But without Government, Who Would Build the Outlet Malls?

tulsa hillsTulsa is wild about its outlet shopping potential.  In the past few months not one, not two, but count ‘em THREE(!) separate proposals have surfaced to slake the bargain-hunting thirst of Tulsans, and by extension, the people of  Northeastern Oklahoma, Southern Kansas, Southwest Missouri, and Western Arkansas.  The first of these caused a mini-controversy when Simon Properties (proud owners of a vast concrete expanse located in the northeast corner of 71st & Memorial Dr.) announced its intention to build an “upscale” outlet mall at West 61st and U.S. 75, abutting the Turkey Mountain Wilderness area.  The plan would replace trees with shoppers and open wallets.  It would also give west siders the joy of sitting in traffic for indeterminate periods of time on a two-lane overpass at a major city expressway.  Spread the love!  Soon thereafter, another plan was announced that would put 90 stores at 129th E. Ave. and Interstate 44, giving east siders options other than scary motels and a truck stop for their weekend diversions.  Finally, the Cherokee Nation Business made an announcement to add to its entertainment empire at the Hard Rock Casino more “premium” outlet shopping and other diversionary entertainment activities for the people of Catoosa…they’ll do it themselves; they are an independent nation.

Regardless of one’s view of outlet shopping and getting a good bargain in general, it should be noted that the local government is involving itself in two of the three above developments.  A recent Tulsa World story quotes city officials as deliberating “whether it is prudent to provide financial incentives to the developers and, if so, what kind…”  What kind of incentives is the City contemplating? Tax Increment Finance (“TIF”) Districts, sales tax reimbursements, etc. for construction of public infrastructure…eh, what?

In a 2006 article for Reason, Daniel McGraw covering TIFs writes, “Although politicians portray TIFs as a great way to boost the local economy, there are hidden costs they don’t want taxpayers to know about. Cities generally assume they are not really giving anything up because the forgone tax revenue would not have been available in the absence of the development generated by the TIF. That assumption is often wrong.” McGraw goes on to explain how expanded use of an area and the subsequent need for better infrastructure (remember that two-lane overpass at 61st Street?) unfairly shifts the tax burden other taxpayers…the people who aren’t building outlet malls—or perhaps, not even shopping at them.

The TIF, however, is only one of a plethora of incentives the local government has in place to “spur economic development”.  If you’re wondering what the City’s Policy is regarding Retail, then you can find it here.  You’ll see a lot of goodies for stores that generate $20 million in revenue by year three of their existence and which are over 100,000 square feet.  You know, the mom and pop shops.  Effectively what this sort of thinking does is open the door to national chains who can sweep into Tulsa and bury a meaty fist into the City’s candy bucket at the expense of those who live and work here and who might…want…to…start…their…own…business…

Nevertheless, “In the last year, the city agreed to use its retail incentive policy to reimburse Costco up to $2 million for the public infrastructure it is building at its store at 103rd Street and Memorial Drive. The Walk at Tulsa Hills, which is expected to have a movie theater, a grocery store, restaurants and retail stores just south of 81st Street and east of U.S. 75, will receive up to $1.2 million in infrastructure reimbursements.”  That’s $3.2 million—total—of the money we have taken from us at each transaction we conduct for goods or services.  Again, if the demand is there and the retailer will make money, wouldn’t it be logical to conclude that the retailer would gladly pick up the tab for making it easier to access its establishment?  If the demand isn’t sufficient for a national or regional retailer, then what about those mom and pop places?  They’re smaller, they won’t require the kind of footprint or infrastructure demands as a big box place, e.g. no real impact on the existing infrastructure.

It all begs the question: Why is the City giving money to retail developers to build new shopping centers in a city full of empty ones?  Here’s another point to consider: If an area is conducive to development (i.e. demand outstrips supply), then retailers will come and they will build because the retailers want to make money, that’s how capitalism is supposed to work.  An even better outcome is that someone within the population who sees an opportunity can set himself or herself to the task of meeting that need by starting a business and if they are successful, perhaps they become the “out of town” retailer in another city.  No government-sponsored “economic development” needed…there, we just trimmed about $8 million from the City budget…that was easy…

So, why does the City care about outlet malls?  Is it a benevolent desire to connect willing bargain hunters with willing merchants?  Is it foresight, knowing that a large development will strain an infrastructure not suited to the influx of new people and vehicles?   Well, no, it’s the money.  From the Tulsa World: “It is really important that we get it (the outlet mall) in Tulsa first, because it is $4 million in sales tax on an annual basis that goes into the city’s general fund.”  That’s right.  They want our money.  They want to lie in wait to skim that 3.1% (out of 8.517% total) off of every dollar we spend on that new jacket, television, loaf of bread, or giant foam finger…all so they can take a little bit more of our money.

So, to recap, the City is willing to give money breaks to outside retail corporations, make the rest of us non-retail magnates pony up for infrastructure costs and the like, so that all of us will find great deals on things we didn’t know we needed so the City, County, and State can skim their share to add the general fund to fix the roads—sorry, no, not the roads—to fund more of that “economic development” so Tulsa can get more revenue to…(see above).  It all reeks of dependency.

What does it say about this local government—or any government, for that matter—when the focus is on “generating revenue”?  But that’s the focus of our local government: discovering new ways to take your money rather than maintaining infrastructure or keeping the peace.