How Does This Deal Make Sense? UPDATE: It Doesn’t

At least, if you go far enough into the article I’m not the only one who thinks this is questionable at best:

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

By JIM PROVANCE
BLADE COLUMBUS BUREAU
March 18, 2006

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.

The tax incentive would last 10 years or until the Springfield, Mo., retailer recoups its investment in land, buildings, and equipment, whichever is shorter.

The language is narrowly tailored so that it could apply only to a minimum $50 million investment of a retail/tourist attraction like a Bass Pro or Cabela’s. It also includes a Dec. 1 deadline for the retailer to commit itself in order to take advantage of the tax break.

The language was added this week to a mid-term budget correction bill, providing one piece of a package that northwest Ohio officials hope will attract an “impact facility” to the area.

The language in the bill is project-specific and does not limit the tax break to Wood County’s Rossford site. The county has been pitching the 1,500-acre Crossroads of America area between I-75, the Ohio Turnpike, and U.S. 20. Toledo also has aggressively courted Bass Pro, one of the top boat retailers in the nation, for its Marina District riverfront.

But several economic-development officials - including Jim Russell, a senior vice president of Marina District developer Pizzuti Cos. of Columbus - have said it is unlikely the outfitter will locate there.

Bass Pro is seen as a retailer that will draw people to the region.

“People only need to go to Dundee, Mich., to see what Cabela’s has done,” said Rep. Bob Latta (R., Bowling Green). Cabela’s, another sports outfitter, is the No. 1 tourist attraction in Michigan. It attracts more than 6 million people a year, more than twice the number who go to Greenfield Village and the Henry Ford Museum. It’s helped to attract other businesses “and has really put Dundee on the map,” he said.

“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?”

The break applies only to a county’s “piggyback” sales tax. In Wood County, that’s the penny-on-the-dollar the county adds to Ohio’s 5.5 cent tax. Lucas County’s “piggyback” is 1.75 cents.

The language is so specifically drawn that, in order to qualify, the retailer must invest at least $50 million, reserve at least 10 percent of its square footage for educational or exhibition activities, and create at least 150 “full-time equivalent” jobs.

I’ve been to Dundee, and I’m not at all convinced that the project has been the panacea for the community that it’s being touted as, especially if that project involved incentives (oh, but Cabela’s has done fine, thank you very much). And I think the questions about the impact on other retailers of a subsidized project are legitimate. It’s one thing for a place like Wal-Mart to put higher-priced stores out of business in a free market; it’s quite another for that to happen while the government is subsidizing the aggressive competitor.

This seemed to be an issue to throw out to S.O.B. Alliance member Newshound, which I did. Here’s his response:

(Wood County) is just a hop and a skip away from here - and yes, it is a boondoggle ….. Toledo and Wood County are fighting over Bass Pro Shops and throwing incentives left and right that they’d never even consider giving a local business looking to expand.

The entire tax incentive strategy for gaining new businesses has gotten way out of hand.

I would add another question: If it’s such a good idea, why wouldn’t a Bass Pro or similar outfit just come in and build without the incentives?
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UPDATE: Here is the e-mail I sent to Representative and Ken Blackwell’s Lt. Gov.-designate Tom Raga:

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.

UPDATE 2: Scott Pullins blogs the Ohio Taxpayers Association opposition here.