Ottawa To some, this Kansas city just 30 minutes south of Lawrence would be considered prime stomping grounds for the "Evil Giant" that many Lawrence residents seek to slay.
That would be Wal-Mart. Likely no Kansas community is more linked to the world's largest retailer than Ottawa. The town of about 12,000 has a Supercenter, of course, but what ratchets up Wal-Mart's presence here is a massive distribution center on the outskirts of town that employs 1,500 people.
Here, Wal-Mart certainly is a giant. Its distribution center is the largest employer in town, and its store is the second-largest employer in town at the moment. But the adjectives used to describe the company are different in Ottawa. The world's most scrutinized retailer is more likely to be called benevolent than bad, excellent instead of evil.
"It was a tremendous turning point for this community," said Tom Weigand, president and CEO of the Ottawa Area Chamber of Commerce, about Wal-Mart's decision 10 years ago to locate in Ottawa. "At the time, we're having a hard time raising $80,000 for our United Way campaign. When Wal-Mart came to town, it raised $100,000 on its own.
"When they came to town, that is when we started building houses again. We build 120 to 150 houses a year in the county. Before, we weren't building but five or 10 a year."
Now, Ottawa may be at another turning point. When taxpayers receive their property tax statements this month, they'll see that the city's total property tax rate has decreased by nearly 17 mills or 10 percent from a year ago.
The majority of the decrease is courtesy of Wal-Mart. That's because the 10-year tax abatement the company received to locate in Ottawa expired this year. Wal-Mart is now paying nearly $800,000 a year in property taxes that it previously wasn't paying.
The county used its share of the property taxes to reduce its mill levy by 9 mills. It all has added up to a community that doesn't necessarily universally love Wal-Mart but certainly has a much different view of the company than people in Lawrence.
"I think for the most part, the community has embraced Wal-Mart," said Richard Jackson, a longtime member of the Ottawa City Council. "You certainly have some people who aren't happy with Wal-Mart because they think they run small businesses out of business. But you are going to have some of that in any community. I think it is fair to say we have a lot less of that feeling here than in other places."
Whether Ottawa's experience with Wal-Mart suggests its Lawrence opponents have misjudged the company, though, is debatable. After all, the controversy in Lawrence is about whether the company should be allowed to open a second store, not a distribution center. Plus, several opponents have said they're not opposed to Wal-Mart but rather the traffic a large store creates.
Many Lawrence residents also won't be too eager to trade property tax rates with Ottawa. Even after the reduction, Ottawa still has a total property tax rate - the mill levies of the city, county and school district combined - of about 153 mills. Lawrence's is about 115 mills, although it did go up by about 4 mills this year.
How Ottawa attracted Wal-Mart, however, does produce an interesting look into the community's economic development strategy. Ottawa and Franklin County landed Wal-Mart by being aggressive. The county offered Wal-Mart a 100-percent tax abatement for 10 years. The city, even though the site was about three miles outside the city limits, financed a $1 million extension of a city water line to the site to help seal the deal.
Lawrence has never offered a company a 100-percent tax abatement, and allowing a major industrial site miles outside the city limits is generally prohibited in city planning documents.
"The key is that we're open and willing to look at all alternatives," Weigand said. "We don't try to limit who we will look at. We look at them and then decide if we want to go after them.
Richard Jackson, Ottawa City Council member, on the future of his community
"I don't want to get into analyzing Lawrence, but they get into debates about whether they want a distribution center and whether it pays enough. We don't do that. We believe there is a job for everyone. Not everyone is going to make $60,000 a year. You need different jobs."
Weigand said the wage issues usually ended up working themselves out anyway. He said starting wages at the Wal-Mart distribution center are now more than $13 an hour for most workers. He said wages started lower than that, but the company realized it had to increase them to attract the necessary number of employees.
Some observers of the Lawrence economy, though, cautioned that Ottawa's strategy may not be a good one for Lawrence. Allen Ford, a Kansas University business professor and critic of tax abatements, said communities would be better off if they offered fewer tax abatements.
"My concern has always been that it is just going to become the norm for a company to get an abatement," Ford said. "The problem with that is it is not special anymore, and if you want to get something special, you have to go up another rung on the incentives ladder.
"You end up converting everyone to a subsidy-seeker, and that is not good for the long term."
There aren't any regrets on the part of Ottawa leaders, though. The 100-percent tax abatement to Wal-Mart was not the last it offered. Since then, the city has offered two 100-percent abatements to American Eagle for its distribution center.
That's the same American Eagle that originally planned to build a distribution center in Lawrence in 2000. It backed away from its Lawrence plans after the community became engaged in a lengthy battle about whether the company would pay wages worthy of a tax abatement. It ultimately went to Ottawa, into a vacant building that had been home to a hardware distribution center.
Since then, the company has undertaken a $40 million expansion and is now completing a $60 million expansion. When the second expansion is completed, it will create another 300 jobs, which will be in addition to the approximately 250 the center has today. As with Wal-Mart, Weigand said the wage issue had taken care of itself. Wages now are in the $10.50- to $11-per-hour range, plus benefits, after the company realized that was what they had to offer to attract employees.
Jackson, the city councilman, said he could understand how it might be difficult for some communities to justify offering such large tax abatements. But he said community leaders in Ottawa didn't spend much time playing the "what-if game" by worrying about whether a company simply would leave the community once its tax abatement expired.
"There can be a downside to anything you do, but sometimes you can dwell too much on the negative aspects and on the what-ifs," Jackson said. "You are not always going to win every one, but you have to take a positive approach. I think that is a big part of why we're growing."
How we compare
Ottawa Population: 12,597 Median family income: $51,650 Average selling price for single-family home: $77,544 Total property tax rate: 153 mills Annual property tax bill for average home: $1,364 Lawrence Population: 88,664 Median family income: $62,200 Average selling price for single-family home: $187,465 Total property tax rate: 115 mills Annual property tax bill for average home: $2,479
Now that the city has more jobs and the county's population has increased by about 1,500 people - or 6 percent - since 2000, Ottawa is beginning to attract more commercial businesses.
Several of them are locating in the downtown area, which Weigand admitted had become "pretty old and stale" in the 1980s when Ottawa was losing population.
The downtown has attracted interest from Lawrence businesses. El Mezcal, a Lawrence-based Mexican restaurant, opened in downtown Ottawa more than a year ago. Henry T's, a longtime Lawrence sports bar, opened a location in downtown Ottawa last month.
"I just looked and saw all the growth coming south out of Kansas City," said David Heinz, an owner of Henry T's, who said the expansion of U.S. Highway 59 to four lanes would spur more growth. "You can just see a lot of potential when you look at this town."
Most Ottawa residents are glad to see the growth. But Lisa Schoonover said she did run into some people who thought the changes had been negative and threatened the community's small-town feel. She said other people also had expressed skepticism about whether the lower tax rates would continue.
Several Ottawa leaders said the growth of commercial businesses had been the other major factor in Ottawa's ability to reduce its property tax rate. This spring, voters by an approximately 70 percent margin approved a half-cent sales tax. It was designed, in part, to reduce the city's property tax rate. The city is using the sales tax to reduce the mill levy by 6 mills in 2006 and is expected to reduce it another 2 mills in 2007 and 2 more mills in 2008, said Scott Bird, Ottawa city clerk.
That's an idea that at least one Lawrence leader wants to consider. Mayor Mike Amyx proposed a 1-cent city sales tax earlier this year to pay for infrastructure and reduce property taxes. The idea, however, failed to win support from city commissioners. Amyx said he hoped Lawrence residents would take a look at how such a system was working in Ottawa.
"I would like to see another round of discussion about it here," Amyx said. "I'm the first one to say that our community can't solely rely on sales taxes, but I'd like to discuss the issue some more."