By MICHELE HOLTKAMP-FRYE, Daily Journal of Johnson County staff writer
A Greenwood City Council member is urging his fellow elected officials to consider the precedent the community is setting and study what outdoor retailer Cabela's will bring to the city before approving an $18 million incentive.
Bruce Armstrong has six concerns about the proposal to grant the Nebraska-based retailer an $18 million bond and allow the company to pay back its debt with its own property taxes, as well as property taxes generated by the spinoff stores and restaurants.
Cabela's announced last week it planned to build a 125,000-foot-store at the southeast corner of Interstate 65 and County Line Road. As part of the deal, an indoor water park and resort also will be built on the 104-acre property.
Here's how the incentive works: The city will sell an $18 million bond. Cabela's Inc. will purchase the bond, and the money generated will go into a trust fund. The retail store will use the money to install utilities, build roads and begin construction of the store.
The debt will be repaid using money that Cabela's and other businesses on the site pay in their property taxes, instead of that money going to fund city or county services, the Clark-Pleasant school district or the library.
Armstrong and a consultant who is representing Gander Mountain are questioning why Greenwood is giving a retailer an incentive.
The incentive gives Cabela's an unfair advantage and an $18 million head start over other outdoor retailers, said David Ewald, president of Ewald Consulting. He represents the company that develops Gander Mountain properties and has worked in about 20 states to stop public subsidies from being given to outdoor retailers.
A 63,000-square-foot Gander Mountain is located across Interstate 65 from the proposed Cabela's property.
Cabela's plan to build more stores will mean that they are no longer destinations, Armstrong said.
"It's not the same destination marketer that it used to be," he said.
The city council gave a preliminary 6-1 approval of the financial package at a public meeting Monday night. Armstrong voted against the incentive and said he cannot approve an incentive for a retail business, even though he would love to see the store locate here.
"There are a lot of issues out there that need to be considered," Armstrong said.
He asked city council members to consider that:
The city council has not granted tax incentives for retailers. While longtime council member John Gibson pointed out that the city did give an incentive for a furniture retailer many years ago, tax incentives should be used to attract or grow businesses that pay high enough wages to support a family on one income, Armstrong said.
"So we're starting down that path," Armstrong said of giving incentives to a retailer.
Cabela's Greenwood store would be 125,000 square feet, which is about half the size of the store in Dundee, Mich. Mayor Charles Henderson has visited that store and talked about how it is a tourist attraction and has spurred development in the area. But Greenwood isn't getting the same size of store that Dundee has, Armstrong said.
The loan agreement sets the interest rate at 7.5 percent. But Armstrong has found where the company recently sold bonds at an interest rate of 6.08 percent. The city could get a lower interest rate too, but at the 7.5 percent, Cabela's is able to make money, which is Greenwood property tax dollars, off of the higher interest rate, Armstrong said.
Cabela's is a publicly traded company that is building more stores closer together. Other companies that have been somewhat destinations are Hooter's, Krispy Kreme and Hard Rock Cafe. Now, those businesses are located in nearly every community.
"This is not going to be the destination locale that Dundee is," Armstrong said.
Splash Universe, the 30,000-square foot indoor water park, is only 60 percent of the size of the Caribbean Cove indoor water park at the Holiday Inn on Indianapolis' north side. That water park is 50,000 square feet.
Greenwood residents might not be able to get into the indoor water park when they want, since the availability of local passes depends on whether the hotel has vacant rooms. He fears that residents' access to the indoor water park will be limited in the summer and on the weekends.
"Every component of the entire agreement is tilted towards Cabela's," Armstrong said.
The city had requested that the agreement include a requirement that Cabela's not build any stores within 100 miles of Greenwood. Cabela's would agree to only a 50-mile radius unless the city took on some liability for the debt.
Ewald said that Cabela's builds stores where the customers are located and can build a store in Greenwood without the help. He wants city council members to scrutinize to the claims Cabela's is making about the number of visitors per year.
The 100-acre farmland, when fully developed into a Cabela's store, a water park and additional stores and restaurants, will be valued on the property tax rolls at an estimated $102 million.
The mayor said that total worth, known as assessed value, is a staggering number and is higher than the value of the Greenwood Park Mall.
The incentive is justified, Henderson said.
"I haven't seen anyone else bring to the table $102 million assessed value," he said.
Once the debt is paid off, in about 20 years, the development will lower the property taxes for Clark-Pleasant schools, the library and the county, he said.
The city council will take a final vote July 16.
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