Sunday, July 17, 2005

Is this really economic development?

Pols won't seize land, just clients


Houston Chronicle, Copyright 2005

Teas 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.

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