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Roundup 3-16-2012

March 16, 2012

List of the Week, Part 1 – Economic Performance

The Tampa Bay Partnership released its latest economic scorecard this week. (You can find the Partnership report here)

Tampa Bay ranked best in transportation and worst in housing in the Tampa Bay Partnership’s latest Regional Economic Scorecard released Tuesday.

The region also improved in three out of the six categories measured by the partnership, but that wasn’t enough to nudge it forward overall. The bay area remained mired at fifth out of six Southeastern metros benchmarked, unchanged from last summer’s ranking. Dallas was tops overall while Jacksonville came in last.

Like many of the lists we report, we have some questions about the assumptions used in the Tampa Bay Partnership’s report (best in transportation?).  We were going to flesh out some of our issues, but we figure that overall they probably cancel each other out.  What is clear is that the Tampa Bay area is underperforming.  Maybe some of that has to do with focusing on the wrong things and spending public money in the wrong places.

Economic Development – Subsidies & Bass Pro Shop

One of the problems with Tampa Bay’s economic performance has been the decades long reliance on retail and real estate to support the economy.  While some profess to want to change that, it seems very hard to get away from that failed model.

As we mentioned a few weeks ago, Hillsborough County is considering subsidizing a project anchored by Bass Pro Shops in the Brandon area (See “Fishing for Subsidies”).  The project is more than just the store.  It is many stores and a hotel:

Bass Pro Shops would be the anchor for a 21-acre development, called The Estuary. The development also calls for additional retail space of at least 475,000 square feet, 27,500 square feet of office or commercial space and a 90-room hotel.

This week, we learned that the deal involves a $15 million subsidy by the County to the store and the developer.

The deal, outlined in documents released for the first time Tuesday, calls for the county to reimburse the owner of the land and developer, David Verardo, for $9.5 million worth of road improvements on Palm River Road and Falkenburg Road, plus $5.5 million toward building the 145,000-square-foot Bass Pro store.

The money for the store would be in yearly payments of $550,000 per year for 10 years. To get the full amount, Bass Pro Shops must show yearly gross sales of $55 million. The cash incentive would be reduced proportionally if the store can’t meet those sales figures.

The offer may be moot, however, because Verardo and Bass Pro Shops have not come to an agreement on how much the company should pay the developer.

What is in it for the County?

A new Bass could bring 369 full-time, permanent jobs to Hillsborough, though most would be low-paying. The real appeal: Nearly half the customers travel from outside a 25-mile range, suggesting tourist dollars on wheels.

* * *

Merrill’s letter cited the following numbers, characterizing them as “conservative”:

• Bass could see initial annual sales of $61.8 million, generating state and local sales taxes. The property assessment could climb to $16.4 million, boosting taxes on land now used for agriculture.

• Along with the Bass store, 475,000 square feet of additional retail space is proposed. If built out and stable by 2020, the surrounding stores could generate $158 million in sales, while also beefing up the tax base.

• The projects could create 1,517 temporary construction jobs over five years and 1,327 retail jobs.

* * *

Hillsborough could break even on its $15 million investment by 2018, he said.

And

Merrill said when the development is fully built out it will generate annual property taxes of $2 million and sales taxes of $14.8 million. The unincorporated county’s share of those taxes will be $3.8 million.

What’s in it for the developer? A big chunk of taxpayer money.

The developer would get $1.5 million if the store is ready to be occupied by Dec. 31, 2014, provided the developer has invested $25 million in capital.

The developer would be reimbursed $8 million toward $10 million in required road projects, which include widening Falkenburg Road to six lanes.

The developer would get paid up to $550,000 a year for 10 years if the Bass store achieves gross annual sales of $55 million, one third of which must be proven in audits to come from non-Hillsborough residents.

So what do we think?  We still have problems with all this.  Sure, we would like the jobs (though they will be low paying), and we would like to have a Bass Pro Shop.  We like some of the structure of the deal – at least in theory.  The incentive idea is good, but incentives involving public money should go to high paying jobs that pay people who can support retail.

Some of the money actually goes to road improvements that many people can use.  That is good. On the other hand, the County wants to spend millions to expand a road that to our eye looks sufficient but claims poverty when it comes to clearly overburdened roads like Fletcher.   Sure, the County may eventually make some money in taxes from the Bass Pro Shop, but will it put any of that to the existing needs of the County elsewhere?

And a lot of money goes to the store and the developer.  We have a hard time subsidizing retail in a sprawling area that is overflowing with retail.  It is not like this development is going to revitalize the area it is in. And does the county need to subsidize another hotel in the area?  There are approximately 6 hotels about 1 1/2 miles down the road at Falkenburg and Adamo.

The other thing we do not like is the cost – $15 million.  By way of comparison, the incentive for Time to bring a 500 job center with an average salary of $57,000 was only $3 million. The bizarre incident involving Price Waterhouse involved incentives of $1.2 million to protect 1500 to 2000 jobs and involving a $70 million office building. (Of course, it turned out to be a farce, but we are trying to establish some normal rate for incentives). By contrast, Bass Pro Shops has gotten the following:

More than $565 million in public incentives have been awarded, and other $157 million proposed, in efforts nationwide to attract developments anchored by Bass Pro Shops, according to a 2010 report by the Public Accountability Initiative, a nonprofit group that has been critical of big business. http://www.tampabay.com/news/growth/hillsborough-county-dangles-15-million-lure-for-bass-pro-shops/1219811

(Nice business model) Finally, with a Bass Pro Shop in Orlando and one in Ft. Myers, are we really going to have that many people from more than an hour or so away coming to the store?

In sum, is this deal worth it? No.

This deal is not economic development – it is real estate/retail welfare. As demonstrated by the Time and Price Waterhouse plans, that $15 million could be used to attract a lot more, higher paying jobs or it could be used to attract new flights to TIA – that would spin off much more business in sales taxes and jobs.  As a Times editorial echoing many of our previous concerns says:

Details of the Bass proposal came out on the very day that the region’s business development group, the Tampa Bay Partnership, announced that the bay area languishes behind Dallas, Raleigh, N.C., and other similar markets in developing high-tech industries. Texas Gov. Rick Perry announced last week that Apple Inc. will expand its campus in Austin, thanks to $21 million in state subsidies. Texas gets Apple — and Hillsborough pursues the worm.

No wonder Tampa Bay compares badly to our competitor region. (For details on the Apple deal see here). If Bass Pro Shops doesn’t want to be in our market without a subsidy, just shop at Cabelas.

HART/PSTA – Now Do It Right

It seems that HART and PSTA are going to have to study consolidation and merger (assuming the Governor signs the bill).

Neither the Hillsborough nor Pinellas public transit agencies want to merge, but a bill passed in the last hour of the legislative session requires them to split the costs up to $100,000 to study the issue.

The bill requires the Hillsborough Area Regional Transit Authority and Pinellas Suncoast Transit Authority boards to identify opportunities to reorganize each agency, merge them, or consolidate functions within and between each agency. The study is due to House and Senate leaders by Feb. 1.

* * *

The HART and PSTA boards opposed the measure in a joint meeting in January, in particular the requirement to pay the Tampa Bay Area Regional Transportation Authority up to a total of $100,000 for a consolidation study.

Neither board is interested in combining operations or decision-making at the top, although the two transit systems jointly share routes and participate in equipment and fuel purchasing pools.

Why would the boards be interested in merger? They might lose their board seats.

As any regular reader will know, we are pleased by this.  However, as we noted last week, we are skeptical that the boards will do a good faith study on their own. (Nothing in the Times article from March 16 changes our mind on that.)  We hope the legislature will hold their feet to the fire.

Despite all the talk of regional cooperation and how the Tampa Bay area should be treated as one area, political leaders have a difficult time actually functioning that way, to the detriment of the whole region.  Just one more thing they could learn from our competitors, like Orlando and their 3 county transit organization.

TIA – Continuing Good News

Once again, passenger traffic at TIA is up.

The airport served 1.3 million passengers, a 7.2 percent increase over February 2011. The extra leap year day contributed 3.7 percent of the increase.

Domestic ridership grew 6.7 percent to 1.3 million passengers last month, while international ridership increased 24 percent to 45,261 passengers.

Note, once again, the big increase in international traffic.  Hopefully, that will help attract even more service. Even better, spring break traffic at TIA is up. Hopefully, that will help the economy generally.

Is This All?

The Times had an article that caught our eye regarding the Tampa City Council.

There seems to be something for everyone today at Tampa City Hall.

Unmarried couples and backyard chickens could move closer to legal protection. Security for the Republican National Convention and Guavaween will be discussed. And officials will try to answer the question: Are corporations people, too?

We understand that some of these issues are of importance, especially to people directly involved, while others, like whether corporations are people, are completely above the City Council’s pay grade.  But we would be a lot happier if, while dealing with some of these issues, the City Council was focusing on changing the way the City is built and real economic development.

List of the Week, Part 2 – You May Be Depressed, But You Don’t Have to Move When You get Old

Our second list of the week is The Best Places to Retire by CBS Moneywatch.  No surprise in God’s Waiting Room, Clearwater came in the top five. (They did not seem to rank the top five)

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