SAY NO TO OUTDOORS RETAIL SUBSIDIES

Cabela's continues to get all the breaks
By Bill Uhrich
Reading Eagle
December 12, 2005
Reading Pennsylvania

During the Christmas holiday season, I usually make some kind of gift recommendation for the bird watcher.
But this year, I have to pause because of a convergence of events in northern Berks County, especially considering how these occurrences reflect the values of Christmas. The late Esther Ludwig, a former Shoemakersville bank director, bequeathed $20 million to the Hamburg School District for scholarships to district students. The Christmas season demands that we ask ourselves: What will we, either individually or as a society, do for our children? And this gift to the school district is an overwhelmingly positive affirmation to that question. What better gift to give a child than education?

Now, I hate to counter this gracious act with a downer, but I have to. Esther Ludwig's generosity to the Hamburg School District stands in stark relief to the tax breaks Cabela's receives. I know, I know. Not Cabela's again. Longtime readers of this column will recall my criticisms of the tax deals that Cabela's wrangles out of every community the retailer builds in. But after Esther's gift, I felt compelled to find out what the numbers are regarding Cabela's tax breaks in Tilden Township and the Hamburg School District, especially considering the hot debates in Berks over property tax reform.

According to Hamburg School District tax records, Cabela's carries a property tax assessment of $19,818,900. Their tax liability for this year to the Hamburg School District would be $381,264.11 if Cabela's were paying its full tax. Instead, the district received just $68,627.54. The $312,636.57 that won't go to educating Hamburg's kids is going to pay off Cabela's bond debt. The numbers for Tilden Township are depressingly similar. Records from their property tax receipts from this year show that Cabela's tax would be $10,383.80, but the township collected just $3,143.75, and the rest likewise went to pay Cabela's debt.

Who has to make up for this shortfall? The overburdened taxpayers.

Tilden levies a $30 Emergency and Municipal Services Tax on every employee who works in the township. Cabela's had 609 employees on which the tax was levied during the first three quarters of this year. This number includes full- and part-time employees and includes new hires due to employee turnover. A further breakdown of these numbers shows Cabela's employed, including turnovers, 34 from Tilden and 81 from the borough of Hamburg. Tilden and Hamburg aren't reaping many benefits in regard to employment. To be fair, though, a majority of employees at Cabela's are from Berks. But what's also important to note is the retail sprawl that's taken place and its effect on the aesthetics and on the rural nature of the area.

A number of residents in Tilden and Hamburg are concerned about what's happening to their mountain township and mountain town, particularly in light of a developer's request to rezone 63 acres next to Cabela's from residential to commercial with plans to bring in a national big-box retail store. Some of these acres are located in the tax-relieved Keystone Opportunity Zone that was created for Cabela's. Big boxes at the foot of the mountain. Just what we need. If you are from Tilden and are as concerned about this issue as some of your fellow citizens, there will be a comment period on the zoning request during the next township supervisors meeting Saturday at 8 a.m. in the basement of the Tilden Elementary School.

Raise your voices and make a joyful noise.
Merry Christmas.

Contact Bill Uhrich at 610-371-5090 or buhrich@readingeagle.com.

By Kelly Evenson
12/17/2005, excerpt
The Examiner
Eastern Jackson County, MO

Every time a new retail development is proposed in Eastern Jackson County, more times than not it comes with a tax increment financing plan. These plans often generate a lot of community debate, because they take state and local property taxes that would go to the school districts, libraries and other entities and put them in a special fund that helps pay for part of the development costs. The plans usually last anywhere from 10 to 20 years. Because school districts receive more property taxes than most other taxing jurisdictions, they tend to be affected the most. Local school officials often find themselves in the middle, getting lobbied by city officials and developers for support, while taking note of how much money the use of TIF is costing the district. "We don't oppose growth, and we don't oppose economic development," said Gary Jones, deputy superintendent for the Blue Springs School District. "But we do have concerns when school districts end up funding 80 percent of these projects. We are a growing school district and have to provide services to our kids. It becomes difficult when some of that potential revenue is diverted to economic development projects." Most all area school districts have gone on record opposing TIF plans at certain times, and some have gone as far as to testify in Jefferson City, hoping legislators will enact tougher TIF laws.

This Letter to the Editor ran on nwitimes.com on Sunday, December 18, 2005 12:24 AM CST

Do we in Lake County, land of possibly the highest property taxes in the nation, want a Cabela's? Sure. Do the folks in Porter County want Bass Pro Shops? Why not? But I'll bet the folks in Porter, LaPorte, Lake, Sullivan and Tippecanoe counties don't understand why taxpayers throughout Indiana should have to pay any private enterprise to build a store.

The same goes for my and your taxes paying more than 1 million to build a new stadium for the Indianapolis Colts. I pay taxes for streets, police, courts, firefighters, schools and the like, not to bribe private enterprise with privileged breaks.  Both political parties are guilty of using your tax money to promote privately owned businesses.  Sure, Cabela's will create jobs and pay taxes. So do all other businesses, but they don't get privileged tax breaks.  Taxpayers should be screaming about this.

John Collie Jr., Gary

The Museum Scam is an very creative and questionable method for sucking public money into the coffers of private business. Cabela's has been persuading local governments across the country to pay for a part of the store that supposedly does not include retail. These "museum" parts of the store typically include stuffed animal displays and animal dioramas, and Cabela's has been successful at encouraging local politicians to subsidize this portion of construction. These museums or displays are clearly used to entice people into the retail store to spend money. It is a marketing tool that is all about selling product, with little or nothing to do with the benefits of a real museum. An alert citizen in West Bend, Wisconsin, has challenged this abuse of the public with a lawsuit against his local government's $500,000 museum subsidy. This gentlemen understood that he was being scammed, and stepped up to do something to protect his fellow taxpayers. Why should the government be paying for a portion of a private retail business that is meant to promote sales at the store? It is ridiculous on its face, and only the mad hunger for development could prompt normally conscientious local officials to waste money in this frivolous manner.

And can someone tell me why it is that Bass Pro has the money to sponsor a NASCAR driver, but not enough money to build a store without taxpayer subsidies? Perhaps the taxpayers should get to have their logo on Jeff Gordon's car. After all, we do seem to be paying for it.

Eastern Jax lawmakers will work to rein in TIF
Jim Davis
November 25, 2005 print edition (excerpt)

Eastern Jackson County, where tax increment financing has become as closely tied to shopping centers as post-Thanksgiving sales, is moving to the center of debate about TIF's use. Two lawmakers from Lee's Summit -- Rep. Robert Johnson and Sen. Matt Bartle -- are preparing to file TIF-constraining bills in December for the General Assembly's 2006 session.

Although bashing has become an annual exercise, the coming session is widely expected to produce what could be the most fundamental changes in TIF since its adoption in 1982. TIF redirects taxes generated by a development to offset the costs of construction that provides public benefits.

The amount of these reimbursements is soaring. A Bass Pro Shops-anchored development in Independence is to receive $73.6 million in TIF, nearly as much as the city had approved for all previous TIF-supported retail projects. Bartle, R-Lee's Summit, said this trend is dangerous because it drains tax money that's needed for other purposes. "The development community is addicted to public financing," he said.

Bartle said public schools are the big losers with TIF because property taxes that provide most of schools' financing are diverted to reimburse developers. "Slowly but surely, schools are seeing their steady source of funding compromised," Bartle said. TIF saps school budgets, he said, because commercial development generates most of the property taxes that support new schools in growing areas such as Eastern Jackson County.

"The net result," he said, "is higher property taxes for individual taxpayers." The Blue Springs R-IV School District reported that it loses more than $16 million annually in property taxes to TIF. The district, whose boundaries extend into Independence and Lee's Summit, contains 11 TIF plans. Gary Jones, the district's assistant superintendent for management services, said the district has raised its levy by more than 25 percent to make up the difference.

Bartle said he'll sponsor legislation that would require schools to get at least 10 percent of taxes generated by new TIF projects. Bartle introduced similar bills in each of the past two legislative sessions; neither advanced beyond a committee hearing. Johnson, R-Lee's Summit, said TIF's use has strayed from its original intent. He said the law aimed to remove blight by making urban locations cost-competitive with suburban sites. "We should get back to the initial premise," said Johnson, a state senator when the law passed. "It's a redevelopment tool. How you can call a horse pasture or a bean field blighted is beyond me." Johnson said he wants to limit TIF's use in suburbs and rural areas, especially for new shopping centers. A similar bill he offered this year wasn't heard.

jdavis@bizjournals.com | 816-421-5900

State may STIF Cabela's financing request
Dec. 6, 2005

BY PATRICK GUINANE
pguinane@nwitimes.com
317.637.9078

INDIANAPOLIS | Cabela's may not build in Hammond, the outdoors superstore said Monday, after a key state panel reaffirmed opposition to the company's $40.7 million financing request. The project seemed to take on new life last week, when the State Board of Finance granted Cabela's more time to negotiate with the Indiana Economic Development Corp. But on Monday, a spokesman for the IEDC said talks will not include sales tax increment financing. "The IEDC is not going to recommend to State Board of Finance that STIF financing be used for the Cabela's in Northwest Indiana," corporation spokesman Weston Sedgwick said. "It's been our position, for the most part all along, that this would not be a good use of tax dollars for the state of Indiana."

While the IEDC makes a recommendation, the State Board of Finance has the final vote. "Certainly we're disappointed that the IEDC sees it that way, but we hope the board will look at it a little more deeply," Cabela's spokesman David Draper said Monday. And if not? "If the STIF doesn't go through, we're going to have to rethink our plans for the property," Draper said of the 93-acre Woodmar Country Club site, a $14 million purchase. "It's not to say we won't build there, but we're going to have to go back to the drawing board to see if it makes financial sense."

The state has never approved sales tax increment financing, though Hammond is among four communities allowed to consider the economic development tool. "Unfortunately for Indiana, this is the approach that's been taken by the IEDC, that STIF should not be used for retail; I don't agree with that," Hammond Mayor Thomas McDermott Jr. said. "We're a border town. I live right next to Illinois. Wouldn't it be horrible if Cabela's abandoned their store in Hammond and opened its second store on the South Side of Chicago?"

Sedgwick said the IEDC still could consider other incentives, such as payroll credits and employee training grants. The IEDC's renewed stance against STIF comes days after Cabela's said it will build a Hoffman Estates store with up to $20 million in government assistance. Hammond has offered to finance $25 million of the $94 million project. Cabela's Draper says he doesn't know how much more the state will have to contribute. "There is a line," he said. "I don't know what that line would be."

Cabela's lays off 30 in Buda
Company cites softer-than-expected sales.

By Dan Zehr
AMERICAN-STATESMAN STAFF
Wednesday, November 09, 2005

Cabela's Inc. laid off about 30 full-time employees at its Buda store Wednesday, blaming high energy prices and this summer's hurricanes for crimping sales at its Texas stores.
The company also laid off a similar number of employees at its store in Fort Worth, spokesman Joe Arterburn said.

"It was basically in reaction to a weak economy and softer-than-expected sales," Arterburn said. "Those are due to unforeseen circumstances, such as skyrocketing fuel prices and the hurricanes that affected customer buying patterns."

Cabela's received $61 million in state and local tax breaks and other incentives to build the Buda store, but Wednesday's cuts will not leave the outdoors retailer short of the job-creation targets included in those agreements. The local economic development agreement required Cabela's to keep 225 full-time positions or return part of the abatements. Arterburn said the store still employed between 350 and 400 people, but didn't immediately know how many were full or part time.

Buda Mayor Joe Trube said that, judging from the city's tax receipts, Cabela's Buda sales were exceeding projections. However, he said, those figures run about 60 days behind.
Hurricane Katrina hit Mississippi and New Orleans 71 days ago (Aug. 9), and Rita followed into the Texas coast just 45 days ago (Sept. 24).

"We were expecting nothing but good things starting in November, going into the holiday season," Trube said.

Cabela's decision expected soon

BY PATRICK CORCORAN
STAFF WRITER
August 18, 2005

Local officials should know within a week whether or not Cabela's -- a popular camping, hunting and fishing retailer -- is coming to Hoffman Estates. Village Manager Jim Norris said Tuesday that the village and state have put forth their best and final offer, and now it's up to executives at Cabela's to make the next move.

"We're very hopeful," he said. "At this point, we've done pretty much everything we can do (to make the deal happen)."
Cabela's officials could not be reached for comment.

Cabela's is seeking a package from local and state sources of about $40 million, according to village officials. Norris declined to discuss details of package offer.

Prattville to Borrow $48 Million

Publication date: 2005-11-01

By Marty Roney, Montgomery Advertiser, Ala.

Nov. 1--PRATTVILLE -- The city of Prattville is borrowing $48 million for incentives to lure large retail interests to the east side of town. Officials are calling the move an "investment," predicting the new shopping centers will generate about $9.4 million a year in sales tax revenue and license fee collections.

The incentive package also includes money to build an 8,000-square-foot conference center adjacent to the Legends complex near the Capitol Hill golf facility. The conference center will be operated by the Retirement Systems of Alabama, which also owns the golf facility and hotel.

"I would rather not pay incentives, but I live in the real world and this is the way the game is played," Mayor Jim Byard said. "We feel the amount of money coming in each year will more than offset the cost of the bond issue which will fund the incentives. Some people will complain about us spending this money. But they are likely the same people who would complain if we didn't land these retail clients, and these businesses went to other communities in our area."

Figures provided by City Hall show anticipated bond payments of $3.8 million a year over the 20-year life of the bond. Once the two large shopping centers are up and running, they will produce about $9.4 million in new sales tax and business license collections a year, Byard said. Subtracting the $3.8 million payment from that amount leaves a net revenue increase of about $5.6 million a year.

City calculations state that is a 68 percent return on investment and a 26 percent increase in the city's operating budget. Prattville's operating budget this year is about $21.5 million.

"Man, that's a lot of money, $48 million," said Mac Harrison of Prattville. "But I guess it's one of those things where you have to spend money to make money. If we can make the bond payments out of the money these new shopping centers are going to produce, it sounds like a good idea to me."

Kaye Forester, a Prattville native, disagrees.
"Why should I pay for Bass Pro Shops and Target and Parisians to build new stores? What happened to private enterprise?" she said. "If the market is here, and I believe it is, these companies should pay their own way. I don't care how much money the city will get in taxes. Public money shouldn't go to private interests."

Plans call for a 400,000-square-foot shopping center near the intersection of Cobbs Ford and Redfield roads. Target likely will be an anchor for that development. On the north side of the intersection, McClinton and Company has plans for a 450,000-square-foot shopping center that will have a Bass Pro Shops as one of its anchors. Artist drawings of the McClinton project show it will be similar to The Shoppes at EastChase.

The incentive package is spelled out in documents filed in Autauga County Circuit Court. A law passed last year compels municipal governments to appear before a judge to show how public dollars will be spent on economic development projects. The "validation" process requires a judge to determine if the city financially is able to meet the debt payments. Judge Ben Fuller will hold the hearing at 3 p.m. Nov. 30 at the Autauga County Courthouse.

By Maurice M. Eisenstein

Post-Tribune guest columnist

Two years ago I addressed the Northwest Indiana Quality of Life Council on ethics in public service. With the leaders of governmental units, universities and businesses in attendance, I told them that ethics is different from legality because an act is frequently unethical without necessarily being illegal. Ethics is enforced by public opinion and leadership. Ultimately, ethics depends on enforcement. It is a question of their leadership and acting as role models. No surprise, I was never invited back.

NWI is an ethical political wasteland because the political leadership, as represented in the Quality of Life Council, is not willing to call unethical behavior by its accusatory name -- evil. (Dan Lowery's efforts are of one person, and he is not a government official.)

In Gary, we have the Urban Enterprise Association confusing millions of dollars between personal and public use, and the School Board and the Library Board are misusing public funds for selfish private luxury, while borrowing funds to service the public. What critique have the so-called leaders who sit on the Quality of Life Council offered on this behavior? There is not a single peep -- never mind a squeak. Are they too afraid or just unaware?

Then there is the ethically challenged family, the McDermotts. The Cabela's deal crosses all possible ethical lines: financial conflict of interest, nepotism, cronyism and unethical manipulation of state power for personal gain. If there is to be any semblance of ethics in NWI public life, the same Quality of Life Council leaders should have the courage to confront these unethical shenanigans. But they have not.

Hammond has a strategically located beautiful piece of green space called the Woodmar Country Club. Where was the competition for the best offer to the club and to the city? There was none because McDermott Sr. was paid hourly to make sure this deal went through while the son as the city's mayor wielded the two-by-four. This crosses all acceptable ethical lines.

Then when the one option was forced upon the public (no one knows the potential alternatives because none was sought), the commercial development of this 100 acres of green space was turned over to daddy's other son.

The misleading claim was -- this is for economic development. Retail development has never been economic development. By its nature, it provides low-paying jobs and takes money out of the community.It is not necessarily bad, but it is not economic development.

Despite the pep rally visit to Kansas City, Cabela's did little for the economic development of that city. In 2002, when the store opened, Kansas City was already listed as 35th among the 268 top metro centers for the creative class by Richard Florida, the guru of economic development. According to the University of Kansas' Policy Research Institute, educational attainment in public schools was improving steadily and had been before the store came in. Since 1990, people with college degrees have been steadily increasing to twice the national average. Before Cabela's, Kansas City ranked third in the nation in the percentage of people with college degrees and third in the nation for job growth. Cabela's has been irrelevant.

Now look at Hammond, where the McDermott family continues to appropriate personal gain from the public trust just as the boards in Gary have. Where are the ethics? The leadership in the Quality of Life Council needs to stand up and say enough is enough.

Maurice M. Eisenstein is a professor at Purdue University Calumet. His opinions do not represent Purdue University. Contact him at m_eisens@calumet.purdue.edu

The Patriot-News
Corporate welfare faces test in court
Sunday, October 02, 2005

In the mid-1990s, some people feared welfare reform would leave mil lions of people in wretched conditions and cause unemployment to soar. Eventually, changes occurred under Bill Clinton.
I always like to point to that fact whenever the topic of welfare reform comes up. Reform made sense on many levels, and it should not have been a partisan debate.
Clinton eventually signed the Republican-led initiative, and history has proven the reform worked. Unemployment, even with the recession we have weathered since, did not spike and has remained relatively low. People who could work were forced to find jobs, and many people did.
That story helps prove a basic management maxim: Do the right thing for the right reasons and you don't have to worry about the rest, no matter what the outcome. You can always take solace in having done the right thing.
And so it should be with corporate welfare. In this instance, however, the leadership is in the hands of the U.S. Supreme Court and not our elected politicians.
As we reported last week, the nation's highest court might settle whether it is a fool's game for governments to chase industries with lucrative incentives. The specific case involves a $281 million tax credit that Ohio gave DaimlerChrysler to build a Jeep plant.
This high-stakes game often pits states against each other as they bid for a factory and its jobs. There is no winner. Not really. But the losers are taxpayers in states that encourage such payoffs. In Pennsylvania, governors and leaders -- Democrats and Republicans alike -- like to play.
One of the oddest payouts in recent years was the millions given to help build a Cabela's outdoors store near Hamburg. Now, I am all for Cabela's. But if I were a competitor, I wouldn't have been happy. As a taxpayer, I wasn't pleased the money supported retail jobs.
Doomsayers would suggest that incentives are needed or companies will leave. The reality is that a business will do what is best for its future and bottom line, so any money given to it is a gamble. The government simply shouldn't be in the business of gambling with taxpayer money.
So far, no state has been willing to stand on principle and end the payments. That has allowed generations of companies to become dependent on the cash. Isn't that what we were trying to stop with welfare reform -- whole generations getting used to handouts that would keep them from learning how to fend for themselves?
It will be interesting to see whether the Supreme Court makes a distinction between cash payments and other incentives. A government trying to redevelop blight might be wise to offer incentives to lure business and industry. There is a difference between that, where the company is taking an equal risk, and cutting a big check. It also makes little sense for the state to train workers -- taxpayers already have paid by investing in public education.
No matter what, though, I hope the Supreme Court gives politicians a way out. By offering clear direction on what is constitutional and what isn't, corporate welfare as we know it just might end.
TOM BARSTOW: 255-8464 or tbarstow@patriot-news.com

Lawsuit seeks to block payment to Cabela's
Retired businessman opposes tax money for store

By DON BEHM
dbehm@journalsentinel.com
Sept. 29, 2005

West Bend - A retired local business executive filed a lawsuit Thursday in Washington County Circuit Court to block a county payment of $4 million to Cabela's Inc. in exchange for the company's commitment to build an outdoor-gear showroom northwest of Germantown.

Douglas Ziegler, retired chairman of The Ziegler Cos. and a former executive of the West Bend Co. and Dart Industries, said that he challenged County Board approval of the payment because he is opposed to taxpayer subsidies of profitable companies. "The suit I have filed against Washington County has nothing to do with Cabela's," Ziegler said. "It has everything to do with using taxpayer money to subsidize a for-profit company in order to lower its costs on a retail project."

"This is America," he said. "If they want to build a store there, God bless them. But it shouldn't be built with taxpayer dollars."

The County Board earlier this month approved borrowing $4 million and giving the cash to Cabela's as an incentive to build one of its trademark retail showrooms at U.S. Highways 41 and 45 on the border of the Towns of Richfield and Polk. The borrowing would be repaid by the county over 15 years, county officials said at the time.

The board resolution in support of the payment said that it would help pay for Cabela's promised museum-quality wildlife displays. The resolution was adopted on a 15-12 vote.

County Attorney Kim Nass is negotiating an agreement with the company in which the county would become owner of a portion of the building open to all visitors, such as a replica mountain or dioramas with North American and African wildlife taxidermy.

Ziegler's lawsuit claims the county improperly designated the displays both as an educational project and as a public museum in an attempt to justify spending tax dollars on store construction costs.

The lawsuit also alleges county officials changed their subsidy strategy, deciding to call the retail development a regional project with state and local support that would benefit residents beyond Richfield and Polk. The change in strategy came after an earlier $4 million subsidy resolution was defeated in August.

The regional approach required the support of only a majority of supervisors attending the meeting. The earlier borrowing resolution had required a three-fourths majority of the board to be enacted.

Ziegler, in his lawsuit, asks that a circuit judge block the pending county payment until there is a ruling on his legal challenges. The lawsuit asks the judge to reverse the board's action and rule that a retail store's animal display does not constitute a cultural or educational contribution or a public museum under state law.

Nass said Thursday that she had not seen the lawsuit and would not comment on it.

The state statute authorizing regional projects was used for Miller Park in Milwaukee, said Bradley Fulton, a Madison attorney representing Ziegler.

Such designations were intended to be used for regional water or sewer systems or parks, not animal displays in a store, Fulton said. "For the county to say a display inside the store is a regional project is inconsistent with the Legislature's intent," he said. In August, the board approved giving Cabela's $500,000 from the county's property tax reserve fund to pay for educational programs, such as hunter safety classes, at the facility.

Some companies have built government subsidies right into their business model.
Outdoors retailer Cabela's Inc. received at least $86 million in state and local subsidies and tax rebates to open stores in Buda, south of Austin, and Fort Worth earlier this year. The company admits in its most recent annual report that without government aid, its revenue — indeed, its whole business model — could be threatened.

AMERICAN-STATESMAN
Sunday, September 04, 2005

Cabela's sought big incentives from state
Retailer wanted more than what it received in aid, documents show
By Dan Zehr
AMERICAN-STATESMAN STAFF
Tuesday, November 22, 2005

Cabela's Inc. had two priorities when the outdoors retailer approached state officials about the two stores it wanted to build in Texas: a big package of incentives and a shield from collecting some state sales taxes.

The company didn't get all it was looking for, but it got a pretty hefty chunk.
Documents released by the governor's and comptroller's offices provide a clearer look at some of what Cabela's requested — and in many cases received as incentives to build huge outdoor sporting goods stores in Buda and Fort Worth.

The Austin American-Statesman obtained the letters through the Texas Public Information Act. Cabela's had sued to block their release after Attorney General Greg Abbott ruled in May that the documents didn't include trade secrets. The company dropped its opposition earlier this month.

Among the documents was a Feb. 13, 2004, letter from Cabela's to the governor's office, in which the company asked for $15 million from the Texas Enterprise Fund, the state's $295 million job-creation fund. Cabela's ultimately received just $400,000, with a chance to earn another $200,000 if it maintains certain employment levels.

"We didn't think ($15 million) was appropriate for 600 jobs in Buda and Fort Worth," said Phil Wilson, deputy chief of staff for Gov. Rick Perry. "We thought it was a nice jobs project, particularly for a part of the state like Buda that could develop around it."

But state officials didn't leave Cabela's empty-handed. They ponied up $20 million in highway money to improve the Interstate 35 interchange that serves Buda and the store there.

"Part of the state's assistance was improvements to I-35, down in Buda in particular," said Kevin Rhodes, Cabela's director of real estate. "Ultimately, we came to an agreement in how we would structure the two deals."

Wilson called the highway improvement money "good public policy," adding that it wasn't an exchange for the money refused from the enterprise fund.

In its annual report Cabela's noted that economic incentives, including free land, money grants and tax breaks, are critical to its expansion. "We believe it will continue to be an important factor to our ability to execute our destination retail store expansion strategy because we believe they will allow us to avoid or recapture a portion of the costs involved with opening a new store," the company said.

Chicago Tribune
July 19, 2005

Don't feed big-box bears; they'll only want more


by Patrick McIlheran
Journal Sentinel
Sep. 17, 2005

Wisconsin has 15,057 fishful lakes and a camo-colored culture every fall.
So why does a county have to pay a merchant of deer rifles and fishing rods to move here?

"Large corporations today don't just plant themselves in a community. They form public partnerships," says Donald H. Roskopf, a member of the Washington County Board who, after reluctance, backed a plan to borrow $4 million, offer it to Cabela's Inc. to build one of its outdoors equipment stores and repay the bond using the county sales tax on the store's customers. The board approved the plan last week.

It's more than a store, say supporters. Costing about $50 million and drawing up to 4 million customers a year, four in 10 of them from out of state, Cabela's will induce businessmen to build gas stations, restaurants, maybe a hotel nearby, say supporters. Besides, with museum-quality fish and wildlife displays planned, they expect a really cool store.
No one denies that.The experts call this "cult retail."

"Their stores are spectacular; I'll grant you that," says James B. Esselmann, also on the County Board.
But remember why people will drive long distances to Cabela's. It's to buy. Remember why the company puts in spectacular displays. It shows them off to school tours with unimpeachable goodwill, but the main point is to attract customers. Hundreds of craftsmen will build the store, and hundreds more people will staff it. But in the end, it's going up because Cabela's expects to make good money.

It should. The site, at U.S. Highways 41 and 45 and state Highway 145, is a key junction in one of the fastest-growing counties in the state. Roskopf got the impression, he says, that "this is the only location they're interested in." Washington County is not starved for growth. The usual argument for diverting future taxes toward luring a business is that, but for such intervention, the growth wouldn't happen. That seems scarcely to fit here. Attractive projects could be drawn without county concessions.

Even towns full of desirable customers offer tax incentives, says Rachel Weber, who teaches urban planning at the University of Illinois at Chicago. "They think they can get more," she says. So, as Washington County wants Cabela's specifically, it pays.
And while there is some risk, that seems small given Cabela's success. As long as the sales tax money comes in, not a dime of the $4 million need come from property-tax payers.

So what's not to like about the deal? I say there are three good reasons not to like it.

First, there's that risk. The bonds are to be repaid over 15 years, and retail success is likely, not certain. Cabela's, after all, runs a big catalog and Internet operation and is under no obligation to the county if store sales weaken and tax revenue falls short. In contrast, revenue from development that happens naturally need not come tied to county debt.
Second, there's the sales tax. Imposed in 1999, it vanishes unless the board votes next April to keep it. With it committed to repaying bonds, what are the chances the tax will go away? And while Cabela's means more revenue for the county, whether that's good depends on what's done with the money. Only 15% of sales tax revenue this year goes to property tax relief, its original purpose. Instead, as one official noted, the available money just encourages people to dream up new ways to spend it.

Third, the deal encourages two disagreeable tendencies: that of companies to sponge off the public and that of officials to meddle. Cabela's openly says it puts stores where it can get governments to help pay for them - "a public-private partnership," as a company official put it. It isn't alone. "The big box (retailers) just know that this is a common practice and that they'd be just silly not to ask for some form of public assistance," says Weber. And cities feel compelled to meddle lest the good stores all go elsewhere. "But where do we draw the line?" asks Esselmann. He cites a businessman who's planning a restaurant in Washington County - and who validly wonders why he's not getting a special deal. I have my own views on Pottery Barn vs. Farm and Fleet and would rather that government stay out of it.

The matter is in Cabela's hands: A spokesman says the chain could decide within a week whether to take the deal. I'd say Washington County should spend the time practicing the word "no," something it's in a good position to say - if not for this deal, certainly for the many importunities to follow.

Mar. 1, 2001
WISCONSIN LAWMAKERS SEEK TO LIMIT BIG BOX SUBSIDIES

Two state legislators are preparing a bill to modify Wisconsin's tax increment financing (TIF) law that will likely limit the use of TIF for retail development projects.

"I am concerned about the inappropriate use of TIF districts to subsidize two kinds of development. The first is development that would have occurred anyway. The other is big box retail development," says Rep. Peter Bock (D-Milwaukee).

Bock and Rep. Michael Lehman (R-Hartford) are drafting a bill based on recommendations issued last year by the Governor's Working Group on TIF. The task force was appointed by Governor Tommy Thompson in response to growing criticism of the state's TIF laws.

Under TIF, a city may designate an area in need of redevelopment and freeze the tax assessment on properties within the designated district. The city then pays for infrastructure improvements to attract new businesses. The subsequent increase in the tax base (the "increment") is used to pay off the bonds, after which the full value of the land and property returns to the tax roles. In Wisconsin, the process can take as long as 23 years. Many states employ some form of TIF.

TIF was intended to help redevelop blighted or neglected properties in urban areas. Critics contend, however, that cities are increasingly using TIF to subsidize the development of open space on the edges of cities and towns.

In a 1999 report, 1000 Friends of Wisconsin found that nearly half of the 661 active TIF districts in the state involved development of open space. Many TIF districts were being used to subsidize big box retail stores. In Baraboo, for example, city officials turned a cornfield and an old apple orchard into a TIF district in order to finance a Wal-Mart. The town of Oconomowoc spent nearly $20 million under TIF helping Target build a distribution center.

Subsidizing retail development is a particularly poor use of tax dollars. Unlike other kinds of development, new retail stores do not generate new wealth. They simply shift consumer spending from one part of town to another. For every job and tax dollar gained from the new development, there will be a job and tax dollar lost at existing businesses.

According to the 1000 Friends report, ten small to medium-sized grocery stores closed in Madison after the city used TIF to subsidize the construction of a new warehouse food chain.

The legislation being drafted by Reps. Bock and Lehman would incorporate two policy changes recommended by the Governor's task force. One would prohibit the use of TIF for projects that are predominantly retail. The other would restrict the use of TIF for developing open space.

The reforms are supported by 1000 Friends and the Wisconsin Towns Association, which represents more than 1,200 of the state's towns. Wisconsin's other municipal association, the League of Municipalities, which represents 190 cities and 378 villages, has sided with real estate developers in opposing the changes.

-- 1000 Friends of Wisconsin's report, "Wisconsin's Tax Increment Finance Law: Lending a Hand to Blighted Areas or Turning Cornfields into Parking Lots?" can be found under "Legislative Initiatives" on the group's web site at http://www.1kfriends.org.

-- For more on the Governor's Working Group on TIF, including its final report, see http://www.dor.state.wi.us/html/tifgrpst.html.

Withdrawal of Subsidies for Big-Box Sprawl

Kenneth Stone, an economist at Iowa State University who has studied superstores for years, is appalled at the number of local governments that actually subsidize these operations. In a 2001 study, he asks, "Is it fair to give taxpayers' money to big corporations that will then use it to help put existing firms out of business?" alluding to a "zero sum game" being played by city governments that dole out financial incentives to big-box stores. "The deck is stacked against local merchants. Nobody speaks up for them. "Under its smart growth policy, Maryland has decided it no longer makes sense to force taxpayers to subsidize wasteful and inefficient development, so the state has pulled the plug on subsidies for sprawl. Developers can still build such development, but the state will no longer subsidize the construction of new roads or water and sewer lines to middle-of-nowhere "sprawl sites;" instead, state funds are directed toward designated "Priority Funding Areas," which include existing communities and areas for which new growth is planned by local governments.

kstone@iastate.edu

Jim Hightower Column
FREE ENTERPRISE SOCIALISM
Attention, class, we're now going to study the new and improved concept of "free enterprise," which has been redefined by modern corporate executives as the availability of free government money to make their enterprise profitable.

Let's turn to the sterling example set by Cabela's Inc. This giant retailer of hunting, fishing, and other outdoor products recently graced the state of Texas with one of its megastores, but only after demanding and receiving a rucksack filled with government subsidies, including $600,000 cash, $36 million in road and construction costs, and $20 million in highway improvements.

What we have here is the giveaway of roughly $57 million of Texas taxpayers' money to an out-of-state corporation to bribe it to come to our state and compete against local businesses that, ironically, are taxed to pay for Cabela's subsidy – a subsidy that will allow the megastore to undercut the prices charged by the locals, thus driving them out of business. Our governor, who's dimmer than a burned-out flashlight, hails this as a triumph of free-enterprise.

For its part, Cabela's is unabashed about its dependence on corporate socialism, even declaring in its annual report that grabbing public money is key to its business plan. But while it thrives on government giveaways, the retail chain has added a new twist to the game by demurely declaring that, as a private, for-profit company, its privacy rights would be violated if details about its public subsidy were revealed to the public. Thus, Cabela's has sued our state attorney general, claiming that it would suffer "substantial competitive harm" if the terms of its deal with the governor were publicly disclosed.

So, class, let's review: A private corporation is funded by the state to give it a leg up on its local competitors, but it declares that it must be exempt form the state's public disclosure law in order to protect its competitive advantage. Are we clear now on the new definition of "free enterprise"?

Council prodded to oppose incentives for Cabela's
Gander Mountain developer objects to city helping its competitor
BY ANDREA HOLECEK
holecek@nwitimes.com
219.933.3316

Oppidan, a Minnesota-based investment company that builds and develops Gander Mountain stores, is trying to convince Hammond City Council members not to grant tax incentives to outdoor retail giant Cabela's.
On Friday, Oppidan sent letters and packets of information prepared by Ewald Consulting to city councilmen asking them to say "no" to subsidies for the proposed 150,000-to-250,000-square-foot store on the Woodmar County Club site.

"I'm writing you to formally request that you say 'no' to subsidies for Cabela's," Oppidan's Mike T. Ayres states in his letter to council members. "They are a direct competitor of outdoor lifestyle stores, like Gander Mountain, which have already established themselves, and have done so without taxpayer assistance." Ayres said his company paid for the study because "we're sick and tired of these subsidies." "We wanted help to fight these battles across the country," Ayres said Monday. "I think it will work. In Washington County (Wisconsin), it's already delayed the final vote to approve the structure providing the subsidies.
"City, states and counties are being sold on the fact that Cabela's and Bass Pro Shops are tourist destinations, but the reality is they could have stores in 50 states, which would change that," he said. "We believe we should all compete in the open market. Let us all duke it out in the free market."
The packets put together by from Ewald, a government relations and association management firm based in Minneapolis/St. Paul, Minn., include studies on the negative effects of government subsidies to business and news stories on past and current Cabela's developments.
Among the conclusions of its study are that "incentives to lure retail into a community often do harm to business already located in the area." It also contends the promises of increased revenue, jobs and increased economic ability often "are unfilled."
The Gander Mountain store located on an outlot of Hobart's Westfield Shoppingtown Southlake recently was renovated to give it a more modern look, add more merchandise and additional selling space. But its spokesman, Matt Lukens, has refused to comment on whether the renovation was in response to Cabela's possible entry into the Northwest Indiana marketplace.
Monday, Lukens confirmed that Gander Mountain, with its 98 stores, is one of Oppidan's clients.
"They look for properties all over the country for us," he said.
After months of increasingly bountiful offers, the Woodmar County Club members recently agreed to sell the club to Cabela's for $14 million. The fate of the deal hinges on Cabela's Inc. receiving a favorable environmental report, however -- according to its agreement with Woodmar -- it isn't contingent on city's approval of TIF (tax increment financing) subsidies and the state's agreeing to STIF (sales tax increment financing) subsidies to aid developing the 80-acre parcel at Indianapolis Boulevard and Interstate 80-94 into commercial land.
Cabela's spokesman David Draper did not return phones calls placed Monday seeking comment on Oppidan's efforts. He has said in recent months, however, Cabela's will expect incentives or subsidies similar to what it has seen in other areas, but the amount of the subsidies it needs won't be known until the company completes its due diligence on the property and knows what site work and infrastructure improvements are necessary.
Oppidan says in its missive to the council that, although infrastructure improvements are a legitimate use of government funds, "taxpayer funds that promote one retailer over another are inappropriate and inequitable."
It also contends that the retailer's claim to being a draw for millions of tourists can't be sustained as it builds more and more stores.
"....Cabela's is looking to locate stores in the Chicago area, Milwaukee and eastern Michigan and have plans to expand to all 50 states," Ayres says. "Bass Pro is already in the Chicago area among other places, and is also looking to locate in northwestern Indiana. Each store they add diminishes the tourism draw of their other stores."
Weston Sedgwick, spokesman for the Indiana Economic Development Corp., said Cabela's hasn't requested any subsidies yet.
"We have talked to the company, but we can't talk (to the media) about negotiations or exactly what we're talking about with the company because it is highly confidential," he said
Asked whether government subsidies are unfair to other retailers in the same market, Sedgwick said he "wouldn't say that."
"We are currently talking to Cabela's and talking about possible options, but at this time I have nothing new to report," Sedgwick said.

MILWAUKEE MAGAZINE
October 4, 2005
WASHINGTON COUNTY GETS WACKY
Murphy’s Law Letters
 
Those wacky folks on the Washington County board have come up with a new and hilarious way to give away tax money. They are handing $4.5 million to Cabela’s Inc. to entice the company to build an outdoor goods mega-store. This is on top of the $5.25 million the State of Wisconsin will spend on highway improvements and infrastructure. Why is this so silly? Let me count the ways. First, Cabela’s is getting a primo location, at the junction of Highways 45 and 41, which will give it access to a mother lode of customers in outdoorsy Wisconsin, where 700,000 people have licenses to hunt and 850,000 people have fishing licenses. Why do they need a subsidy to cash in on this huge market? Second, Gander Mountain, a competitor of Cabela’s, is considering locating just up the highway. But the company isn’t asking for a subsidy. Why help one retailer over another? Third, Cabela’s has gone across the country demanding such handouts. Tax subsidies are critical to its expansion plans, one of its annual reports noted, “because they will allow us to recapture a portion of the costs involved with opening a new store.” Why encourage this sort of civic blackmail? Fourth, the claims for tourism are exaggerated. Supporters say the store will attract out-of-state customers. The only problem with this theory is that every state is getting a Cabela’s. The company already has a store in Prairie du Chien, Wisconsin, one in Michigan, two stores in the Twin Cities area and one in northern Minnesota. Meanwhile, it has purchased land for a store in northwestern Indiana and is negotiating for a handout to build a store in the Chicago suburbs. That leaves a possible influx of a few Iowans – those who don’t go to Illinois, Minnesota or the smaller store in Prairie du Chien. Seems a high price to pay for the privilege. Fifth, the economic impact is questionable. How many family-supporting jobs are ever generated by a new retail store? The real benefit, in terms of good-paying jobs, will occur in Cabela’s headquarters in Nebraska, which will increase its payroll by $3 million if the Washington County store is built, the company told the Omaha World-Herald. Sixth, the legal pretext for $4 million of the handout is absurd. Washington County is actually portraying this as an investment in a museum-quality display of taxidermy. Retired West Bend businessman Doug Ziegler is suing the county, arguing that the animal displays do not constitute an educational or cultural contribution, as the county board claims. On the contrary, these stuffed animals are something Cabela’s features to draw customers to its store, the same way a casino books top-name entertainers to bring more people to the slot machines. Cabela’s is a commercial enterprise, not a museum, and any government representative who can’t tell the difference needs a basic course in civics.

Taxpayers are being ripped off around the country by outdoors industry retailers Cabela's and Bass Pro Shops. Both retail chains are demanding millions of dollars in state and local subsidies in exchange for building a new store. Cabela's brags about its "public-private partnerships" with state and local officials, and leverages communities against each other in an effort to gain greater taxpayer support for their profit-making enterprise. Subsidies for retail development of this kind are an inappropriate use of tax dollars, and an anti-competitive practice that should be stopped. This blog is dedicated to exposing and opposing the extortionate bullying of Cabela's and Bass Pro Shops. We will provide articles, commentary and links to educate and encourage grassroots citizen opposition to these unnecessary and inappropriate taxpayer subsidies.