National report criticizes Bass Pro subsidies
Monday, July 12, 2010 7:40 AM
A report critical of practices employed by Springfield-based Bass Pro Shops comes just as the outdoor retail giant signed perhaps its most significant lease agreement with the city of Memphis for its iconic Pyramid.
The report criticizes Bass Pro for winning $567.5 million in taxpayer subsidies for completed stores – an average of $29 million per project – and failing to deliver on its promises to develop stores as tourist destination and economic anchor for the cities in which it wins government favor.
The study, Fishing for Taxpayer Cash, by Buffalo, N.Y.-based Public Accountability Initiative, was prompted by a $294.8 million proposal to build a Bass Pro in Buffalo; it also pointed to other cities’ developments that centered around a Bass Pro store being built but failing to live up to expectations. It was written by Andrew Stecker, PAI analyst, and Kevin Connor, co-director.
“We’re a watchdog organization … focused on corporate and government accountability,” Connor said. “We saw a real need for accountability and research around Bass Pro given the amount of taxpayer money involved in a project.”
Bass Pro officials would not agree to an interview but issued a two-page statement regarding the report.
“This ‘report’ is plagued with factual errors and filled with gross distortions,” the statement said. “The authors portrayed that tax abatements and other economic incentives often provided for entire retail developments and supporting public infrastructure as though they were direct subsidies to Bass Pro Shops. What they reported or implied is a gross misrepresentation of the facts.”
Privately held Bass Pro claims to have used its taxpayer subsidies to develop more than 35 million square feet of retail and associated properties, resulting in more than $8 billion of new capital investment.
“Assuming the author’s figure of $500 million is correct, the public support would represent approximately 6 percent of total dollars invested in these projects,” Bass Pro officials said in the statement.
Connor, a 2005 Harvard University graduate with a bachelor’s degree in history and literature, conceded that Bass Pro isn’t the only retail company that seeks taxpayer funds to build its stores.
“Bass Pro certainly has established themselves as a leader in getting taxpayer subsidies to build its stores, but it’s certainly not the only retail company doing this,” he said in an interview last week.
Bass Pro Shops is ranked No. 123 on Forbes’ 2009 list of America’s largest private companies with $3.4 billion in revenue and 16,000 workers in 2008. The retailer ranked No. 158 on the 2008 version of the list.
“Time and again in cities across this country, Bass Pro and its owners have pushed forward claims about how the store has performed – how it drives economic development, sales-tax revenues, that sort of thing,” Connor said. “I have yet to see data and evidence that really proves this point. Why hasn’t Bass Pro put forward data of how its stores have performed in terms of meeting sales-tax projections, meeting jobs projections, audited data, verifiable data? I haven’t seen anything of the sort.”
The report is based on media reports, citing 83 footnotes, from other cities in which Bass Pro stores have failed to live up to expectations, Connor said.
• A Kimco Corp. mall in Mesa, Ariz., is described as a “ghost town” and spurred the state to pass a ban on retail subsidies. Mesa offered $84 million in subsidies, the report said, heeding promises that magnets Bass Pro and Walmart would attract other retail stores. Stores that opened in the mall relocated from other locations in the city.
• A Harrisburg, Pa., taxpayer-subsidized store is “struggling to attract tenants to the mall it anchors.” The report said Bass Pro expected to hire 300 to 400 workers, but three years after opening had hired only 101, a figure Bass Pro disputes. According to Connor, the figure came from an Associated Press story in 2007. When contacted for this story, Harrisburg Mall management referred questions to Bass Pro.
Bass Pro officials disputed the findings from the Mesa store, accusing the authors of “picking and choosing information to meet their agenda.” Their statement said the center is 94 percent leased with more than 60 tenants and four new tenants under lease.
“The year before the suburban Phoenix center opened, the property contributed just $86,000 in tax revenue to the city,” Bass Pro officials said. “In less than four years of operation, Mesa Riverview has generated nearly $10 million in sales tax revenue for the city of Mesa. Through the first five months of the current fiscal year, sales tax tallies were nearly $2.9 million, putting the 250-acre retail/entertainment venue on track to far exceed the $4 million in sales tax generated in 2008–09.”
Although he could not verify the sales tax figures, Mesa Economic Development Director Bill Jabjiniak gave a mixed review of Bass Pro.
“They are a tremendous community asset,” said Jabjiniak. “They are a destination location. I believe they played a very instrumental role in helping us locate a Toby Keith I Love This Bar and Grill, which is a 1,000-seat restaurant. They tend to like to be near a Bass Pro Shop. The two of them together created quite a bit of synergy.”
But Jabjiniak didn’t disagree with the report’s assessment of Mesa Riverview as a ghost town.
Before the Toby Keith restaurant opened, followed by the announcement of two other eateries and a theater, the entertainment portion of Mesa Riverview – which Bass Pro anchors – has struggled, he said.
“I attribute a lot of that to the economy,” Jabjiniak added. “I would say yes, it can be described as a ghost town without those.”
Power play for Pyramid?
Bass Pro announced July 1 its newest city – Memphis, Tenn. – following five years of negotiation.
Bass Pro has entered into a 55-year-lease with the city and will construct the new location inside the city-owned Pyramid, one of Memphis’ most recognizable works of architecture.
Lease terms posted by the Memphis Commercial Appeal at www.commercialappeal.com, say Bass Pro will pay $880,000 in rent for the first year. After that, the company’s annual payment will be either $1 million or two percent of gross sales plus one percent of sales of boats and recreational, off-road and all-terrain vehicles, whichever is greater.
Bass Pro will require Memphis to pay $30 million toward construction.
The Commercial Appeal also has reported that Memphis plans to use $70 million in federal recovery funds to develop the Pyramid.
Memphis Mayor A.C. Wharton and Shelby County Mayor Joe Ford appointed a 16-member Pyramid Adaptive Reuse Committtee to determine the most productive use for the building. Bass Pro officials said the committee hired RKG Associates, a Dover, N.H.-based consulting firm specializing in real estate, land use and economic development, and RKG identified Bass Pro Shops as the top choice.
The backyard in Buffalo
Connor said the Public Accountability Initiative compiled its report because of a project in its own backyard.
Erie Canal Harbor Development Corp. manages Canal Side, a $295 million, 20-acre waterfront development in Buffalo, to be anchored by Bass Pro. A lease is expected to be signed by August, and the store is slated to open by Memorial Day 2012.
According to the proposed 50-year lease, Bass Pro is exempt from real estate taxes and will pay $1 per year plus a common area maintenance charge of $600,000 per year, the ECHDC Web site states.
According to www.eriecanalharbor.com, Bass Pro’s core, shell and fixtures will cost $35 million, covered by ECHDC. Equipment and furnishings are not included in that figure. Other anticipated funding sources include the New York Power Authority, Federal Transit Administration, the Federal Highway Administration, the state of New York and private developers.
Retailers as tourist draws
Bass Pro, Connor said, is simply too inconsistent with its stores to measure successes.
“It always seems to be mixed,” he said. “We certainly saw stores that performed well. Certainly, the Springfield store seems to do well and brings in a lot of business, but the essential finding of the report is that Bass Pro simply doesn’t generate the economic development and sales tax revenue that it promises consistently.”
Connor cited stores in Pearl, Miss., and Hampton, Va., as two of the most successful among those subsidized. Those stores ranked near the bottom in taxpayer subsidies, the report said, with $8.2 million for the Pearl store and $10.8 million for the Hampton site.
Kathy Deer, executive director of the Pearl Chamber of Commerce, couldn’t be happier with her city’s Bass Pro.
“Any provisions that were made for Bass Pro are minimal compared to what Bass Pro has done for our area and our city,” Deer said. “There’s no regrets there. Bass Pro draws more people to our city than anything we’ve ever had and probably ever will have.”
Deer had no statistical evidence to back her claim; she offered a less-scientific method.
“You can go through that parking lot today – any day of the week – and look at license tags on each car,” said Deer. “It’s going to be from every county of the state, it’s going to be from other states. It’s just a huge draw from this area.”
But Connor said even in Bass Pro’s corporate home, inconsistencies remain.
“Even in Springfield, where there’s this very successful store, there’s this museum next door that has done very poorly – the Wonders of Wildlife,” he said.
According to Bass Pro’s statement, its 56 stores had 109 million visitors in 2009, or more than Major League Baseball, National Football League and the National Hockey League combined. However, data at www.mlb.com, www.nhl.com and www.nfl.com, reported that total combined attendance was 112 million, with 73.4 million visitors in 2009 for MLB, 21.5 million for NHL and 17.5 million for NFL.
Bass Pro officials also said customer traffic was up in all stores during 48 of 52 weeks in 2009.
Connor said as a whole, the retail sector shouldn’t be counted on to fuel tourism. And Bass Pro said that its stores, as with all retailers, operate with varying degrees of success.
In the statement, the company said, “it has never closed a store and is proud of its reputation of being a positive contributor to the economy of Springfield and the other cities in which (its) stores are located.”