No TIF for Christie, Lowe’s
Bob Sutherland, Sutherland Lumber
Thursday, October 9, 2008
Editor’s note: This is a letter sent to Matt Zimmerman, Emporia city manager.
AS THE DISTRICT Manager and owner of Sutherlands in Emporia, I am writing to share information and insights regarding the tax increment finance (TIF) proposal that the City of Emporia is considering for a Lowe’s retail development by DJ Christie and Co.
As I have stated in the past, Sutherlands in no way opposes free and fair competition. Competition is vital to business and we are not unfamiliar with it. However, offering incentives to DJ Christie and Lowe’s would be counterproductive to Emporia’s longterm economic development. A reasoned analysis of the facts and issues provokes many unanswered questions.
Here are the points I hope city leaders and citizens bear in mind:
New home improvement retailers will not expand the current size of the market. The August 2004 Downtown Emporia Market Analysis quantified the market for home improvement and lawn & garden in Emporia to be $25 million. It clearly demonstrates that $4 million of that total is lost to other communities. Anyone familiar with Emporia knows that people go out of town for all manner of business and entertainment and will continue to spend money outside of town. Perhaps a portion of the $4 million dollar “leakage” would stay if a Lowe’s was built, but this does not justify risking taxpayers’ money.
New home improvement retailers will take most of their business from existing businesses. DJ Christie is aware of the finite quality of the Emporia market and has tried to whitewash people’s concerns with vague claims about a new store “expanding” the market and “not effecting” other businesses. This not only goes against common sense, it is contrary to the experience of any competitive businessperson. What guarantee or definitive examples is DJ Christie giving to back up its claims? Beware offers wherein one party takes no risk.
There are many other types of businesses that would be a better target for a TIF incentive, as supported by the City’s own research. The City recently paid $75,000 dollars for a Buxton Retail Study to determine which businesses would most benefit Emporia. The results (parts of which for some reason have not been shared with the taxpaying public) listed dozens of types of businesses and specific companies that Emporia should work to attract. Nowhere does any type of home improvement or building materials retailer appear on the list of suggested businesses. Why would the city break its longstanding tradition in not handing out TIF with a giveaway to a market segment that is not suggested by expert research? How does the city justify spending $75,000 on research it doesn’t use?
TIF giveaways are a risk that cities can live to regret. We only need to go so far as Hays, Kan., to find a city that is facing budget shortfalls as a result of a badly executed TIF handout. In 2004, Hays’ city leaders approved a TIF district for DJ Christie and Co. and Home Depot. As quoted in the Hays Daily News in September 2007, city manager Toby Dougherty states “the actual Home Depot sales are less than they projected. So as a result there is a pretty good possibility that we will notify Home Depot that they will be making up any revenue shortfall so we will have it in time to make bond payments.” As documented by the Hays press, over a year later Home Depot is yet to contribute any money to Hays’ shortfall. There appears to be no contractual agreement or option put in place to protect the city. Is DJ Christie or Lowe’s offering to protect Emporia by guaranteeing enough tax revenue to justify taxpayers’ handouts to their businesses? Does Emporia have a contingency plan in place in the event it cannot service the debt it issues to finance Lowes’ TIF giveaway? City leaders have a responsibility to answer these questions for Emporia taxpayers.
TIF handouts are unfair unless all competing businesses get to partake. I would be interested to know what portion of Sutherlands’ upcoming need for capital improvements in our facility would be eligible for TIF money. I’m sure other merchants are facing forward-going costs to remain in operation and would also appreciate a similar government-financed handout. I think all would agree that Emporia can ill afford to spend taxpayers’ money on giveaways to every competing business. Isn’t the best policy to give incentives only to new business segments rather than those that are already here? Does the city want to create the precedent for any new store that comes to town to expect TIF money? What message does an unfair giveaway to one retailer send to area businesses about the future in Emporia? Will banks be hesitant to lend to businesses that could be hurt by future city subsidies to those businesses’ competitors? Are government officials poised to become “gatekeepers” for future entrepreneurial activity in town and is that an appropriate role for them?
The property in question is not “blighted.” I do not need to expand on this point other than to say citizens should not stand by while politicians abuse the statutes and “condemn” property that is appealing and valuable. The entire western world could be “blighted” under the ridiculously loose definition of the word that the promoters of this project are using. I or any of my friends would be proud to call the property in question “home.” Do Emporians understand the precedent a condemnation of this property would represent, that virtually anyone’s property could be targeted in the name of economic development?
Paying Lowe’s to come is no guarantee that other merchants will follow. A TIF district in Pittsburg, Kan., a fair comparison market to Emporia, is another project of DJ Christie’s that deserves analysis. Several years ago, Christie promised that bringing anchor tenant Home Depot to Pittsburg would bring dining and clothing apparel retailers to adjacent spaces. The strip mall in question has partial occupancy today. Tenants in the strip mall include a “Yummy” Chinese resturaunt, H&R Block check cashing, the UPS store (employing about two people at a time) and a Subway fast food outlet. Also developed on the property in 2005 was a 40,000-square-feet Goody’s family clothing retailer that has already closed its doors, adding yet another empty building to the Pittsburg, Kan., community and undoubtedly putting downward pressure on commercial property values. How is this a cure for “blight”?
TIF districts slow economic growth more often than they accelerate it. The Institute of Government and Public Affairs at the University of Illinois recently studied 235 cities and found that those with TIF districts actually grew more slowly than those that did not have TIFs. Where TIF districts created property tax growth in one area, the lack of TIF in adjacent areas brought sales and property tax revenues down, usually more than the increase in the TIF areas. All TIFs do is move money around the community, creating winners and losers in dynamic that usually results in a negative net gain. City leaders need to use their leverage to attract job creating industry that produces products Emporia can ship outside the area, bringing new wages and capital we don’t currently have, not redundant businesses that enrich specific interests but leave our whole community poorer. Have Emporia officials really looked at the full picture here?
Does Emporia need to attract new businesses? Certainly, but only in ways that grow its economic base, not cannibalize existing and established businesses, not in ways that expose the city to financial losses or unsupported debt, and not in ways that run afoul of the basic rules of fair and free competition.
Thank for your time and attention.
Comments
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momus (anonymous) says...
THANK YOU! There is something to be said for study, research and common sense.
October 9, 2008 at 1:52 p.m. ( permalink | suggest removal )
eiggohp (anonymous) says...
Competition is always good, but if Christie is involved, it is EMPORIA BEWARE!!!!! If they want to come, deal directly with Lowe's and leave Christie out of it~~~~you'll be sorry like so many places have been. Do some checking on his track record......he runs really fast with YOUR money!
October 9, 2008 at 4:31 p.m. ( permalink | suggest removal )
dale011 (anonymous) says...
Well written, and thought out. I have opposed the location of this new business based on the unsafe traffic conditions in the area, I hate to even go up that way fearing getting into an accident. Once the other road construction projects are completed, PERHAPS the safety situation will get better, but I seriously doubt that. So, to add the concept of a TIF district on top of that just makes me shake my head. Are our community leaders that desperate that they would rely on the recommendations of a firm that has really one objective - drive Lowes down our throats so they can get paid - leaves me spinning rather than shaking. I have lived where TIF was the rule, and spent hours in city council meetings listening to the school board complain because they get no tax revenue from the area. If used improperly, the taxing authority ends up with less tax base and has to then raise taxes on others in order to make up for the TIF area. Please, community leaders, pull your heads out and look around. With less money to spend on food, gas and medicines, who is going to shop at a new building center? The existing businesses in Emporia are going to end up fighting for the few dollars that folks have to spend.Lets make good decisions based on sound information, not flashy charts on a powerpoint presentation. The dow went down almost 700 more points today, I now have to work until I'm 105 in order to make up for the losses.
October 9, 2008 at 4:34 p.m. ( permalink | suggest removal )
create (anonymous) says...
Thank you for this in-depth explanation, Mr. Sutherland. I hope people can see the sense in what you say.
I've been saying this all along and catching flak for it. Emporia needs to attract the kind of industry that will employ large numbers of people in order to produce products. Emporia needs WAGES so they can go shopping. All the people who want Lowe's to come here seem to be thinking of only one thing: They want to go shopping at Lowe's.
Sutherland's letter explains what is at stake. eiggohp has been telling us about Christie since the beginning. My own research tells me that one of the things Christie does is fill his little strip malls with retailers he has recruited from nearby shopping centers thereby creating more empty space in the mall. It's just a shift, no new business.
gayzettesux, why don't you just write to Sutherland's to complain. Be ready to provide date and time, names even. I've never had a problem at Sutherland's. In fact, I go to the help desk and have always received service right away. I've had friends who just wander around grumbling that they can't find anything. Why not just ask at the help desk where they have the info.
October 9, 2008 at 5:09 p.m. ( permalink | suggest removal )
Free4all (anonymous) says...
My wife and myself have always complained of custoner care in this town sonce moving here. Several occasions at blue stem I have stood waiting to ask an employee a question only to stand there and wait till he is through BSing with his buddies or family members and the treat me like dirt for butting in. Yes I complained and heard the manager laugh while hanging up the phone. Anouther occasion at sutherlands when I found a trailor I wanted and stood in the parking lot by it and called inside to ask a question about it. I was put on hold for 10 minutes and the girl came back on giggling with others asking what I was holding for. I told her I was inquiring about a trailor and that I was outside and wanted to purchase it. She stated that she had no idea who to talk to about it so I informed her that I would travel to Topeka and make my purchase. I went to tractor supply and got the best sevice ever and they even did a safty check on it for me for free. A sales person even came out on his own while I was looking at them. Those are only 2 instances of several that we have ran into here. No we are not from here and often look forward to traveling out of town to shop and dine due to variety and REAL customer care.
October 9, 2008 at 9:09 p.m. ( permalink | suggest removal )
admireed (anonymous) says...
Lowe's jamed own our thoats. Prepare! Powers do not give a S^%$#!
October 9, 2008 at 11:52 p.m. ( permalink | suggest removal )
notasheeple (anonymous) says...
I say the same as I did in my last post… “If your that upset with Sutherlands than contact the owner or if you go to there website you can contact the corporate office they WILL contact the owner.”
But I guess you just did just that? and I’m sure Mister Sutherland is reading his own post!
And to that I would like to add.. Bob, would you go into Staples one of these days and just walk around and see how many times you get asked if you need help and or greeted and while your there ask for some info on some product that they have. This may bring some insight into the problems at your store.
I for one have no problem with the so-called lack of service as I usually know what I’m looking for and if I need help I walk up to the person or the counter and ask for help.
October 10, 2008 at 8:41 a.m. ( permalink | suggest removal )
bobsuth (anonymous) says...
Bob Sutherland here. Thanks for the supportive comments. We screen written and online comments from customers daily. The vast majority are positive, and any negative comments are used to coach our employees on how to improve.
I invite anyone thinking that paying taxpayer money to subsidize a new home improvement store would improve service too look deeper. The internet is full of complaints about the service people get at "national" home improvement chains, something you really don't see about us.
The fact is, the only way Christie can sell this to you is playing on people's fleeting desire for "something new, something bigger". That's fine, but government should not be in the business of giving private companies handouts for that reason alone. There needs to be an economic benefit, and so far Christie has done nothing to show that this giveaway would produce one, (except a benefit for Christie). Please feel free to call me at 303-775-2790.
October 10, 2008 at 9:17 a.m. ( permalink | suggest removal )
emporian (anonymous) says...
Mr. Sutherland
If only you ran your store as well as you type a letter. After last week I will never spend another dime to support Sutherlands. That has got to be worst hardware/lumber yard in Eastern KS. I waited 17 minutes for help at your store and still ended up spending $180 (the last you will be getting). Then an employee argued with my wife about something we knew could be done (and we spent the money elsewhere and got it done). Then getting lumber is an ordeal in itself. If you can actually find someone to help you, then you have to watch very closely to make sure you are actually getting good lumber. I, as well as many that I work with, wouldn't mind seeing this new store come in and Sutherlands leaving town. I sure wouldn't lose any sleep over it.
October 10, 2008 at 10:23 a.m. ( permalink | suggest removal )
eatasheep69 (anonymous) says...
I don't understand why some of you (gayzettesux, emporian) have such problems with the Sutherlands here. I have always had good service there. Maybe the problem is with you. You get what you give.
October 10, 2008 at 10:34 a.m. ( permalink | suggest removal )
emporian (anonymous) says...
I am not alone. Most I work with has had troubles with Sutherlands. One guy had them come out and measure for a custom countertop. They ordered it and got it in only to find out Sutherlands measured it wrong. Then they wouldn't take it back cause it was custom even though they screwed up. I can name you 15 people right now that wont set foot in that place. All I ask is for good customer service (read that someone who will help and might know what they are talking about) and neither occurs at sutherlands.
October 10, 2008 at 10:41 a.m. ( permalink | suggest removal )
bobsuth (anonymous) says...
Bob Sutherland here.
Again, this is not about Sutherlands but about what is a good use of taxpayers' money.
I notice that those who wish to denigrate our business do so anonymously. In the name of openness and honesty, here is the link to our online comment page for the Emporia store. Look for yourselves what our customers say:
http://sutherlands.com/survey/display...
October 10, 2008 at 11:39 a.m. ( permalink | suggest removal )
emporian (anonymous) says...
Didn't know you had that. How do I post on it?
October 10, 2008 at 12:11 p.m. ( permalink | suggest removal )
notasheeple (anonymous) says...
emporian.. BS
October 10, 2008 at 12:18 p.m. ( permalink | suggest removal )
emporian (anonymous) says...
not bs, I dont visit their website. If I can figure out how to post I will. You can think what you want.
October 10, 2008 at 1:32 p.m. ( permalink | suggest removal )
emporian (anonymous) says...
I figured it out. Left a comment card.
October 10, 2008 at 1:40 p.m. ( permalink | suggest removal )
hartford (anonymous) says...
Just because one person may get great service doesn't mean the next person will. I have been in there several times. Sometimes I get great service, and other times, the associates seem to be clueless. I was taught, growing up in a small southwest Kansas town, that the customer is always right. A customer shouldn't have to come in all bright eyed and bushy tailed to receive good service. My old boss would say "Kill 'em with kindness kiddo". I will spend a little more, or drive a little further, if I know I can get better service elsewhere.
I am looking out for number 1 when I purchase what I need. Business should also be looking out for number 1. That is why I don't understand poor service. I am talking about any business, not just Sutherlands.
Having said all that, what Bob was trying to say has nothing to do with customer service. What I took from his article was it doesn't matter if it's Sutherlands or any other like business. Do I personally think we should get a Lowes? Yes, and I know it will hurt local businesses. But the weak will be weeded out, and the strong will try to stay a float and hopefully succeed.
October 20, 2008 at 12:52 p.m. ( permalink | suggest removal )
jfk (anonymous) says...
I have had nothing but good experiences from Sutherlands as well as the other lumber stores in town.
If Lowe's wants to come to town, albeit, but without special help from the city.
This town needs more, higher paying jobs, not more unfair competition that will do little to help our community except for lining their own pockets and running our local businesses out of town.
November 24, 2008 at 3:19 p.m. ( permalink | suggest removal )