Monday, August 6, 2007

More on the Cabela's deal

This is recommended reading. Thank you Shirley, for writing this and allowing me to post it... the facts are getting around, to the point where the Rapid City Council has been forced to call an election on September 18 on where the citizens of Rapid City stand. Cabela's for its part, is backpedaling, trying to save their tarnished image by offering to give back, uh, 3 of the 20 acres they would get for free.


By Shirley Frederick 8/6/07
(posted here by permission)

Rapid City has been negotiating with Cabela’s, a national corporation worth $1.35 billion that bills itself as the World’s Foremost Outfitter. As an incentive to Cabela’s to locate a retail store in Rapid City and not in Sturgis, Spearfish, or Box Elder, the council voted on June 18, 2007, to give Cabela’s the city Visitor Information Center, $2 million from the 2012 fund, and 30 acres of city-owned land at the VIC. State law prohibits cities from giving publicly owned property to corporations. Therefore Rapid City will transfer the property to the Black Hills Economic Development Foundation, an organization that represents developers. The foundation will transfer it to Cabela’s.
In negotiations Cabela’s said it would build on the VIC land, but Bill Gikling, president of the Rapid City Development Board, sold land to Cabela’s on June 25, 2007. The store will be located on the land purchased from Gikling. The city will lease VIC space in Cabela’s for $1 a year for 30 years.
As part of the deal the city plans to create a tax increment financing district (TIF). The 30 acres, the land purchased by Cabela’s, and 40 acres of undeveloped property owned by Gikling will be included in the TIF. The cost of entire package is estimated by the city at $22 million, which includes the estimated value of $3,672,108 for the land, $3,700,000 for the VIC building, $2 million in economic development funds, $2.5 million for lift station improvements, and $10 million in interest.

The difference between the taxes on the undeveloped TIF district land and the taxes on the developed land (the tax increment) will go to the city. Cabela’s will pay property taxes at the same rate as everyone else, but all the tax increment will go to the city to pay back the $22 million. The county, the school district, and the West Dakota Water District will receive their share of tax dollars based on the undeveloped value of the TIF district. This will not affect the school district because the state, through the state aid formula, will use tax dollars collected statewide to give the school district its full per-pupil allocation.

Opponents of the TIF say that the money from the TIF will not be nearly enough to pay off the $22 million and that the balance “will come from somewhere else.” That “somewhere else” is city sales tax plus property taxes from residents outside the TIF district. In effect, large amounts of TIF money that should go to the school district, the water district, the county, and the city for tax-funded services will go to the city to pay for development.
Most of us, as property taxpayers, pay for the city services we receive. If the TIF is approved, we also get to pay for city services for the property owners in the TIF district. The Cabela’s TIF is the city’s 65th TIF. Opponents say that multiple TIFs are the primary reason our property taxes continue to go up.

In an effort to refer the City Council’s June 18 action to a vote, opponents have filed 3,100 signatures at the County Courthouse. If the action being referred is determined to be an administrative action, it cannot be referred. If it is determined to be a legislative action, it can. City Attorney Jason Green will make the decision and announce it to the council August 6. The City Council is scheduled to approve the TIF at its August 6 meeting.

The following arguments are used by supporters of the $22 million incentive package and the TIF:

  • The prestige and huge marketing power Cabela’s brings will be a major boost to the entire region.
  • Cabela’s wants to invest in Rapid City’s future.
  • This public-private partnership will be good for Rapid City.
  • Through increased sales tax revenue and rising property values in the TIF district, the city will recapture the dollars given away.
  • This partnership will improve the quality of life for the people of Rapid City.
  • The Cabela family is giving the public an opportunity to share in their good fortune.
  • The Council has to act quickly or Cabela’s will go somewhere else.
  • The incentive package is bringing Cabela’s to Rapid City.
  • The $2 million comes from the Opportunity Capture Fund.
  • Cabela’s is a destination store.
  • Economic development projects have to be completed on a very timely basis to meet the needs of corporations.
  • Opponents just don’t understand what a good deal this is.
  • Opponents are lazy negative whining naysayers who don’t want progress.
  • This is the way business is done these days. Get with it.
  • Cabela’s will create new high-paying jobs.
  • It’s just common sense that Cabela’s will improve our community.
  • The city will develop a reputation of being unfriendly to business if we let this deal fall through.
  • John [an opponent] is spreading falsehoods faster than Bill Clinton at an impeachment hearing wearing Monica’s dress!
  • Opposition like this is why we are still in the Dark Ages.
  • Opponents are just shooting off their keyboards. This is a no-brainer. Let’s get moving.


Opponents say the following:

  • By creating this TIF the city transfers the tax burden onto the very people who have been paying their taxes for years.
  • This is a shady deal hatched in secrecy and rammed through the City Council in a 72-hour hustle.
  • This deal was made in closed meetings by an aggressive circle of insiders..
  • City staff and officials are deliberately misleading the public and have created a confusion stew.
  • Promoters make inflated claims of sales tax increments for which there is little evidence.
  • City Council members chirped right in with the Cabela’s PR.
  • Repeating slogans is no substite for well informed decisionmaking.
  • What ever happened to equal protection under the law?
  • In a rapidly developing area a TIF is a scheme to permit land speculators to cash in.
  • Notice the J word. You can get public officials to support almost anything if they can claim credit for creating jobs.
  • The TIF has nothing to do with public benefit. It’s about greed.
  • It’s a betrayal of the public trust.
  • Much of the cheerleading comes from the bankers and realtors who will benefit.
  • If Cabela’s is such a tourist draw, why not tear down Mt. Rushmore and build it there?
  • People visiting Cabela’s will see a fake mountain, a fake trout pond, a fake waterfall, and lots of stuffed animals. But didn’t they come to the Black Hills Hills to see the real thing?
  • If you call yourself a destination store and promise to hang dead animals everywhere, you, too, can get free land.
  • Cabela’s will not bring in new money. It will cannabalize other businesses.
  • Cities in Idaho, Indiana, and Maine have refused to cave in to Cabela’s attempted extortion, but Cabela’s is going ahead in those states anyway.
  • In its annual report Cabela’s brags about low labor costs. That means lots of part-time jobs with no benefits.
  • There will be few new jobs. Many of the employees will come from existing businesses, lured by the opportunity to buy merchandise at a discount.
  • TIFs were created to bring development to depressed areas. Anyone pretending that the I-90 corridor is depressed is detached from reality.
  • Giving public property to a corporation is illegal.
  • It’s a crime to give away that beautiful Black Hills Visitor Center with its good location, easy access, and excellent parking.
  • Why would tourists come to Rapid City if it looks like strip malls all across the country?
  • Where do we get this pro-growth mentality? And why does “growth” always refer to new buildings and better shopping? What about better education, a thriving arts community, improved transportation, renewal of aging buildings, parks throughout the city, support for local businesses and farmers? Those are the kinds of growth that build community.
  • The city needs public debate on development, not shoddy name-calling.
  • No amount of repetitions of false and misleading claims will make them true.
  • Boosters seem to think that facts don’t matter.
  • We opponents are not ignorant little twirps. We want open honest accountable government.
  • City government has a duty to evenhandledly represent all businesses, not just those with hardball-playing dealmakers.
  • Research shows that rapid development on the edge of a city leads to deterioration of older parts of the city.
  • Big box retailers take money out of the city and send it to their out-of-state shareholders, while locally-owned businesses return profits to the community.
  • The fundamental issue, here, is Who owns local government?
  • The Giveaway Land Speculation Gravy Train can be stopped by the referendum.
  • Stopping this particular abuse is a necessary first step toward a rational development policy focused on the downtown area and public places.
  • When cronies get their claws in city government, it’s our job, in a democracy, to pull them out.
  • They want to give away the farm, the keys to the machinery, and all of the cows.
  • A TIF is like a black box. Public money goes in, development comes out. Who knows what happens in between?
  • Government is like a five-year-old child. It needs a lot of supervision.


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