Letters to the Editor

Fair deal?

July 3, 2011

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To the editor:

My wife and I own and operate Paisano’s Ristorante at 25th and Iowa. I am writing in regards to the development of the property at 27th and Iowa, into a proposed Olive Garden by M.D. Management, an out-of-town developer.

My reasons for writing are obvious; we are certainly concerned with this potential development. We are also members of the Lawrence Originals, a group of 21 locally owned restaurants, representing over $21 million in sales revenue and well over 1,000 employees.

The development company essentially is requesting approximately $600,000 in tax abatements over a 10-year period in order to build and lease an Olive Garden, under the Neighborhood Revitalization Act incentive. These savings will be passed on, in some degree, to the end user, Olive Garden, through lower lease payments, while the out-of-town developers recoup their money because they bought a piece of property at the height of the real estate bubble and that bubble has burst.

Does that sound fair to you?

Comments

SinoHawk 4 years, 2 months ago

The restaurant business is one of the most difficult industries when in comes to turning a consistent profit. While I have nothing against Olive Garden and understand why they would seek incentives to come to Lawrence, subsidizing any restaurant seems to be a poor use of our tax resources (since the amount of money spent in Lawrence at restaurants is more or less fixed, this isn't attracting any additional dollars or jobs to Lawrence).

The cited revenue figures above show only $1M in revenue (each) per year for these Lawrence based restaurants. After deducting salaries, rental, the cost of food, and taxes, I would bet that there already little left owner for the owners (i.e. profits).

My perspective would be different if this was a likely net positive for Lawrence in terms of jobs (i.e. company relocating to Lawrence, or creation of a new call center/support center for a larger company).

Richard Heckler 4 years, 2 months ago

Tax incentives for Olive Garden provide a leg up for a new cafe that Lawrence does not necessarily need or will necessarily support.

NO it is NOT fair to other eating establishments.

Olive Garden and MD developers go to the bank or else don't come to Lawrence.

MD developers put the property up for sale to get your money back or go back to the sellers for a hardship refund. It is NOT the taxpayers responsibility to bail out developers who purchased property at inflated values.

What exactly did the sellers promise MD development? Why would developers purchase property at inflated value in an over built market?

Incentives should come from the previous owners and the real estate industry NOT THE TAXPAYERS.....thank you.

CountyResident 4 years, 2 months ago

If the 21 Lawrence Original restaurants average $1 million in revenue annually, how is it possible for Olive Garden to have annual revenue of $5 million? This is the amount they claimed they would have in their application for a tax rebate. This needs to be looked into, because it is the reason they say this project will benefit the city. If this revenue projection is overstated, then it will change the amount of sales tax that the city will collect.

jafs 4 years, 2 months ago

All such projections are unreliable, and shouldn't be counted on when making these kinds of decisions.

SinoHawk 4 years, 2 months ago

To supplement what jafs says, Olive Garden probably will do far more business than the 'average' Lawrence eatery. It isn't that unlikely that any one restaurant will do that much more business than any other. For a large chain like Olive Garden, the question is how much revenue do they expect for any given location. The cost structures are pretty much set in stone for any given location--it is the revenue projections that determine whether or not a location gets built. If Lawrence is only attractive after incentives (i.e. revenue is only slightly larger than projected cost after incentives), then we are encouraging sub-optimal investment. If Lawrence was already attractive (i.e. they will build either way), then incentives are merely a transfer of wealth from the city to a company.

Matthew Herbert 4 years, 2 months ago

I can't understand offering tax abatements in a community that is simultaneously telling its citizenry to prepare for higher property taxes to cover shortcomings in revenue. In a time of economic prosperity, when things are looking up, I am willing to accept these abatements. This side of the Clinton-era, we haven't see a time like that in Lawrence.

jayhawklawrence 4 years, 2 months ago

It should be a very easy decision to vote no.

...and NO, it isn't fair to our local restaurant owners.

jayhawklawrence 4 years, 2 months ago

I like Olive Garden and live not too far from the proposed sight, but I will make you this promise; if they go thru with these tax breaks no one in my family will ever choose to eat there.

jafs 4 years, 2 months ago

That's fine.

But you should be aware that it is in fact the development company, MD development, that will get the tax breaks - they will be charging OG market rent for the space.

According to other reporting on this story by the JW.

camper 4 years, 2 months ago

I am strongly against this abatement . An abatement is essentially start-up money for a business (as pointed out by a wiser man on another thread). I have some problems with this.

1) Taxpayers cannot afford this and should not have to pay for this. 2) It is unfair to local business who do not receive these abatements. 3) It is Anti-Competitive because it benefits larger companies by reducing their start-up costs which in economic terms is a barrier to entry. Large companies are better leveraged to absorb these barriers to entry. This further pushes out small business.

We need to rally support to throw this propsosal out.

camper 4 years, 2 months ago

I am strongly against this abatement . An abatement is essentially start-up money for a business (as pointed out by a wiser man on another thread). I have some problems with this.

1) Taxpayers cannot afford this and should not have to pay for this. 2) It is unfair to local business who do not receive these abatements. 3) It is Anti-Competitive because it benefits larger companies by reducing their start-up costs which in economic terms is a barrier to entry. Large companies are better leveraged to absorb these barriers to entry. This further pushes out small business.

We need to rally support to throw this propsosal out.

Richard Heckler 4 years, 2 months ago

Why give any retail business a leg up over the competitors that have stepped up to the plate without local big government welfare?

Is MD development paying property taxes or are they delinquent?

Time to do away with all Free Lunch's! Lawrence Taxpaying Voters should weed out the city hall “Free Lunch” program!

Here’s what happens. (THIS IS ALL ABOUT LOCAL DEVELOPMENT)

http://www.democracynow.org/2008/1/18/free_lunch_how_the_wealthiest_americans

http://www.uua.org/events/generalassembly/2008/commonthreads/115777.shtml

David Cay Johnston has been researching tax issues for more than 20 years as a investigative reporter...

This is how large corporations have learned to dupe local taxpayers. - " It's just one of the many swindles these chains have learned to perpetrate against city and county governments. This is so effective that the Cabela family, which owns a chain of big-box sporting goods stores, receives 137% of its profits from taxpayer subsidies. If they couldn't work this scam, they wouldn't be in business at all. ( I consider Olive Garden a small size big box operation)

Why do city governments take such a blatantly bad deal? Under stiff competition the small shops go out of business, taking the town's tax base with them. Schools, parks, recreation programs, and libraries are starved. Almost always, these city councils would be far better served putting the money in upgrades to local Main Street businesses, rather than financing the competitor that will kill them.

Johnston also noted that as a result, the nation is losing mom-and-pop businesses that are often more efficient in real terms than the big box stores, which carry tremendous overhead in management and distribution." - ( I consider Olive Garden a small size big box operation. )

Flap Doodle 4 years, 2 months ago

You are still forgetting that attribution thing when you quote the DCJ lies about Cabela's. Plagiarism is killing the planet. Doing that is DUMB and IRRESPONSIBLE !!!!!

Richard Heckler 4 years, 2 months ago

IF Olive Garden will put one or two others out of business Lawrence taxpayers cannot afford this one business. All empty retail establishments are a drag on all taxpayers. Why? Because empty buildings do not generate sales tax or employment both of which Lawrence taxpayers cannot afford to be without.

Lawrence retail is over built which dictates economic displacement NOT economic growth.

What is economic displacement? It is a situation whereby retail establishments are reaching out for the same number of retail dollars in spite of the fact that there are only so many retail dollars in any community.

Sooner or later communities overload the retail dollar market yet more and more are allowed to compete for the same amount of retail dollars which in essence results in an unstable economy = Lawrence,Kansas.

New retail establishments do not magically create more available retail dollars instead they rob long time existing business people who worked hard and put up their own money.

stuart 4 years, 2 months ago

The city needs to make MD development clean up that corner that they have been sitting on for these past four years! It is "blighted" because of their own inaction. Taxpayers should not have to "chip in" to help these out of town developers!

Sunny Parker 4 years, 2 months ago

Life is not fair. Get over it and provide a better service!

grammaddy 4 years, 2 months ago

No tax relief for national chains! It's not fair to the local folks who went into business without abatements.

camper 4 years, 2 months ago

There are many local eateries that already provide superior service. In fact, Paisanos is way better than anything the Olive Garden can put up in terms of food and atmosphere (even tho the OG is actually pretty good).

And who is to say that a new Olive garden will not wind up like the Burger King on 23 street that just got knocked down, the Borders bookstore that just closed? Why should taxpayers subsidize this risk. I'd give it a 50/50 chance that the Olive Garden would even be there when the abatement expires.

Brock Masters 4 years, 2 months ago

Nothing is wrong with competition provided the playing field is level. Let Olive Garden come and compete without the advantage of a tax rebate. Let the developer compete with other developers without the advantage of a tax rebate.

Competition is good, but the government giving one party an unfair advantage in the form of a tax rebate is bad.

Brock Masters 4 years, 2 months ago

Nothing is wrong with competition provided the playing field is level. Let Olive Garden come and compete without the advantage of a tax rebate. Let the developer compete with other developers without the advantage of a tax rebate.

Competition is good, but the government giving one party an unfair advantage in the form of a tax rebate is bad.

camper 4 years, 2 months ago

It is not competition if it is not fair. In a 100m race, everyone starts at the starting line. No one gets a head-start. This is competition.

camper 4 years, 2 months ago

Olive Garden can unfairly lower it's menu prices because they do not have to pay taxes at the same rate its competitors do.

jafs 4 years, 2 months ago

Again, it's MD development, not OG that will get the tax breaks.

OG will pay market rent for the space.

Brock Masters 4 years, 2 months ago

You are correct that OG will not directly receive the tax break, but they will benefit from it. MD development will not be able to offer a competitive lease rate to OG without the tax rebate (if you believe them). Consequently, OG will not be able to lease the site they want or have to pay a higher rate for it. So, yes, OG does benefit from the tax rebate.

But then, we've been through all this before :)

jafs 4 years, 2 months ago

Maybe.

But it's misleading to claim that OG gets the tax break and will pay lower taxes, when it is in fact the development company that gets those.

I really don't understand why the JW has done such a poor job of reporting on this, spreading the mis-perception that it is OG seeking the tax break.

camper's comment is only one of many that share this misunderstanding - he thinks that OG owns the space and will pay property taxes, when that's not the case at all.

Brock Masters 4 years, 2 months ago

It is incorrect to state that OG will get the tax break, but I think it is correct to state that they will benefit from it.

Bob Forer 4 years, 2 months ago

My eyes can handle the blight. My pocketbook can't handle the corporate welfare. Just say no.

tomatogrower 4 years, 2 months ago

Tell the developers to clean up their property or sell it, and take the loss. If not, the city should condemn it. What's with these wimpy business people who just refuse to risk their own money. How can they call themselves developers? Go get a real job.

Charles L Bloss Jr 4 years, 2 months ago

Tax incentives are unfair to all. Everyone should pay their fair share of taxes, if they don't like that let them go elsewhere. I am tired of paying higher taxes, so some people do not pay any. Thank you, Lynn

John Hamm 4 years, 2 months ago

Hell no it's not fair but this is Lawrence and you know who rules Lawrence - developers both in and out of town.

BigfootHunter 4 years, 2 months ago

Paisano’s has mediocre food and service. Improve or watch Olive Garden take a big chunk of your business. Why do you think Olive Garden see's an opportunity in Lawrence?

Genovese is probably the best Italian food in town, but downtown is becoming a bit of a hassle(Which means its busy). An Olive Garden on the south side makes some sense.

Evan Ridenour 4 years, 2 months ago

Why doesn't the city start condemning these properties? Make the developers pay for allowing their properties to become dilapidated instead of giving them tax money to turn a profit. These developers are black mailing us taxpayers, it is time to call the bluff.

jhawkinsf 4 years, 2 months ago

If you think that property should be condemned AND you are being consistent, then you must also be advocating for the condemnation of half of East Lawrence, half of North Lawrence, more than half of the student ghetto, and on and on. That property is ugly and underutilized, but it is nowhere near the point where government intervention is necessary.

Evan Ridenour 4 years, 2 months ago

You are greatly exaggerating the amount of property in East Lawrence that is as dilapidated as that intersection is. But yes, I do think the city should also be condemning those properties as well.

jhawkinsf 4 years, 2 months ago

Sure. I'm exaggerating....some. But if the city did condemn all properties in Lawrence that are in similar distress as the building at 27th. & Iowa, I can't even imagine what that would do to the local real estate market. Property values would plummet, the tax base would collapse and no person in their right mind would invest in this city for decades to come. But if that's what you want.

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