Monday, September 20, 2010

More thoughts on paying Kohl's to build a store here

A few days ago I wrote a brief essay on the Almanac about Rolla leaders' eagerness to pay $1.5 million in tax money to a Fortune 500 retailer, Kohl's, to build a department store here. I bemoaned the fact that American capitalism has become so fragile that big businesses must almost always have taxpayer support to start or expand into new markets. We really are a democratic socialist republic and it isn't necessarily because progressives/liberals/Democrats want it that way; it's the conservatives, mainly businessmen, who have their hands in the taxpayers' pockets, too.

Chester Kojro, a regular Almanac reader, wrote to me and told me that I had missed the point. I think he is right, so I'm going to share his letter:

Dear RD,

You missed the real point of Rolla City Council's
corruption.

Kohl's can build a store within a certain budget
(good business practice) but the Rolla site exceeds that by about $1.5 MILLION,
hence the need for a discount arrangement, in this case a TIF.

Rolla
is glad to pay the money to make the deal happen. Whether money is up
front or deferred, end result is the same.

So who really
profits here? The real estate owner who is gouging with ridiculously
overpriced land. He gets the money up front, regardless of whatever
happens with Kohl's and other Rolla businesses. The land is being sold
at an exorbitant price and Rolla City Council is paying it!

Chester Kojro
Rolla, MO

I don't know why I didn't think about the land price being high. That was one of the red flags that went up for me when the city oligarchy started talking about blighted property and tax payments when TIF (tax increment financing) started in Rolla years ago.

At the time, I asked city officials what I thought were tough questions about what kind of legal mechanisms are in place to keep municipalities from paying too much for land. I asked how taxpayers could be assured that there wasn't some kind of collusion going on between landowners, real estate companies and the city government to move property at a higher price than it should, all with the taxpayers' support. I never got an answer.

I wasn't the only one with such questions. At the first TIF commission meeting, I recall Gerald Pietsch talking about that very subject. At the time, the city wanted to get ahold of the property at the corner of 63 and 72. That property was for sale, but the owner had put such a high price on it that it wasn't selling. Pietsch said that was one of the problems that would always have to be watched by the TIF commission; he warned that TIF could be used by landowners to get a price that that the market would not bear.

Now, having said all that, I'll say this: I don't think the taxpayers care.

I've talked to a few people on my rounds about town, and they're all hopeful the city government will do whatever it takes to bring Kohl's to Rolla. These consumers tell me we need the additional jobs and we need the construction investment. They tell me we need to build a department store to show other potential investors that Rolla is on the move. Most of all, they tell me, we need the shopping.

In the argument of tax subsidy vs. shopping, shopping wins hands-down in Rolla.

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