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How Manteca tax dollars sent Dick’s Sporting Goods to Modesto mall

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POSTED May 10, 2011 1:01 a.m.

Dick’s Sporting Goods is opening in Modesto’s Vintage Faire Mall instead of Manteca’s Orchard Valley.

And it is due in a large part by a decision that gave Bass Pro Sports veto power over a “competing” private competitor in an endeavor that involved the expenditure of Manteca tax dollars.

Bass Pro Shops - and their competitor Cabelas - routinely demand and get from developers that build shopping centers financial concessions that are almost 100 percent picked up by local jurisdictions eager to secure tax revenue and jobs. It should be noted that is not the case with Gander Mountain, the other Big Three member in outdoors sports retailing.

Unfortunately, such concessions have become a way of life for government. Manteca isn’t by far the first or the last city to make such arrangements. In reality, Manteca is a Johnny-Come-Lately to the entire endeavor although you could argue that they do it - in most cases - more effectively and beneficial for the city overall than most jurisdictions.

The Manteca deal with Orchard Valley developer Poag & McEwen gives up a portion of the sales tax that essentially the city never would have received had Bass Pro Shops not located in Manteca. The deal, crafted under the leadership of former City Manager Bob Adams, gave Poag & McEwen 55 percent of basic local sales tax collected each year for 35 years with an annual cap of $1.1 million.

Since almost all of the money generated by Bass Pro Shop is non-local, Manteca is getting 45 percent of what it never would have gotten. And although it is hard to separate Bass Pro sales based on confidentiality laws, it is clear from the first two years of the overall center’s performance with who wasn’t open that Bass Pro is easily generating in excess of $1.6 million in annual sales tax. Manteca also benefits from increased revenue from Bass Pro via the half cent Measure M public safety tax that is excluded from the revenue sharing deal.

That means Poag & McEwen will in all likelihood receive the max of $38.5 million which explains how they can afford to continue to build out the space for the upscale outlet mall even though prospective tenants have indicated they are waiting to sign deals until the economy picks up a bit more steam.

Since Manteca didn’t give up property tax or float bonds to make the deal happen, it is essentially way ahead on the deal unless, of course, at some point Bass Pro before 35 years are up opts to shut the Manteca store. You never know.

Bass Pro’s building costs were then subsidized to a large degree upfront by Poag & McEwen which in turn is being reimbursed by the sales tax split.

So what does all of this have to do with Dick’s Sporting Goods going to Modesto?

As the key anchor tenant Bass Pro was given veto power by Poag & McEwen over tenants that could harm their bottom line. It isn’t all that unusual of a stipulation provided by developers of shopping centers. It’s all part of doing business.

Dick’s Sporting Goods wanted to build between Best Buy and JC Penney. Bass Pro’s ownership said no because Dick’s Sporting Goods sells canoes and kayaks which are items Bass Pro also sells.

There would be nothing wrong with this if it was totally a private sector matter but it was tainted by the forfeiture of future sales tax to the developer to land Bass Pro.

Essentially Manteca’s decision set the stage for Bass Pro to discriminate against Dick’s Sporting Goods while at the same time benefiting indirectly from government money in the form of the sales tax split which helped lower their overhead upfront in building the store.

You would be correct in arguing that Dick’s Sporting Goods probably wouldn’t have seriously considered Manteca with Orchard Valley being in place and Orchard Valley wouldn’t be there if it wasn’t for Bass Pro being lured here by Poag & McEwen using the sales tax split to fund their enticement.

But you’d also be correct in saying that the infusion of tax dollars not only helped give a leg up to Bass Pro Shops which gets similar deals wherever they go but they were also used to ace a competitor out of the market.

Keep that in mind if you’re ever in the market for a canoe or a kayak.

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