August 28, 2006

Cabela’s: Outdoors Store and....Museum?

Across the country, large retailers continue to extract huge subsidies from local governments desperate for jobs and corporate investment. In the latest example, a giant Cabela's outdoors store to be built in the suburbs of Chicago would save on its property taxes because 15% of the 185,000 square foot store would be designated a tax-exempt museum. Cabela’s stores contain several thousand square feet each of taxidermy, aquarium, and other displays that are open to the public, and this is the area that would be designated a "museum" under the proposed incentive package. The property tax break is projected to save the store $5.5 million over the next twenty years, in addition to the $18 million given in direct sales tax rebates, according
to the Chicago Tribune.

Meanwhile, in the suburbs of Kansas City, Merlin Entertainments Group of London is in talks with local governments about the construction of a proposed Legoland amusement park. The group has asked the state to raise over 50% of the $740 million for the project using public funds from bond issues, which the state and local governments will be paying back for years. Near the end of the article, the reporter offers this particularly revealing tidbit: [...]the payoff could be enormous, not only for the reputation of Olathe, which has felt overshadowed by Overland Park, but the entire metropolitan area". This short line demonstrates the power of the developer’s strategy. Olathe feels compelled to offer such generous incentives because the city is afraid of losing the project to other suburbs. As the proposed bond issue shows, this divide-and-conquer strategy has been very successful for developers.

Worst of all, no one seems to know if the local governments get what they pay for so generously. A Good Jobs First case study found that when a local paper tried to find out if the $32 million subsidy package granted to the Cabela's that opened in Hamburg, Pennsylvania was paying off, none of the government offices that touted the project could provide any specific numbers about the deal's outcome. No one knew if the project had generated more investment, or increased tourism, or any of the other benefits the store was supposed to bring. The lack of record-keeping by local governments nationwide makes it impossible to know if such business subsidies are a good use of taxpayer’s money.

Voters should not allow businesses to hold their local governments hostage for development money on projects of unknown value to the community. Local governments should not be forced to pay the costs of business expansion.


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