SAY NO TO OUTDOORS RETAIL SUBSIDIES

A national brawl has broken out over subsidies to big-box retail. Except this time it’s not anti-sprawl activists protesting Wal-Mart. Instead, it’s the #3 outdoor sporting goods retailer ratting on #1 and #2. Check out www.sayno2outdoorsretailsubsidies.com

As readers of The Great American Jobs Scam will recall, I call out #1 Cabela’s for its business model of seeking huge subsidies for its mega-stores (see chapter 2 free on the www.greatamericanjobsscam.com/chapter-2.pdf , page 64-67) which it touts as tourist “destinations.” Already, Cabela’s facilities have received or been pledged more than $300 million in subsidies in just 12 communities! #2 Bass Pro (privately held) is also on a store-building binge, also lands big subsidies – and may even win a whole new subsidy (sales tax TIF, truly bad news) enacted by the state of Ohio.

Now comes #3 Gander Mountain challenging subsidies to Cabela’s and Bass Pro, espousing the radical idea that there should actually be a free market and a level playing field.

As Gander Mountain’ s developer Mike Ayers once put it: “If you give [a tax break] to a Wal-Mart, should you give it to Target? If you give it to Home Depot, then should you give it to Lowe’s? And if you give it to Bass Pro, shouldn’t you give it to Cabela’s and Gander Mountain? How about we just don’t give it to anybody?”

The idea of denying subsidies to big-box retail is truly an idea whose time has come. Our Shopping for Subsidies (www.goodjobsfirst.org/pdf/wmtstudy.pdf) study about $1 billion in subsidies for Wal-Mart facilities remains the most-often downloaded report on our website. And as we compile elsewhere on our website (www.goodjobsfirst.org/ corporate_subsidy/hidden_taxpayer_costs.cfm), 22 states have now disclosed which companies have the most employees and/or dependents on Medicaid and/or State Children’s Health Insurance Programs.

Kudos to Gander Mountain for taking a principled stand. As I argue many different ways in Chapter 6 of Jobs Scam, subsidizing retail is almost always a bad idea.


Greg LeRoy
Good Jobs First

Apparently, this is the kind of economic development prompted by a Bass Pro coming to town.

This story ran on nwitimes.com on Saturday, March 25, 2006 12:12 AM CST

PORTAGE, INDIANA
A Hooters restaurant could join the mix of eateries flocking to the site of a planned Bass Pro Shops store at Ameriplex at the Port. "They are looking into it," said Jennifer Salazar, of the Hooters corporate office in Atlanta.

----------
From: BizzyBlog
Sent: Tuesday, March 21, 2006 20:18
To: district67@ohr.state.oh.us
Subject: I would hope that you delete the retail sales tax subsidy/abatement in HB530

Mr. Raga,

There is no reason such a subsidy/abatement is necessary.

If Bass Pro or any other business wants to set up shop and compete on a
level playing field against other establishments, fine. But there's no
reason for the state to be helping counties pick winners or losers.

This is horrible tax and fiscal policy, and I trust you'll vote to
strip the provision relating to it out of HB 530. If you don't, it will
make me seriously question why Ken Blackwell chose you, and in turn why
I should choose him.

Regards,

Tom Blumer
Business Address: 3476 Irwin Simpson Road, Suite 116
Mason, OH 45040
513-260-4494 (wireless)
BizzyBlog.com
biz@bizzyblog.com

Article published Saturday, March 18, 2006

House to sweeten pot to lure retailer
Piggyback sales tax dangled as incentive

By JIM PROVANCE
BLADE COLUMBUS BUREAU
(excerpt)

COLUMBUS - Sporting goods super-retailer Bass Pro Shops would get back 75 cents of every $1 paid in county sales taxes if it locates in Wood County - or anywhere else in Ohio - under a bill expected to clear the Ohio House next week..

"This isn't good public policy," said Zach Schiller, senior researcher for Policy Matters Ohio, a nonprofit research group in Cleveland that focuses on the economy from a lower to middle-class perspective.

"Giving tax breaks for retailing, in general, is something I'd want to stay away from," he said. "For one thing, is it really going to generate enough business conceivably to be worthwhile, to pay for the additional public services, for the extra people, and the extra traffic on the roads?

"How will it affect other retailers?" he asked. "I'm not a close student of this industry in northwest Ohio, but I'm sure there are existing retailers that sell these products. What if Cabela's decided to locate in Bowling Green? Are we going to give them the same treatment so that this continues on forever?"

Sunday, February 19, 2006
Retail tax incentives don't always provide "enough bang for (the) buck"

In "Not enough bang for buck: Megastore offers to come and bring jobs, but wants big tax breaks, grants," Boston Globe columnist Steve Bailey comments on the plans of Cabela's and the Bass Pro Store, megastores focusing on outdoors-products, to come to the Boston area. Bass Pro is doing it without government incentives while Cabela's is asking for about $26 million in tax incentives from the local and state governments.

I think I've written about these companies before. If I haven't well the Wall Street Journal and other newspapers have. It is claimed that these megastores are huge destination draws. These claims are used to justify the tax incentives.

Bailey went to the Cabela's Store in Hamburg, Pennsylvania, and checked it out. Among his findings were that 3/4 of the cars in the parking lot had Pennsylvania plates.

He opined further that the store, all by itself, did little to build critical mass, spillover benefits if you will, for the community's business district, which is not even two miles away.

This is an important point.

I keep making the point that a city concerned with urban revitalization should ensure that every decision, especially those involving tax incentives and other subsidies, accomplish multiple objectives simultaneously. Incentives should be used to promote "economic development" in terms of "building a local economy."

Department stores were considered "anchors" for so long because they attracted customers who then shopped other stores in the area of the anchor. Is a destination store that doesn't provide customers and connections to other stores really an anchor? Certainly Wal-Mart doesn't want its customers to shop anywhere else.

What's the point of providing big incentives to a store like Cabela's if it doesn't add value to your extant businesses?

While I think there are some advantages to providing incentives to stores like Home Depot or Costco to locate in the city, if only to capture the sales tax revenues that would go to other jurisdictions, this needs to be thought through very carefully in order to ensure a true and worthwhile "Return on Investment." (Note a problem with providing tax incentives to Costco is that most of its transactions are for groceries, which in DC aren't taxed. And Costco is likely duplicative of the current supermarket offerings in the city. Even though Costco, unlike Walmart, is unionized, and pays decent wages and health insurance benefits.)

From the article:

Why does one retailer say it needs tax incentives to move here and the other does not? Because it thinks it can get them. The two retailers have been playing this shakedown game all over the country as they expand out of their heartland base. Cabela's has received more than $350 million of government subsidies as it expands, according to one of its smaller competitors, Gander Mountain. That is the equivalent of giving Cabela's seven million free fishing rods at an average cost of $50 per rod for resale to its customers.

Cabela's and Bass Pro have sold themselves as not just another retailer, but as destination locations that can draw tourists and spur economic development. (Bass Pro, for instance, claims its flagship store is Missouri's number one tourist attraction.) And communities, desperate for jobs, have responded. Massachusetts, with one of the nation's slowest-growing economies, is hungry for jobs, too -- and ready to play...

Hamburg's huge Cabela's -- the biggest in the chain -- is an impressive store, but that is what it is: a store. You can get a wild boar target for $189.99 and a used Smith & Wesson .38-caliber handgun for $249.99. But you can get many of the same brands of jeans and jackets and shirts anywhere. On Wednesday I randomly checked the license plates on 200 cars; 152 of them -- or three-quarters -- were from Pennsylvania. The out-of-state tourists from Maryland, New Jersey, and Delaware largely stayed home that day. Meanwhile, Hamburg (pop: 4,100), just 1 1/2 miles away, might as well be 50 miles away for all the good it appears to have done the sad downtown. And Bass Pro and Gander Mountain have stores in Harrisburg, just an hour away.

Communities have been paying big money to bring in low-paying retail jobs. Buda, Texas, for instance, gave Cabela's subsidies worth $61 million, or about $271,000 for every full-time job, according to an estimate by Gander Mountain. Reno, Nev., spent $52 million, or $208,000 for every job.

At $25 million, Massachusetts would be getting a relative bargain: $111,000 for each of the 225 full-time jobs. Then the jobs are expected to pay about $10.60 an hour. Massachusetts needs jobs. But it also needs to be smart how it spends its scarce resources. Money used to build a retail store can't be used for something else.

The point is to get the most bang for your buck. If backing up the truck for a retailer that will pay $10 an hour is the best we can do, then we are in more trouble than we know.

http://urbanplacesandspaces.blogspot.com/2006/02/retail-tax-incentives-dont-always.html

James Ostrowski
Free Buffalo (from big government, political machines and special interests)
984 Ellicott Square
Buffalo, NY 14203
716-834-1142
jameso@apollo3.com
http://www.jimostrowski.com


Buffalo Author Slams Bass Pro Deal
as Corporate Welfare

Buffalo, New York. November 28, 2004. Buffalo attorney and author, James Ostrowski, will hold a press conference Monday, November 29, 2004, at 10:00 a.m. in front of Memorial Auditorium to release his 2000-word critique of the Bass Pro deal, entitled “Bass Pros at Corporate Welfare.” Ostrowski is an adjunct scholar at the Ludwig von Mises Institute and a columnist for one of the most popular economics sites in the world, Mises.org.

Ostrowski will also announce his plans to form Buffalo’s first independent think tank—Free Buffalo. Free Buffalo will attempt to reverse the top-down, top-heavy political model that has devastated this once great city and replace it with a highly decentralized system that returns power to the people and to communities and neighborhoods, and is based on a free market economy.


Ostrowski noted the irony of how the politicians expect us to support this project when it is shrouded in secrecy and the details have not been made known. “Even the time and place of the Governor’s press conference has not been disclosed,” Ostrowski said. “I guess they don’t want real live citizens showing up to rain on their corporate welfare parade.”

Ostrowski also noted that as some information about the project trickles out, we find that this is not just a deal to promote economic development, but one which strengths the role of big government in our lives. “The city gets to own more parking ramps; our bloated and inefficient transportation monopolies get an expensive new station; and the State gets the Aud. The corporate welfare model gets more firmly entrenched. Anyone who thinks this a movement away from big government and toward the free market is sadly deluded.”

Here are some excerpts from Ostrowski’s report:

“Nor will any other current politicians do anything to turn this place around. They are all clueless. They don’t know what the problem is and so naturally they don’t have a solution. So they revert to selfish careerism, the operating principle of politics around here since the great Grover Cleveland left town. They focus on quick-fixes (one percent sales tax increase), public relations gimmicks (regionalism), and magic bullets (Bass-Pro) that will single-handedly save the day, or rather con the public into so thinking. It’s a sporting goods store, for Pete’s sake.”

“We’ve seen this kind of nonsense during the entire forty-five year period of Buffalo’s decline. It allows the politicians to get re-elected enough times to reach the magic age of fifty-five, at which time they can start collecting their outrageous pensions, a reward for doing absolutely nothing good for their communities in their entire careers!”

“The Bass Pro deal that conservative-turned-liberal George Pataki has put together will not rescue Buffalo. Any benefit from giving Bass Pro $66 million in public money or benefits will come at the expense of $66 million in losses to the taxpayers. Anyone who can’t grasp this after it is explained is, I am sorry, just plain stupid! Unless money grows on trees, that money has to be seized from taxpayers who would have spent it on their most urgent needs in voluntary free market transactions.”

“Stealing all that money from taxpayers will destroy jobs. The jobs Bass Pro will create are artificially subsidized and may well disappear without further subsidies. The record of government-subsidized jobs is atrocious. Huge amounts of money are spent per job and those jobs very often disappear later. Any questions?”

“Here’s a list of the magic bullet projects the politicians said would turn Buffalo around but never did:

• Urban renewal
• The subway line
• The theater district
• Subsidized construction of office buildings and hotels downtown
• The baseball stadium
• The convention center
• Marine Midland Arena
• The Adelphia Project (never got off the ground)
• The Medical Campus (in the works)”

“The failure of these projects proves factually what I have already proven theoretically: seizing small amounts of money from hundreds of thousands of taxpayers for use in concentrated form for a politically-chosen project will always fail—except to line the pockets of the developers and politicians and their errand boys and girls.”

“One of the problems with Buffalo is that we keep rewarding failure so long as it hath the power to assume a pleasing shape.”

“To sum up, the corporate welfare schemes our politicians are addicted to fail because they suck the energy out of the far corners of the market economy and concentrate that energy in one place and time where it can do the most good for the politicians. After the press conferences are over and the consultants, lawyers, and power brokers have been richly paid off, these projects are left to face the harsh reality that they are not sustainable in the free market. Their costs exceed their revenues. Duh! That’s why they need a subsidy in the first place. The choice then is to either keep subsidizing them—stupidly sending good money after bad—or abandon them. A grim prospect but the politicians don’t give a damn because they are long gone by then, spending our pension funds in warm weather climes to avoid our high taxes.”

July 14, 2005, 11:32PM
Pols won't seize land, just clients
By RICK CASEY
Copyright 2005 Houston Chronicle

Texas politicians, Democrat and Republican, tripped over each other in their eagerness to make Texas safe from last month's U.S. Supreme Court ruling allowing the use of eminent domain for economic development projects.

How terrible, they harrumphed, that a governmental body could use its power of eminent domain to take property from one individual or business so it could be used by another business!

In less than three weeks — lightning speed for state government — the governor authorized the Legislature to take up the issue in special session and both houses produced bills protecting landowners from having their property seized for use by private companies.

Unless, of course, that private company is the Dallas Cowboys. This is, after all, Texas.

But while the governor and his buddies are protecting us from land grabs for private companies, they're showering certain favored companies with our money.

Water tower, too
Take the Cabela's outdoors store that opened last week in Buda, a small town just south of Austin. Please.

The Nebraska-based former catalogue store went public a few years ago and started building stores all over the country. Following in the footsteps of Missouri-based Bass Pro Shops, it created shops that look like theme parks, called them tourist draws and snookered public officials to grant tens of millions in tax breaks and subsidies.

They call it "economic development."

The tax subsidies, breaks and incentives total more than $60 million, according to documents obtained by the Austin American-Statesmen. (Is there more? Cabela's sued Attorney General Greg Abbott to try to keep the newspaper from obtaining some documents.)

The town of Buda and Hays County expect to pitch in as much as $40 million, mainly for infrastructure, $4.5 million in county sales taxes will go back into the project, the state will pay $20 million for road enhancements, and the governor's Texas Enterprise Fund will kick in several hundred thousand dollars.

Showing no restraint, Buda will turn its water tower into an advertisement for the store and pay toward some billboards as well. And the Texas Fish and Wildlife Commission is delivering Guadalupe bass for the store's 60,000-gallon aquarium.

Nebraska special session?
We Texans aren't alone. The governor of Nebraska is considering calling a special session for the sole purpose of passing state subsidies for a Cabela's store.

And a town in Ohio three years ago considered exercising eminent domain to move a couple of recalcitrant landowners out of the way for a Cabela's store. The store was built without such a land seizure, but not without subsidies.

So what's the matter with this? Simple. Retail isn't economic development.

Economic development is about creating wealth. Retail is about disposing of wealth.

That doesn't make retail unimportant. We want to buy nice things with the wealth we create.

And retail does provide jobs, but only as many jobs as wealth created elsewhere will support.

Cabela's and the politicians they have snowed argue that the Buda store will attract hordes of tourists, and that creates jobs.

I don't know how many people will travel farther than, say, 100 miles for a fancy outdoors store, but consider this:

The state is also subsidizing a new Cabela's in Fort Worth. Nobody from north of Fort Worth will drive past it to get to Buda.

There's a big, extravagant Bass Pro Shop in Katy (built with tax subsidies), so nobody east of Houston needs go to Buda.

And Bass Pro Shop is planning a megastore in San Antonio, just 70 miles south of Buda.

Interestingly, developers several years ago approached San Antonio officials seeking tax breaks, saying they needed them to attract a Bass Pro Shop. They were told the city policy was to not give tax breaks to retail stores.

Their reasoning was simple. They had just seen a close-in suburban town give big breaks to Target, which opened a new super store — and closed down two older stores within San Antonio city limits. The new store didn't create jobs. It simply moved them.

Bass Pro apparently decided it could make money in San Antonio without tax money.

One of those speaking against subsidies for Bass Pro was, not surprisingly, Katy-based Academy Sporting Goods. Its owner, Arthur Gochman, understands that a new sporting goods store, no matter how fancy, doesn't create new buyers. It takes them from other sporting goods stores.

"I don't mind competing," he said. "I just want a level field."

The politicians, with their subsidies, aren't taking his property from him. Just some of his customers.

"Economic development" in Texas, it seems, is subsidizing Nebraska and Missouri companies at the expense of Texas companies.

You can write to Rick Casey at P.O. Box 4260, Houston, TX 77210, or e-mail him at rick.casey@chron.com.

BOISE, Idaho (AP) _ An Idaho House committee rejected a bill that would have given sporting goods giant Cabela's a tax incentive to build a megastore in the Post Falls area.

Sponsored by Rep. Bob Nonini, R-Coeur d'Alene, and Rep. Frank Henderson, R-Post Falls, the measure would have refunded 75 percent of sales tax collected at the store to Cabela's to reimburse the company for building a new highway interchange at Post Falls to access the hunting and fishing showroom. The Idaho Department of Transportation has estimated such an interchange would cost $10 million to $15 million.

The House Revenue and Taxation Committee voted 9-8 against even introducing it.

That means the store could be located in Eastern Washington instead of northern Idaho. Two bills to give Cabela's tax incentives in Washington are still making their way through the Washington Legislature.

http://www.cdapress.com/articles/2006/03/01/news/news02.txt
How much should we bend for Cabela's?


By BRIAN WALKER
Staff writer

Report: Outfitter strategically pits bordering states against each other, saturates market

POST FALLS -- A recent study alleging how Cabela's likes to pit bordering states against each other to lure the outdoor outfitter giant and how its aggressive expansion plans are saturating the market is making some local officials reevaluate how much they'll bend at taxpayers' expense.

But they also have to consider the study's source -- an affiliate of Cabela's competitor Gander Mountain.

"Leveling the Playing Field: Making the case for limiting government incentives for retail development" was released last fall by Ewald Consulting of St. Paul, Minn.

As it states in the second paragraph of the report, Ewald works with the developer for Gander Mountain.

Sidney, Neb.-based Cabela's is considering Post Falls and Liberty Lake for one of its "destination" retail stores. Legislative efforts are launched in both states that would give the company tax incentive.

"Somebody needed to make a case for what's going on in support of public policy," said David Ewald, president of Ewald Consulting, of the report. "With a profitable company like Cabela's, why does a state need to provide that much to substantiate attracting a company to a community where it will make a profit.

"In a place like North Idaho, where there's a lot of people who hunt, camp and fish, why would you have to pay them to come? Why put the money into a retail store when there's education and transportation?"

The report has made even Post Falls Mayor Clay Larkin, a staunch supporter of economic development, take a different look at luring Cabela's.

"While it would be nice to have them here, at what price?" Larkin said. "It's made me re-evaluate how important it is to the taxpayers of the use of their money. If they do decide to come here, it should be with the same courtesy as any other business coming here but nothing more."

A bill in Idaho would help fund an Interstate-90 interchange estimated to cost $10 million to $15 million for Cabela's at Beck Road in Post Falls. Cabela's would be reimbursed for 75 percent of the cost through returned sales tax money.

"It is not an appropriate role for state and local governments to favor one retailer over another by awarding subsidies," the report states.

Cabela's plans to open a Boise store without a tax incentive.

"That certainly will not sit well up here," Larkin said.

Liberty Lake officials, who received a copy of the report along with Larkin, and Cabela's spokesman David Draper couldn't be reached for comment.

The report re-printed several 2005 newspaper articles questioning using taxpayer money to subsidize a for-profit company to lower its costs on a retail project. It argues that the 150 to 200 jobs the company creates at each store isn't enough to offset the upfront state money used to attract it.

Larkin said if Cabela's wants to come to Post Falls, it will find out a way to do it on its own.

"It's happened in other places," Larkin said.

Larkin said the report is "the rest of the story" on Cabela's and is just something to consider.

"It reinforces not spending public tax money to support for-profit businesses," he said.

Post Falls has remained steadfast in continuing to ask for-profit Ironman for additional expenses it incurs during the popular June triathlon.

Larkin said bending over backward for Cabela's wouldn't send a good message to existing local outdoor outfitters such as Fins and Feathers and Black Sheep.

"Those companies didn't receive any special help," he said.

A map in the report shows the current and future locations of Cabela's and how many are on the border of two states, suggesting a showdown between two governments to attract the company.

It appears that's what is going on here, Ewald said.

The map also infers that the company is saturating the market and asks, "Is Cabela's really a destination or is it just a retail chain?"

"Each additional store diminishes the tourism attractiveness of its predecessor," the report states.

Ewald said St. Paul-based Gander Mountain, which has 98 stores in 18 states, typically looks to move into an existing building in its new locations before building a new one.

"It's a company that doesn't go around the country with its hands out to give it millions of dollars in tax-increment financing," Ewald said.

Shannon Burns, Gander's director of investor relations, said the company doesn't discuss its possible future locations. It hasn't expanded into the Northwest.

"We're talking about having as many as 300 stores, and certainly Idaho has the kind of market that would be attractive for Gander Mountain, but I can't say more than that," Burns said.