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June 22, 2015

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Roger Musick

Steve, the research paper you quoted states in the abstract:
“ This study applies a quasi-experimental method for performing economic impact analysis of a firm‟s entrance on regional labor markets. … this paper evaluates the impact of new firm entrance on employment, unemployment rates and labor forces in 7 control and 7 treatment counties. …. The findings suggest that the entrance of a large-scale specialty retail store has no persistent impact on employment in the effected or surrounding counties. These findings suggest labor market constraints.”

The entire paper talks about the fact that Big Box retailers do not increase the labor market but does say:
“Notably, the quality of employment opportunities at Cabela’s appears to be an improvement over workers previous employment alternatives.”

The other paper makes the argument that the Cabela’s is just another retail store for local residents. It makes the statement:

"It’s almost like they are out to take advantage of the rubes,” says Michael Hicks, an economist at Ball State University in Muncie, Indiana. "Often these small town city councils aren’t the most sophisticated in analyzing an economic development proposal."

Convincing politicians that the store will be a tourist mecca is a critical part of Cabela's' and Bass Pro's spiel, says Stacy Mitchell, author of Big Box Swindle.

"When they go to these city councils they want to convince them that people will travel hundreds of miles just to shop at that store. They want them to believe it's not just a store, it's a tourist attraction," says Mitchell. "But just look at a map – these stores are everywhere. Why would you travel to one of these stores, if there is one in your hometown?" (Maps of Cabela's and Bass Pro Shops can be seen here and here).

I can’t believe you really believe this argument. The argument maybe true for some Big Box stores and possibly some Cabela’s as I can only speak to the Mitchell store. It is a total false statement for Mitchell. First, have you or Michael Hicks ever driven through the Mitchell Cabela’s parking lot and looked at license plates. When I did there were eight times more out of state plates then Mitchell plates.


The other argument that Cabela’s improved the jobs in Mitchell but did not create new jobs is also hard to believe. It maybe true in the other cities but I don’t believe it is in Mitchell. With all the out of state customers Cabela’s their must be more workers to take care of them.

While the labor impact is good it is very minor compared to the sales tax increase from Cabela’s sales to non Mitchell residents. The papers totally forget the biggest impact. The total sales per Mitchell resident is much higher then all of the other larger cities in South Dakota and continues to climb. Cabela’s is a major part of this higher Mitchell sales tax revenue.

You should write Michael Hicks the author of the document you referenced and inform him the “small town city council” in Mitchell he calls “unsophisticated” made one of the best decisions ever when it worked with Cabela’s to create a store in Mitchell. I would bet that the incentive for Cabel’s has been returned many times just though Cabel’s sales tax. I find it hard to believe that anyone in Mitchell would think that Cabela’s has not been great for Mitchell. Mitchell has a huge increase in sales and property taxes and he is still working for Ball State University. No one ever said a degree created Intelligence.

Roger Musick

Steve, you use the term “Crony Capitalism” related to incentives for businesses. Wikipedia states “Crony capitalism is believed to arise when business cronyism and related self-serving behavior by businesses or business people spills over into politics and government, or when self-serving friendships and family ties between businessmen and the government influence the economy and society to the extent that it corrupts public-serving economic and political ideals.”

I can understand being against government incentives but that doesn’t mean those that are for business incentives are self serving or Crony Capitalists.

Steve Sibson

Roger, you are ignoring the negative impact the I-90 corridor development has had on main street, the Super City Mall, Kmart, etc. The government, via its informal partnership created by the Chamber board, has picked winners and loser. That is the result of crony capitalism.

The net impact of the governmental subsidies on overall economic activity is at best zero. Hicks pointed to more research than his own. Cabela's own CFO also made the argument that the local community was the "primary" component of the customer base.

And when you noticed the out of state license plates at Cabela's parking lot, how many were there because of Mount Rushmore? And who benefited the most from those customers? The owners of Cabela's.

I hope you at least may begin to understand that I do make a serious attempt to fact check.

Anonymous

EXCELLENT job, Steve!

Its amusing to watch Roger backpeddle and hem & haw.

"“Notably, the quality of employment opportunities at Cabela’s appears to be an improvement over workers previous employment alternatives.”

So, the gov't is essentially picking business winners & losers!

Anonymous

" I would bet that the incentive for Cabel’s has been returned many times just though Cabel’s sales tax."

And I bet that downtown Mitchell LOST sales tax revenues as did other small town businesses AROUND Mitchell when their customers flock to Mitchell to the big boxes.

WHAT DON'T YOU GET?

Roger Musick

Steve, I was wrong again, there are two people that think Cabela’s was not great for Mitchell, you and someone ashamed to use their name or maybe they just don’t want to look foolish.

The comment from Anonymous makes no since. The quote that the jobs at Cabela’s was a better job for the employees was from the Ball State paper. Does anonymous not think it is good to improve the jobs in Mitchell? The government does sometimes provide small incentives to business that will improve the Mitchell economy. Very seldom does government provide incentives for retail. Cabela’s was an exception because of the high % of out of town sales.

You ignore the facts that Mitchell provided a small incentive for Cabela’s because of the great % out of the area money it would bring to Mitchell and additional sales tax which has proven to be 100% correct. Anyone can misuse quotes, take quotes out of context or that don’t apply to Mitchell. Please go count the license plates your self instead of relying on a Ball State person for your facts. Then tell me again that you think the shoppers at Cabela’s are primarily Mitchell residents.

Who cares if the out of state people are going to Mt Rushmore when they stop and spend money at Cabela’s the City receives sales tax. Sure the stock holders of Cabela’s also benefit. Cabela’s maybe a big investment of the Tosibia retirement plan, who knows or cares, we promoted Cabela’s locating in Mitchell to draw more out of town people to spend money in Mitchell for the sales tax primarily. No other or hidden motive. It has worked wonderfully. .

The other retail that have located around Cabela’s is 100% the type of free enterprise I think we both support. Zero incentive from the City or MADC. Should the City stopped this free enterprise and favored another retail store or location? You are living in the past if you think we could have stopped big box retail.

Your fact checking is like someone who watches FOX or MSNBC all the time and thinks they understand both sides of an issue.

Roger Musick

Steve, I can understand being against government incentives but that doesn’t mean those that are for business incentives are self serving or Crony Capitalists. You never explained what you think is self serving or family ties in the Cabela's or other decisions in Mitchell. Hopefully you can find a more correct and less abrasive term.

Roger Musick


Steve, we both like to base our thoughts on actual facts. With this in mind please think about the following information comparing the Mitchell City sales tax and Huron City Sales tax from when Cabela’s opened in 2000 through 2005::

Year Mitchell Huron
2000 $5,816,043 $3,505,358
2005 $8,633,747 $3,887,027
Increase $2,817,704 $381,669
Change % 48% 11%

As you can see for the 5 years after Cabela’s opened Mitchell generated a huge amount of additional sales tax and grew about 4.5 times faster then Huron.

If Cabela’s just transferred sales from other Mitchell retail stores we would have seen only minor sales increase, after all, as the studies you referenced explained just because you build a Cabela’s store the local residents have no more money to spend.

Mitchell City sale tax grew about $2.4 million more then Huron.

If this is not enough to connivence you that Cabela’s sell a high % to out of town customers go look at the license plates.

SD Concerned Citizen


Mr. Sibson,

As much as I dislike Big Box stores with a preference of supporting locally owned Main Street businesses and can appreciate the concerns you raised it looks like the incentives given to Cabelas was a positive for Mitchell.

Mitchell seemed to be hurting and in decline during the 80's. Mitchell's once great Main Street was suffering with long standing anchor stores going out of business. I've never been a fan of malls and preferred the uniqueness of Main Streets where employees could and shoppers could see outside than be stuck in some sterile mall.

Cabelas locating in Mitchell helped provide the spark for growth in Mitchell again the steady momentum has been building since. I can tell you that I've known numerous people from North East South Dakota who drove all the way down to Mitchell to shop at Cabelas and even Menards since that store was bigger and had more to offer than the stores up north before Aberdeen was able to get theirs. Even the super Walmart is bigger than others here in the state. Mitchell's location on the Interstate helps.

I'd rather see towns like Mitchell get these opportunities than Sioux Falls.

Steve Sibson

Roger, the Ball State research was in regard to Cabala's impact on employment, not sales tax revenue. And how much of that sales tax impact was Walmart?

I have a April 13, 2002 and July 13, 2002 Daily Republic front-page reports announcing two stores moving out of the mall and relocating to the Walmart/Cabela's area. There was around 200,000 square feet of vacancies in downtown and north-side of Mitchell after Econofoods closed.

Anecdotal evidence regarding license plates should not trump sound statistical analysis. Governmental economic development is largely about picking winners and losers and transferring monies from one place to an another, or in other words, from one person's pocket to another.

Roger Musick


Steve, your right the Ball State study was about Cabala’s impact on employment. You totally missed my point that employment had very little to do with why Cabala’s was provided a incentive to open a store in Mitchell. The incentive was all about increasing the sales tax revenue for Mitchell. The Ball State study may have been perfect it just studied the wrong impact. If I remember correctly Cabela’s opened before Walmart by a couple years. In 2000 Mitchell sales tax increased about 13% and in 2001 another 14%.

You previously indicated that the big box stores just moved sales from down town to South of the Interstate. If this is true the City sales tax would not of changed with Walmart. Not that I believe that Walmart does’t increase sales tax significantly. But you can’t talk out of both sides of your mouth.

I don’t believe without the Cabela’s the other development on the South of the Interstate would not have happened. That is how government incentives should work; a little incentive to get the ball rolling for the Cities benefit which is exactly what happened South of the Interstate.

I don't know what you would do to stop businesses from relocating from down town to South of the Interstate. Should government subsidize the businesses that stay down town? I thought you were a no government incentive in any case type guy. No one is giving any incentives to anyone to move South of the Interstate but a small one to Cabela’s to open a store in Mitchell.

Your argument that the Ball State study which states in it’s abstract “ This study applies a quasi-experimental method for performing economic impact analysis of a firm‟s entrance on regional labor markets” is some how more accurate then the facts as proven by the sales tax and actual seeing where the customers are from by looking at the license plates is comical. This would be like you saying the theoretical profits for a toner manufacture as published by a college professor can determine the profits of the Mitchell Toshiba plant more accurately then the P&L. You know better.

Your concept “economic development is largely about picking winners and losers” is way off base. Mitchell made a decision to provide a small incentive to Cabela’s to increase the Mitchell sales tax. If Bass Pros would have considered building in Mitchell at that time we probably would have provided an incentive to them.

Your stated concept that economic development is about " transferring monies from one place to an another” is something I can agree with. The goal of Mitchell economic development is to move money to Mitchell from other places. I think this is good for Mitchell but probably no impact on the US as a whole.

You have not commented on my past post:
Steve, I can understand being against government incentives but that doesn’t mean those that are for business incentives are self serving or Crony Capitalists. You never explained what you think is self serving or family ties in the Cabela's or other decisions in Mitchell. Hopefully you can find a more correct and less abrasive term then Crony Capitalist.

Steve Sibson

Roger, I have explained Mitchell's crony capitalism in letters to the Mitchell paper. You people call it collaboration among business, government, and education. That is how Amy Novak can help provide Puetz Corporation with buildings to build.

Roger Musick

Steve, again you are viewing a small amount of information from the outside and jumping to the wrong conclusion. Writing letters about things you don't understand is not good.

DWU was using Puetz construction for building projects long before Amy Novak even lived in Mitchell. The first major projects in recent times at DWU were the Sherman Center, McGovern Library and new dormitories which were all built when I was board president of DWU and head of the building committee. I am again on the DWU board and very proud of the great facilities the DWU board and DWU donors have built at DWU for the DWU students and Mitchells benefit.

Steve Sibson

Roger, you will also be proud of the fine arts center that the taxpayers are paying Puetz to build for DWU. No high school even comes close to needed such an extravagant building. And the state government made sure the taxpayers could not refer that $15 million over budget project to a vote. And you chastise me for pointing out that we no longer have representative government.

And I am still waiting for the data on how much of that sales tax increase came from Walmart and how much came from Cabela's. And don't forget that it was Cabela's CFO that said the local community is Cabela'a primary customer base. Wouldn't he be the one to have the data to make such a statement? Not the "general public". That brings another problem with public/private partnerships...their is little transparency. And when us taxpayers use what little information that is available, our conclusions are marginalized as conspiracy theories. On this post I used a professor's work, but that still is not good enough.

Roger Musick

Steve, I’m sure you meant the fine arts center being built by the Mitchell school system. Yes I am proud that our school system has good financial planning and is able to build the fine arts center now and phase 2 of a new high school when it is required without a tax increase. Very few school systems have the long term planning and discipline to build their major projects without a tax increase.

Isn’t it great that Puetz was the low bidder on this project and the dollars will stay in the Mitchell community.

Mitchell electorate had three opportunities to vote against the fine arts center. Tara ran against the fine arts center in two elections and you did in one election.

I’m very proud that our Mitchell HS students will be able to perform in one of best facilities in South Dakota and we can show case Mitchell to other HS students from all over the area. I want those students from other communities going home talking about how they wished they lived in Mitchell. We have a great community and the fine arts center will give us a facility we can be very proud of.

Your continued augments against Cabela’s based on out of context quotes (his quote was not about the Mitchell store) and projections about the impact on Mitchell’s payroll when the real facts are available is why some people should not be in politics. Politicians need to understand others views and be willing to change there mind when presented with much better information. Just go look at the license plates and watch Cabela’s cash registers for a few hours and then tell me if you think they are generating sales and if the sales are all to Mitchell residents. Your opinion on Cabela’s is far more radical then your view against government incentives. Cabela’s being very good for Mitchell is a proven fact while if government incentives are good is an opinion.

The market cap of Cabela's is $3.62 BILLION and sales were $3.75 BILLION. These sales were obviously not all in Mitchell but it is clear that Cabela’s is creating a very significant sales tax and has been very important to the growth of Mitchell.

I don’t agree with your concept that “their is little transparency.” The decisions for the incentives are all made during public meetings and widely reported.

When you say “when us taxpayers use what little information that is available, our conclusions are marginalized as conspiracy theories.” The problem is you pick quotes and internet papers that support your theory and pretend that they are all true and that they include 100% of the truth. Then you accuse people of evil things based on your incorrect information. You create the conspiracy theory.

When I informed you that sales tax was the main reason Mitchell provide an incentive to Cabela’s you have chosen not to believe me because it doesn’t fit your cause. I was in the room when the issue was discussed and the Mitchell sales tax revenue increase over the years strongly supports this concept.

The concept you stated that “I used a professor's work, but that still is not good enough.” Is a joke. This was a nice paper but it just studied the wrong thing. I told you that the Mitchell payroll change had very little to do with Mitchell’s decision to provide an incentive to Cabela’s, it was all about sales tax. With the internet today it is possible to find information for any argument. A good researcher wants to understand all sides of an issue then decide. There are 1,000s of papers on the internet arguing that global warming is not happening.

Steve Sibson

"I’m sure you meant the fine arts center being built by the Mitchell school system"

That was to get the taxpayers to fund DWU's new fine arts center.

Roger Musick

Steve, I still don’t understand what the new Mitchell School Systems Fine Arts center has to do with DWU. I’m on the board of DWU and this building project by the school system has never even been discussed at DWU. To my knowledge today DWU never even uses the existing HS auditorium. I think DWU students do sometimes work with the group that does plays at the Pepsi center but not sure what this has to do with the Fine Arts Center being built at the HS. In the future if the new Fine Arts Center can be used sometimes by the Mitchell residents attending DWU I think that would be good but it has zero to do with the reason the building is being built.

tara volesky

Get real Roger. The MDR, chamber, DWU and school board is building this facility for these special interest entities. The majority of the people of Mitchell have no clue that this facility is being built. Who is going to pay the $3 million dollar naming rights? Hey, will the taxpayer build us golfers an indoor driving range. It will bring all kinds of people to town. lol. By the way, what happened to the new sheet of ice?

tara volesky

The school board doesn't care about upgrading the HS or expanding Gertie Belle that has been overflowing for years. Take the FAC to a vote, and it will go down 75%. By the way, Show Choir is a club activity like hockey and swimming. Should the school build a new pool too? The HS and auditorium could have had a total remodel for much less then what they are spending for the non-sanctioned elites.

Roger Musick

Tara, you ran against FAC in the last two elections and the voters have spoken. The special interest group composed of HS students won. I am amazed how everything you and Steve oppose is for a special interest group and a some how a conspiracy. The second sheet of ice was built and the kids had a great time using it this year.

Craig

Obviously Mr. Musick has a lot of patience, but it is hard to disagree with his premise here.

Let's look at the facts. Prior to Cabela's coming to Mitchell practically nothing existed South of I-90. You had some industrial businesses such as Trail-Eze and Trail King and a handful of others, but development out there was practically non-existent and had been stagnant for years.

Along comes Cabela's, and a decade later you had hotels, retail stores, restaurants, a new MTI campus, residential housing units for MTI and on and on. That is an amazing amount of growth which you cannot deny.

Did some of that growth come at the expense of other retail stores in Mitchell? Sure it did. I'm sure ShopKo and KMart lost sales to Walmart as they always do when Walmart comes to a town. Leader Hardware obviously lost a ton of sales to Cabela's. Burger King lost customers to Culver's, and so on.

However a rising tide lifts all boats. Think about how many hundreds of jobs have been created South of I-90. Everyone who has one of those jobs needs a place to sleep, they need food, they need clothing, they want entertainment options... they all spend money. This results in more revenue within the city and more opportunities for residents.

Without those job opportunities you would see a lot of DWU and MIT grads leaving Mitchell before the ink on their degree was dry - but now some of them (even if just a small portion) have an opportunity to stay in Mitchell. Isn't that a good thing?

Sure one could argue that Cabela's may have come to Mitchell even without tax incentives, but I seriously doubt that would have occurred. I suspect if it came down to it they may have opted to build in Sioux Falls instead - but they opted for Mitchell because there was no direct competition in town, they got the tax incentives to build, and they know Mitchell is known for being a prime destination for sportsman. So it works for them - but would Mitchell be better off without Cabela's? I really don't think so.

Cabela's has been a catalyst. Without them coming to town and acting as that spark, you might not have had Walmart come. Menards may not have expanded. The dozens of small businesses which have opened in the past 15 years may not exist. Is that 'better' for Mitchell?

If nothing else simply look at the population of Mitchell. If you examine population data from the year before Cabela's opened to ten years later the city gained 1,000 residents. That is around 7% population growth. Now let's look at Huron - in that same period they had 5% growth. Aberdeen and Watertown both around 6%. Chamberlain (since it was mentioned) had a merely 2% growth. So what drove that growth in Mitchell vs. other cities? Where did those extra 1,000 residents find jobs and how many of them would have come to Mitchell without Cabela's being part of the picture?

Obviously there will always be the debate about whether these stores merely shift business away from the mom and pop shops in town, and we know that does happen to some degree, but they also provide opportunities for new residents, they offer incentive to retain residents, and in some cases they pull revenue from outside the area.

How many sales tax dollars does Mitchell collect from Internet sales vs. the dollars they would collect from a sale at Cabela's retail store? How many sales tax dollars does Mitchell collect when an out of state Sportsman flies into Sioux Falls and spends $3,000 at Scheels before being shuttled over to hunt Pheasants at the Rooster Roost Ranch vs. flying into the Mitchell airport and spending that $3,000 at Cabela's?

You may use the example that the North side mall is practically vacant, but anyone who knows the history of Mitchell knows there are a number of factors at work there. First, when Randall's and ShopKo opted to build new stores across the street it was the beginning of the end for the mall, because those were the anchor stores. Without them traffic in the mall dropped, and the few stores that came and went after that never brought the traffic back to the mall.

No offense to the Reader's Den or Tradehome shoes, but they weren't the type of stores to bring in hundreds of shoppers on a daily basis and as a result the mall floundered.

Then you had that road redesign that allowed traffic to bypass Mitchell - that funneled highway traffic directly around the core downtown area, and allowed North side residents (including everyone located around the lake) to zip down to the new stores South of I-90. I'm sure that took a toll on downtown shops and decreased the value of those North side properties, but that is an issue many cities struggle with when they balance traffic needs against retail needs. Find a city in America that has a major roadway running through it and you'll see that main streets dry up as development occurs near those highways and bypasses. That is true in Mitchell, and that is true all across the US.

Bottom line - if Cabela's didn't get some incentive to come to Mitchell, they probably wouldn't have done so. If they wouldn't, you would probably not have a Walmart, you may not have a newer, bigger Menards store, you may not have a Culver's or a new Dairy Queen, you would likely have fewer hotels, and probably a few hundred fewer residents. Maybe that is ok to you... nobody ever said everyone has to like the idea of growth or that every city needs to grow. Sometimes it is ok for a city to remain the same size with the same core businesses - but considering the population of the nation continues to grow, if a city isn't growing at a pace equivalent to their peers... aren't they really going backwards?

In my view, clearly Cabela's has been very good to Mitchell. I'm sure the deal wasn't perfect, but it is hard to argue against the results.

Steve Sibson

Craig, moving Mitchell do the South benefitted a few much more than the rest of us. If you and Roger belief that this was an economic success, and I argue that it was mostly for a few business interest, then why did the taxpayers have to subsidize it? Your argument that Cabela's brought Walmart is without evidence. I have been to other Walmarts and there don't have a Cabela's across the street. The I-90 corridor development did not happen by accident. It was planned out. Those who were involved with the planning were able to capitalize on it. Example: How many county liquor licenses were issued for a couple of thousand just prior to being annexed by the city making their value skyrocket?

All I am doing is providing research from Ball State that shows that the economic development process only moves money from one person's pocket to another, especially when it involves retail. This system of legalized corruption will continue. All I am doing is telling people the truth, big government begets big business which begets big government. A cycle that is fueled by debt. This is not sustainable.

Roger Musick

Steve, your not listening again. The only government incentive was a small amout to Cabela's. All other business in that area were totaly the decision of the business owners. I thought you were a pro free enterprise kind of guy. Who is this person that "Capitalized" on the development.

I don't spend time at the liquor stores so I don't have any idea but their impact is tiny compared to the business around I90 in Mitchell.

I thought we previously proved and agreed that the Ball State study only looked at the impact of 7 Cabela stores payroll impact but in Mitchell we were intrested in the new sales tax. What you are doing is misrepresenting information that does not apply to Mitchell even after it has been explained to you in detail by someone who was in the room when it was being decided. Listen and learn, that is the purpose of blogs with comments

Steve Sibson

Roger, since "all other business in that area were totally the decision of the business owners", proves that the Cabela's subsidies was not needed. The only impact was a few business people made extra money off of the taxpayers. And how much of the "other business" impacted sales tax versus the impact of Cabela's? And if the taxpayers were getting a ROI on Cabela's, that extra sales tax revenue should have resulted in reduced property taxes. But our property taxes are going up, not down.

Mitchell was included in the Ball State study, so I am not misrepresenting. I am using research to support my position that economic development policy is simply a transfer of funds from the masses to certain business interests, and the long-term impact on the economy is negative as evidenced by the massive debt that has risen at the federal and local levels to fund the boom/bust cycles.

Roger Musick

Steve, you are wrong again. The 2014 City Mill Levy payable in 2015 did reduce by about 5% and I think we will see City taxes go down in the future.

Mitchell data was grouped with 6 other Cities and the study you quote was only looking at payroll change which I have told you many times is not why Calela's was recruited to Mitchell. You seem to insist that a study that analyzed the wrong thing for many cities is somehow more important to Mitchell then the actual facts about Mitchell.

Not sure how you are relating any massive debt at the federal or even local level to the Cabela's discussion or any TIF discussion as the business applying for the TIF owes the debt not the government.

It appears from this blog that your the only person in Mitchell that doesn't think Cabela'S has been good for Mitchell. Your argument's are not based on facts about Mitchell but just a concept that anything the elected officials do must be wrong because government is always bad.

With your concepts I struggle to understand why you would want to be an elected official or how you think the general population would vote for you?

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