxes at a much higher rate than the middle-class individuals. But the primary reason that many pay a lower tax rate is that more of their income comes from investments, which is generally taxed at a far lower rate than wages.

Even if investment income doesn’t play a big role in your finances, understanding the basics of how tax rates work can help even the average wage earner save hundreds, if not thousands of dollars a year.

Here’s an overview of what you need to know:

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TAX RATE BASICS

Although it’s common to grumble about taxes, taxpayers often don’t know precisely what percentage of their income goes to the government. So an essential starting point is to look at how tax rates are applied.

Taxpayers can currently fall into one of six federal tax brackets depending on their taxable income. This amount includes items such as wages and distributions from retirement accounts. The tax rate for each bracket ranges from 10 percent to 35 percent. This is the most basic building block of tax planning because your taxable income can be reduced considerably by various credits, exemptions and deductions.

Here’s the breakdown of how much single filers would pay in federal income taxes depending on their taxable income for 2011:

1. 10 percent - income up to $8,500

2. 15 percent - over $8,500 up to $34,500

3. 25 percent - over $34,500 up to $83,600

4. 28 percent - over $83,600 up to $174,000

5. 33 percent - over $174,400 up to $379,150

6. 35 percent - amount over $379,150

Keep in mind that these are marginal rates, meaning your income is taxed in tiers. The first $10,000 you earn, for example, is taxed at a lower rate than the next $10,000.

So let’s say you earned $100,000, putting you in the 28 percent tax bracket. This doesn’t mean you’d fork over $28,000 in federal income taxes. It means that the amount you earn above a certain threshold is taxed at 28 percent. Your federal income taxes would actually be closer to about 22 percent of your income.

The current federal rates are set to expire at the end of this year. If Congress doesn’t act by then, the rates would revert to levels from before the Bush-era tax cuts, which ranged from 15 percent to 39.6 percent.

For now, federal income tax rates overall are near historic lows, says Joseph Rosenberg, a research associate at the Tax Policy Center in Washington, D.C. He also said that nearly half of Americans do not pay any federal income taxes as a result of various exemptions given to those with dependents and limited incomes.

Federal income taxes are only a piece of the larger tax picture, however. Payroll taxes, which go toward Social Security and Medicare, eat up another 5.65 percent of wages. That rate returns to 7.65 percent if the payroll tax cut pushed by Obama isn’t extended past February.

State taxes are another factor and can vary widely, with rates ranging from as low as 3.4 percent in Indiana to 11 percent in Hawaii and Oregon, according to H&R Block’s Tax Institute. A handful of states, including Alaska and Florida, do not have an income tax.

THE EXCEPTIONS

Not all income is taxed at the rates outlined above. A key exception is any money earned from long-term investments, such as stocks, mutual funds and real estate held for at least a year. This income is classified as capital gains and is taxed at a flat 15 percent. That’s regardless of whether it’s $100 or $1 million.

“This is why someone who’s a millionaire might have an effective tax rate that’s lower,” said Gil Charney, a tax analyst with H&R Block’s Tax Institute. “A higher percentage of their income is going to be from long-term investment income.”

In Romney’s case, a chunk of his income in 2010 and 2011 came from Bain Capital, the private equity firm he founded and managed between 1984 and 1999.

Bain still pays Romney “carried interest,” which is a classification of pay for managers of hedge fund and private equity firms. Critics say this type of compensation and should be taxed as salary at ordinary rates. But as it stands, carried interest is considered capital gains because it’s profit in excess of what investors paid into the fund, Charney said.

The tax rate for capital gains wasn’t always 15 percent. The rate has moved up and down through the years. In the 1970s, for example, the figure was close to 40 percent. And if Congress doesn’t act by the end of the year, the capital gains tax rate will revert back to 20 percent.

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REDUCING TAXES

Tax rates are subject to political influences. But there are a few standby strategies taxpayers can use for reducing their tax bill.

A key tactic is to reduce taxable income; this is why financial planners are such advocates of maximizing contributions to 401(k) accounts. Workers can reduce their taxable income by as much as $17,000 a year. For traditional individual retirement accounts, the maximum contribution is $5,000 a year.

Most large employers also let workers set aside up to $5,000 of pre-tax wages in a health care flexible spending account. This money can be used for a variety of medical costs, including co-pays, prescription drugs and supplies such as cold packs.

There are also numerous tax breaks for donations and education and health care costs that you may incur anyway.

Not everyone will be able to get their tax rate down to 15 percent. Yet there are numerous steps you can take to minimize your tax bill.

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GROOVY GROVE: One of St. Louis’ newest designated communities, the Grove, has started off the new year with several new business openings and planned openings of several more.

Urban Breath Yoga at 4237 Manchester Avenue opened on Jan. 1, which, yes, was intended to coincide with the need for a place for hangover recovery. Director Cathleen Williams said the studio was previously located in Dogtown, and that she made the new space the main location because it has a larger reception area and additional room for classes.

Located in the same block is No Coast Skateboards, which opened last year and bills itself as the only skater-owned and operated shop in St. Louis. Planning to open soon along the same stretch is the SoHo Restaurant and Lounge, which is described as an upscale restaurant with a rooftop deck for dining and lounging payday loan.

Sameem Afghan Restaurant, which had originally been on South Grand but closed for a couple of years, reopened last week at 4341 Manchester Avenue. Owner Fahime Mohammad also operates Al Waha Restaurant and Hookah Lounge at the old Sameem’s location. He also operates the Kabob Palace catering company in Manchester.

The addition of Afghan cuisine adds another dimension to the variety of international cuisine in the Grove, which also has restaurants offering Baja Mexican, Nepalese, soul food and Spanish tapas. Rounding it off will be O’Shay’s Irish Pub, which is planning a spring opening.

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Iran’s navy said Sunday it test-fired an advanced surface-to-air missile during a drill in international waters near the strategic Strait of Hormuz, the passageway for one-sixth of the world’s oil supply.

Iran’s state TV said the missile, named Mehrab, or Altar, is designed to evade radar and was developed by Iranian scientists. The report said the missile was tested Sunday but provided no further details.

A leading Iranian lawmaker said the sea maneuvers serve as practice for closing the Strait of Hormuz if the West blocks Iran’s oil sales. After top Iranian officials made the same threat a week ago, military commanders emphasized that Iran has no intention of blocking the waterway now.

The exercise covers a 1,250-mile (2,000-kilometer) stretch of water beyond the Strait of Hormuz, including parts of the Indian Ocean and the Gulf of Aden.

The drill, which could bring Iranian ships into proximity with U.S. Navy vessels that operate in the same area, is Iran’s latest show of strength in the face of mounting international criticism over its nuclear program. The West fears Iran’s program aims to develop atomic weapons _ a charge Tehran denies, insisting it’s for peaceful purposes only.

The 10-day exercise drew significant attention after the Iranian warnings about closing the strait. Iranian military officials later appeared to back away from that threat.

A spokesman for the exercise, Rear Adm. Mahmoud Mousavi, made a similar conciliatory comment on Sunday.

“We won’t disrupt traffic through the Strait of Hormuz. We are not after this,” the semiofficial ISNA news agency quoted him as saying.

Prominent lawmaker Ismail Kowsari offered a different view. He said the war games are part of Iran’s preparations to close the vital waterway if sanctions are imposed.

“Iran’s armed forces have practiced operations to close the Strait of Hormuz several times,” the semiofficial Fars news agency quoted Kowsari as saying Sunday.

“If we feel that the enemies want to prevent our oil exports, definitely we will close the Strait of Hormuz,” he said.

Mousavi said the missile that was tested Sunday is one of the newest in the navy’s arsenal.

“It’s equipped with state-of-the-art technology and a built-in system that enables it to thwart jammers,” Mousavi told state TV. One way to deflect surface-to-air missiles is to confuse their guidance systems.

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Viva Del Taco?

On Sunday, the owner of the old Del Taco building in Midtown backed off plans to knock it down, saying he would explore a range of other alternatives before seeking a demolition permit from the city.

After weeks of silence on his plan to bulldoze the saucer-shaped landmark at South Grand and Forest Park boulevards near St. Louis University, developer Rick Yackey sent a statement to the Post-Dispatch pledging to hire an architect, talk with potential tenants and hold a community meeting to explore possible uses of the building.

“I am a developer, not a demolition man,” Yackey wrote, noting that he has performed more than 2 million square feet worth of historic rehabs in the city, been honored by the Landmarks Association of St. Louis and never once applied for a demolition permit.

Yet demolition was to be the fate of the Del Taco building, according to plans filed with the city last month. Yackey, who owns the structure and neighboring Council Plaza, indicated he would knock down the 1967-built former gas station and replace it with new buildings for retail tenants.

That news prompted a flurry of protests from fans of both the restaurant and the building’s funky midcentury architecture. Even as the Del Taco itself closed, thousands of people signed online petitions to save the structure. Supporters held rallies. Mayor Francis Slay weighed in, urging reuse. Eventually, aldermen changed the redevelopment plan to require review by the city’s Preservation Board before any demolition permit could be issued. That’s where things stand now.

Yackey said his goal is an “economically viable” project that fits in with the neighbors. Demolition was always a last resort, he said, but the existing structure, just 2,000 square feet under a vast cement canopy, has very little leasable space payday loan lenders.

“This isn’t about disliking the building,” he said. “It’s about things being functionally obsolete.”

But after the uproar, and after talking with Slay and Alderman Marlene Davis, Yackey decided to see whether he can keep the building. He has hired an architect to study adding on to the ground floor, and he’s talking with the owner of a neighboring property about swapping some land for more parking spaces.

That is great news both for the Del Taco building itself and for the broader cause of preservation in St. Louis, said Randy Vines, who helped organize rallies in support of the building. The outpouring of support shows that people care about distinctive buildings, even if they’re just a few decades old, he said. And the protesters tried hard to keep a positive tone.

“We’ve done our best to offer solutions,” Vines said. “Certainly this is a building that can be adapted to another use.”

Yackey said he’s talking with potential tenants already. He wouldn’t say who, but Kaldi’s Coffee and local pizza chain Pi confirmed last week that they’re interested. Yackey also plans to hold a “community meeting to explore reuse and redevelopment ideas.”

And, Yackey said, he won’t rush to knock the building down.

“I have not applied for and will not apply for a demolition permit until completing this investigative process,” Yackey wrote. He said he expects that will take two or three months.

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Days before Canadian superstar Georges St-Pierre won his bout at UFC 129 at the Rogers Centre last April, a unanimous decision was already in among Toronto business owners like Carlos Gavilanes about the true victor of the bloody cage match: the cash register.

The Ultimate Fighting Championship went the distance for Toronto tourism and for local businesses, which took in an estimated $40 million from the most successful fight night in UFC history.

Polish central bank Governor Marek Belka said inflation in the eastern European country will peak within two months and a surprise interest rate increase in May isn’t a start of “a new trajectory” in monetary tightening.

“We are really very close to the peak” of consumer-price growth, Belka said in an interview in the Kazakh capital Astana today. The rate increase wasn’t to signal “a new trajectory of interest rate increases. It’s simply that we want to implement our strategy faster.”

The central bank unexpectedly raised its benchmark seven- day rate by a quarter-point to 4.25 percent on May 11. The bank sought to pre-empt pressure on prices as consumer spending is picking up. The inflation rate rose to a 2 1/2-year high of 4.5 percent last month.

Wage growth is accelerating in Poland, the European Union’s largest eastern member which escaped a recession altogether during the credit crisis. The Polish central bank raised borrowing costs three times since January as policy makers across the globe struggle to curb inflation.

The rate move probably changed perceptions of how fast prices are going to rise and will “moderate” economic growth in Poland, Belka said cash advance. Imported inflation is also eroding the purchasing power of consumers, he said.

‘Hysteria Is Over’

Following the rate increase “we are observing a certain attenuation of inflationary expectations.” Belka said. “The hysteria is over.”

The inflation rate may drop “close” to the central bank’s target of 2.5 percent late next year, Belka said. The rate has been above the bank’s goal for seven months.

Government efforts to limit public spending may help combat inflation in the country, he said.

Even so, Belka said he has “some doubts” the government will be able to reduce the budget deficit to 2.9 percent of gross domestic product as planned next year.

The central bank took the government’s pledge “seriously” that it will implement “additional measures if necessary” to cap expenditures, he said.

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Facing continued public unhappiness over gas prices, President Barack Obama is directing his administration to ramp up U.S. oil production by extending existing leases in the Gulf of Mexico and off Alaska’s coast and holding more frequent lease sales in a federal petroleum reserve in Alaska.

Obama said Saturday that the measures “make good sense” and will help reduce U.S. consumption of imported oil in the long term. But he acknowledged anew that they won’t help to immediately bring down gasoline prices topping $4 a gallon in many parts of the country.

His announcement followed passage in the Republican-controlled House of three bills _ including two this week _ that would expand and speed up offshore oil and gas drilling. Republicans say the bills are aimed at easing gasoline costs, but they also acknowledge that won’t be immediate.

The White House had announced its opposition to all three bills, which are unlikely to pass the Democratic-controlled Senate, saying the measures would undercut safety reviews and open environmentally sensitive areas to new drilling.

But Obama is adopting some of the bills’ provisions.

Answering the call of Republicans and Democrats from Gulf Coast states, Obama said in his weekly radio and Internet address that he would extend all Gulf leases that were affected by a temporary moratorium on drilling imposed after last year’s BP oil spill. That would give companies additional time to begin drilling.

The administration had been granting extensions case by case, but senior administration officials said the Interior Department would institute a blanket one-year extension.

New safety requirements put in place since the BP spill also have delayed drilling in Alaska, so Obama said he would extend lease terms there for a year as well. An oil lease typically runs 10 years.

Lease sales in the western and central Gulf of Mexico that were postponed last year will be held by the middle of next year, the same time period required by the House. A sale off the Virginia coast still would not happen until 2017 at the earliest online cash advance. But Obama said he would speed up environmental reviews so that seismic studies to determine how much oil and gas lies off the Atlantic Coast can begin.

To further expedite drilling off the Alaskan coast, where such plans by Shell Oil Co. have been delayed by an air pollution permit, Obama said he would create an interagency task force to coordinate the necessary approvals. He also will hold annual lease sales in the vast National Petroleum Reserve on Alaska’s North Slope. Officials said the most recent sale was last year, but that they had not been held on any set schedule.

Republicans dismayed by the lack of progress in Shell’s drilling have drafted legislation to exempt drilling off Alaska from air pollution laws.

House Natural Resources Committee Chairman Doc Hastings of Washington, sponsor of the legislation, said it was “ironic” that Obama “is now taking baby steps in our direction” after the White House and congressional Democrats criticized the bills.

“The president is finally admitting what Republicans have known all along, that increasing the supply of American energy will help lower prices and create jobs,” Hastings said.

Obama also called on Democrats and Republicans to vote to eliminate billions in taxpayer subsidies to oil and gas companies.

In the weekly Republican message, Alabama Rep. Martha Roby said it’s time for Washington to get serious about the challenges facing the country, including straightening out its finances and tackling the gas price issue. She praised the House for passing measures to expand domestic energy production “because when we’re talking about energy, we’re talking about jobs.”

“The greatest threat to our economy, job creation, and the future of our children is to do nothing,” Roby said. “We have to act. It is what we were sent to Washington to do.”

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