WILL ROGERS
Will Rogers
If you’re among those either infuriated or entertained by
rationalizations offered to justify handing over taxpayer cash to lure
businesses to Burbank, prepare for yet another fit of irritation or the
giggles. If you’re among those irked that I lack the ability to
understand the vital role cash business incentives play in preserving
city services and boosting municipal revenues, prepare for more proof of
my vexing shortcoming.
Last week, I told you about the city staff’s recommendation that the
council, acting as Burbank’s Redevelopment Agency, approve an agreement
to lure a new business to town. As an incentive to encourage Sears to
open a store called The Great Indoors in the Burbank Empire Center, the
staff wants City Hall to give back to the store up to $50,000 per year of
the sales taxes it collects on Burbank’s behalf. The rebate program would
run for five years, with The Great Indoors getting back a maximum of
$250,000.
The Great Indoors is pitched as a “new concept” from Sears in the sale
of home furnishings, appliances and decor. Outlets have already opened in
Denver, Phoenix and Dallas. The 143,000-square-foot store headed to
Burbank bills itself as “Everything you need to remodel and decorate
every room in your home, all under one roof!”
City projections estimate the store will do $60 million of business
each year, but the rebate is based on a sliding scale. If the store’s
sales fall below $60 million, the sales tax rebate also declines.
*
When the package was offered for City Council consideration last week,
City Manager Bud Ovrom announced it was being pulled from the agenda. He
said Sears officials hadn’t signed the agreement, and that, as a matter
of policy, the council wouldn’t consider the proposal until Sears had
formally committed to it.
But tomorrow The Great Indoors and Sears are expected to close escrow
on the site the store will occupy in the new office, retail and hotel
project near the “five points” intersection of Victory Boulevard, Burbank
Boulevard and Victory Place. Naturally, since the company has already
committed to the new project, there is no longer a need to “lure” it here
with an incentive, right?
Wrong.
Obviously, like me, you must be suffering from some mental defect that
prevents you from understanding these very complicated business matters.
*
According to Ben Reiling, president of the firm developing the Burbank
Empire Center, the close of escrow and the transfer of the property is
expected to take place tomorrow, before the incentive package can be
formally agreed to by Sears and returned to the council for its
consideration.
I spoke to Burbank Community Development Director Bob Tague, the man
whose office develops and processes incentive proposals. Tague said that,
regardless of the title transfer and escrow closing, “Staff will continue
to recommend council approval of the package.”
I give Tague a lot of credit for chuckling after he said that,
accurately anticipating I would find his position mystifying. Indeed,
I’ve disagreed with Tague and his incentive proposals many times over the
years, and still he’s never been anything less than amiable, open and
willing to explain things to me. I will sincerely miss his good and
cheerful nature after he retires at the end of this month.
Of course, he can afford to be good natured, because the council
routinely buys into his view, with an easy majority routinely rejecting
my ridicule of such giveaways.
*
“You probably wonder why we would [recommend approving the incentive]
even after the store has committed to the site,” Tague said. All this
time I’ve thought Tague had no grasp of points obvious to me, and in an
instant he proved me wrong.
“Staff would still recommend approval because the store based its
calculations on receiving the incentive,” he said.
Of course, no matter the discussions that have taken place between
city staff and the store executives, there can never be a guarantee of
council approval until the council actually gives its approval. That’s
what Tague acknowledged when he hastened to add that The Great Indoors
can’t really count the incentive into its calculations unless and until a
council approval is final.
*
When the day comes that the sales tax rebate is again brought before
the council, is there any reason in the world for even one council member
to approve it? Inasmuch as I’m not a Sears executive or stockholder, I
can’t think of any. With the firm already committed to the site,
arguments that Burbank needs to lure the big generator of sales tax
revenues have flown right out the window.
If city staff wants to argue the council has to make good on implicit
or direct promises made by staff, this is a fine opportunity to remind
the staff it cannot make commitments for taxpayer funds without the
council’s prior public and formal approval. There are good reasons that
chats in the back hallway, unofficial encouragement from council members
and even the staff’s view of good policy don’t supersede public
deliberation by a panel of elected officials accountable to voters.
Perhaps the good folks at Sears want to argue we have to pony up the
cash because they entered into a land transaction on the basis of a
belief the council would eventually subsidize the deal. That requires
portraying one of the world’s largest retailers as an unsophisticated
bunch being victimized by persnickety technicalities.
If that’s the case, I imagine I’m just one of the millions of
customers who will expect to see a large credit to my charge card account
with Sears, because I bought a refrigerator there based upon my belief
the store will gladly agree to subsidize my purchase after the fact.
As a matter of policy, a week ago I believed there were no good
reasons to approve the proposed business incentive for The Great Indoors.
As of today, I think there are several good reasons to actively oppose
the proposal.
Will Rogers’ column appears in every edition of the Leader. He can be
reached 24 hours a day at 241-4141 voice mail ext. 906, or by e-mail at
WillColumn@aol.com.