In the movie "The Jerk" Steve Martin comes to the realization "it's a profit thing." Profit is not a dirty corporate word. Profit makes the world go round. It pays taxes, pays good wages and provides funding to charity. Big business success is good; small business success is great because profits are closer to those most responsible, and local profits have a greater impact on their local economy. We should encourage profitable local businesses.
America was built on entrepreneurial spirit, bold sometimes risky actions that resulted in either significant successes or forgettable failures. This spirit of American ingenuity is what made this country great. If at first you don't succeed, try, try again. Stubborn pride and belief in oneself led many to spurn handouts whether in daily life or business.
Fast forward to the present
The idea of a beautiful hotel on the hill is wonderful. However, it seems to be a flawed business plan that only works with government subsidies.
First, the Oread Inn had to be exceptionally tall, according to the developers, to make it financially feasible. Although planning and historic resources officials were concerned about the height of the building, they eventually approved the plans. Now, private developers say, they need to create a special sales tax zone for the project to be viable. When does this private business idea carry its own weight?
A large industrial center located near the Lawrence airport, a transportation crossroads, given the right environment, is a great idea.
First, it was going to be a 900-acre industrial park with thousands of jobs for the community. Reality sets in, and now the scaled-down version is for a 144-acre development. This private developer has another great plan, but the only way it will work is with an investment of tax money to extend infrastructure such as roads and sewers to the project.
Both of these businesses have asked for creative public subsidy. How about that creative public subsidy coming with public equity? Perhaps some company profits should be shared with the public "investors." What is to stop the developers from selling and reaping all the reward when the public shared the risk? Maybe with this public equity comes public reimbursement when the property is sold. If the hotel wants, say, 20 percent or 30 percent public help, maybe upon sale of the hotel, the public should receive 20 percent or 30 percent of the sale price for schools or parks.
In today's very competitive environment, communities need to rally together to get ahead and compete for economic opportunities. It would seem there is a ceiling on how much and how many times local residents can be taxed. There is a limit on resources. Facing limited resources, shouldn't broad economic needs such as 70 percent of streets in Lawrence needing repair, a sewer plant representing the biggest public expenditure in Lawrence's history and the horribly dilapidated state of our youth athletic fields have top priority in the use of public money?
Private efforts that will benefit private bank accounts need to stop asking for public support. If it is such a great idea, try it on your own.
Comments
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merrill (anonymous) says…
Excellent commentary. Obviously this is bad city/county government run amok with more on the immediate horizon.
Tax rebate: The City does not have a policy or program on tax rebates. It only has a policy on tax abatements. Tax abatements are given under very specific enabling statutes that specify what a city can and cannot do. Once the tax is paid, the city can choose to rebate some or all of the tax without limitation. Hmmmmmmmm.
The building being acquired has been a failure for a long time. It was built just prior to the recession of 1992. The Chamber could not find a tenant and asked the City for abatements to attract firms, even those for which the benefits did not exceed the costs. Could it be that the price is a bailout for the rather secretive organization that runs the East Hills Industrial Park with taxpayer support? Taxpayers certainly hope not.
Open ended tax rebate: As Chad Lawhorn has pointed out in his article, this rebate freezes the amount of the tax. This has never been done before. Even abated properties appreciate in value over time providing some gain to the city. The taxpayers should be assured that there is a compelling need for such a generous subsidy.
Track record of the Chamber: The leadership of the Chamber are the same people that led the City into 18 prior tax abatements of which 14 are either total failures (the firm failed or left town eg: Serologicals, Davol, E&E, etc.) or the firm failed to provide the jobs or wages promised (eg: Microtech, Prososco, Packerware, etc.) The Chamber favors adding 1000 aces of industrial land while the number of industrial jobs is declining, not rising, and our industrial facilities are sitting empty or are being converted to storage uses. Given this poor record of leadership why are they still in business? This is the same leadership pushing the City into what may be another failed project.
The only possible authority for this type of somewhat shady economics is a majority of city and county commissioners with the Chamber of Commerce perhaps as a partner. Who knows? A majority from both city and county commission can dictate direction to city/county staff as to what they want to happen. We may never know the reality. It does seem as though these commissions are trying to shove through too many tax dollar projects at a very brisk pace.
just_another_bozo_on_this_bus (anonymous) says…
Am I really reading a JW editorial?
OnlyTheOne (anonymous) says…
Rats! I agree with a LJ-W editorial again. Something's wrong here - oh yes, ideas presented by a couple of developers and actions by the City Commissioners!
Keep 'em private or not at all!
Now let's start talking about that closed door, illegal IMHO, tax rebate.
Disposable (anonymous) says…
Agree with the intent of the comments - except:
"Although planning and historic resources officials were concerned about the height of the building, they eventually approved the plans."
Fact check - The HRC unanimously DENIED the proposal.
The City Commission will need to justify the TIF - AND - over-ruling the HRC when discussing this project.
snowWI (anonymous) says…
Good letter! I think we all know that the city commission is catering to private developers at the taxpayers expense! The good old boy system is alive and well in Lawrence. It definitely matters who your name is in this city.
snowWI (anonymous) says…
notnowdear (Anonymous) says:
"It does not matter to me who your name is in this town. I don't buy into pseudo-hierarchies."
Then how come the current city commission caters to these developers who plan speculative developments, and the taxpayers pay for the massive infrastructure upgrades? Their is not even an employer lined up for this proposed development, but a few people will get rich quick by selling the land to the city to be "developed." If the developers think the project will be successful they should pay the majority of the costs associated with it.
BigPrune (anonymous) says…
I doubt Dolph wrote this editorial.