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Loveland -April 1, 2008
The City of Loveland is now discovering that retailers who want to locate in town are unlikely to do so
if they do not receive incentives already provided to their competitors or others businesses. Despite
what the RH-Line printed this morning, the City Council has not yet decided the issue (it is on the
agenda for this evening) and the retailer took the initiative to request the incentive - it was not a city
initiative.
In the case of JAX Mercantile, a company with two different stores in Ft. Collins and one in Ames,
Iowa, the case for incentives is well made given a number of factors that set this business apart from
the many cookie cutter franchises the council has been excited to subsidize in the past through other
means.
The McWhinneys receive roughly half of the sales tax collected in Centerra plus a TIF (Tax
Increment Financing) on the improved value of the property because the city declared the open farm
land where they wanted to develop as "Urban Blight" when forming a special tax district. This means
both Dick's Sporting Goods and Sportsmen's Warehouse are being subsidized (or their landlord) by
sales tax dollars.
JAX Will Fill A Real Area of Blight
The difference in this case is JAX really is planning to locate in an area of blight (the old ShopKo)
that many will argue was created by the City Council's false declaration of blight east of Loveland
that facilitated developments partly financed with future sales tax dollars.
JAX Is Not A Cookie Cutter Big Box Retailer
Another difference is that JAX is a unique experience for shoppers that retail experts contacted by
LovelandPolitics refer to as a "destination." This is because residents from out-of-state or even from
the greater Denver area do not have another store quite like JAX where they can shop. This means
people travelling through the area will come into to Loveland just to shop at JAX even if they are
heading for example from Denver to Cheyenne. Those same travellers are unlikely to stop for a big
box retailer where an identical cookie-cutter store can be found in most U.S. cities with populations
over 70,000.
JAX Is A Destination
The analysis created for the City of Loveland by the tool "Claritas" and provided to the city by JAX's
consultant confirm what most residents already know. The big box retailers brought to Loveland by
Centerra don't fill the need for animal supplies, sporting goods, recreation or especially military
surplus comparable to what the two JAX stores in Ft. Collins supply local shoppers. They call the
people who leave Loveland for such supplies as "leakage" and city staff appears to have hinged their
case for supporting the request only on the leakage issue which appears like a limited view of the
situation.
"Leakage" is easily demonstrated by the large number of residents in Loveland who drive to Ft.
Collins to shop at the JAX sporting goods and JAX farm supply stores or shop at Ag Land in Greeley.
Competitors of JAX In Town Already Receive Subsidy
The two big box sporting goods retailers that have been brought to Loveland by Centerra already
enjoy an advantage of a sales tax rebates provided when the area was added to the Loveland
Redevelopment Area through the McWhinney's Master Finance Agreement (MFA) which runs for 25
years into the future. JAX is only asking for 1% of the 3% (not half) and will only require the
incentive for approximately 3 years (not 25 years). The total incentive being sought is a mere
$300,000 which pales in comparison to the nearly 1/2 billion the McWhinney properties will be
subsidized by sales taxes over the next 25 years.
Project May Depend On Incentives
Unlike the "incentive" provided to Eslan to build a motel and events center after he already
purchased the property, JAX has yet to sign a lease or decide to open a new retail store in Loveland.
In other words, it is likely many projects already provided incentives or tax subsidies by the previous
council through a LURA (Loveland Redevelopment Agency) were already in motion and going forward
with or without the "incentive."
In this case, it isn't obvious that JAX will proceed without the incentive. Perhaps, just as an issue of
equity, JAX wants to not be the only new retailer in Loveland paying the full sales taxes to the city.
If you have any comments - please post them on our blog.
The City of Loveland is now discovering that retailers who want to locate in town are unlikely to do so
if they do not receive incentives already provided to their competitors or others businesses. Despite
what the RH-Line printed this morning, the City Council has not yet decided the issue (it is on the
agenda for this evening) and the retailer took the initiative to request the incentive - it was not a city
initiative.
In the case of JAX Mercantile, a company with two different stores in Ft. Collins and one in Ames,
Iowa, the case for incentives is well made given a number of factors that set this business apart from
the many cookie cutter franchises the council has been excited to subsidize in the past through other
means.
The McWhinneys receive roughly half of the sales tax collected in Centerra plus a TIF (Tax
Increment Financing) on the improved value of the property because the city declared the open farm
land where they wanted to develop as "Urban Blight" when forming a special tax district. This means
both Dick's Sporting Goods and Sportsmen's Warehouse are being subsidized (or their landlord) by
sales tax dollars.
JAX Will Fill A Real Area of Blight
The difference in this case is JAX really is planning to locate in an area of blight (the old ShopKo)
that many will argue was created by the City Council's false declaration of blight east of Loveland
that facilitated developments partly financed with future sales tax dollars.
JAX Is Not A Cookie Cutter Big Box Retailer
Another difference is that JAX is a unique experience for shoppers that retail experts contacted by
LovelandPolitics refer to as a "destination." This is because residents from out-of-state or even from
the greater Denver area do not have another store quite like JAX where they can shop. This means
people travelling through the area will come into to Loveland just to shop at JAX even if they are
heading for example from Denver to Cheyenne. Those same travellers are unlikely to stop for a big
box retailer where an identical cookie-cutter store can be found in most U.S. cities with populations
over 70,000.
JAX Is A Destination
The analysis created for the City of Loveland by the tool "Claritas" and provided to the city by JAX's
consultant confirm what most residents already know. The big box retailers brought to Loveland by
Centerra don't fill the need for animal supplies, sporting goods, recreation or especially military
surplus comparable to what the two JAX stores in Ft. Collins supply local shoppers. They call the
people who leave Loveland for such supplies as "leakage" and city staff appears to have hinged their
case for supporting the request only on the leakage issue which appears like a limited view of the
situation.
"Leakage" is easily demonstrated by the large number of residents in Loveland who drive to Ft.
Collins to shop at the JAX sporting goods and JAX farm supply stores or shop at Ag Land in Greeley.
Competitors of JAX In Town Already Receive Subsidy
The two big box sporting goods retailers that have been brought to Loveland by Centerra already
enjoy an advantage of a sales tax rebates provided when the area was added to the Loveland
Redevelopment Area through the McWhinney's Master Finance Agreement (MFA) which runs for 25
years into the future. JAX is only asking for 1% of the 3% (not half) and will only require the
incentive for approximately 3 years (not 25 years). The total incentive being sought is a mere
$300,000 which pales in comparison to the nearly 1/2 billion the McWhinney properties will be
subsidized by sales taxes over the next 25 years.
Project May Depend On Incentives
Unlike the "incentive" provided to Eslan to build a motel and events center after he already
purchased the property, JAX has yet to sign a lease or decide to open a new retail store in Loveland.
In other words, it is likely many projects already provided incentives or tax subsidies by the previous
council through a LURA (Loveland Redevelopment Agency) were already in motion and going forward
with or without the "incentive."
In this case, it isn't obvious that JAX will proceed without the incentive. Perhaps, just as an issue of
equity, JAX wants to not be the only new retailer in Loveland paying the full sales taxes to the city.
If you have any comments - please post them on our blog.
| JAX Asks City For 1% of The 3% Sales Tax For 36 Months This May Be The Best Case For Retail Incentives |
| Council Approves JAX Tax Incentive |
Loveland - April 2, 2008
The Loveland City Council Approved the incentive package proposed by JAX of Ft. Collins to use
$300,000 in future sales tax to renovate and occupy the old ShopKo building on Eisenhower Bvld. in
Loveland near Home Depot. JAX will retain 1% of the 3% sales taxes generated by sales at their new
Loveland store for approximately 3 years until $300,000 is generated.
The City Council voted unanimously to approve the proposed deal which the city staff endorsed.
Councilman Daryle Klassen was reluctant at first and complained about the issue of "me to" and other
business complaining about the lack of fairness in some businesses getting a return on sales tax while
others do not.
Ironically, this deal best reflects at least what the goals of the business incentive plans were meant to
accomplish; filling existing blight, bringing unique businesses that create a unique character for Loveland,
and most importantly creating an incentive to bring them to Loveland instead of subsidizing a business or
large land owner already in Loveland with plans to expand.
JAX will combine the farm supply and outdoor gear store merchandise sold at the two locations in Ft.
Collins into a single retail outlet in Loveland. The Council was told they could possibly open as early as
July in Loveland.
The Loveland City Council Approved the incentive package proposed by JAX of Ft. Collins to use
$300,000 in future sales tax to renovate and occupy the old ShopKo building on Eisenhower Bvld. in
Loveland near Home Depot. JAX will retain 1% of the 3% sales taxes generated by sales at their new
Loveland store for approximately 3 years until $300,000 is generated.
The City Council voted unanimously to approve the proposed deal which the city staff endorsed.
Councilman Daryle Klassen was reluctant at first and complained about the issue of "me to" and other
business complaining about the lack of fairness in some businesses getting a return on sales tax while
others do not.
Ironically, this deal best reflects at least what the goals of the business incentive plans were meant to
accomplish; filling existing blight, bringing unique businesses that create a unique character for Loveland,
and most importantly creating an incentive to bring them to Loveland instead of subsidizing a business or
large land owner already in Loveland with plans to expand.
JAX will combine the farm supply and outdoor gear store merchandise sold at the two locations in Ft.
Collins into a single retail outlet in Loveland. The Council was told they could possibly open as early as
July in Loveland.