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.

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