Supporters gear up for Cabela's referendum

Cabela's official says 'no' vote could lead to re-evaluation of the project

By Scott Aust, Journal staff | Saturday, September 01, 2007

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RAPID CITY--The opening salvo of the Cabela’s referendum campaign began in earnest this week as supporters and opponents started organizing for the run-up to the Sept. 18 vote.

Voters will decide then whether the city can transfer 30 acres of land north of Interstate 90 where the Black Hills Visitor Information Center sits to the Rapid City Economic Development Foundation, which would transfer the land to Cabela’s.

Opponents announced the formation of the “No Free Lunch” committee Thursday, around the same time as postcards from Cabela’s started landing in Rapid City mailboxes urging approval of the deal.

The land transfer is part of three agreements the Rapid City Council approved as an incentive package to lure outdoor outfitter Cabela’s to Rapid City.

Cabela’s plans to build an 80,000-square-foot store less than a mile west of the VIC as part of a larger Foursquare Properties retail center on 70 acres near Dyess Avenue and East Mall Drive.

Other parts of the Cabela’s incentive package included $2 million in economic development funds and moving the VIC inside the new Cabela’s.

Those agreements are not part of the special election, and moving the VIC appears to be off the table entirely since Cabela’s officials told the city three weeks ago the company would deed back the building and about three acres of surrounding land to the city.

Cabela’s officials won’t say whether the company will pull out if voters reject the land transfer.

“We’re confident voters will see the value of Cabela’s coming to the community,” said Joe Arterburn, corporate communications manger. “If not, if the vote fails, it would be something we’d have to go back and re-evaluate the viability of the entire deal and consider our options.”

That uncertainty worries Mayor Alan Hanks.

“You don’t think a Sturgis or a Summerset or a Spearfish would do absolutely everything in their power to bring Cabela’s to town?” Hanks said.

Hanks said he has never liked using incentives to attract major retailers, but it’s a fact of life to bring businesses such as Cabela’s to the city.

If Rapid City doesn’t land Cabela’s, he’s sure another community in the Black Hills area will pony up the cash to land them. 

“I wish we didn’t have to do it. But the reality is if we didn’t offer them an incentive package, they can go up the road and get incentives from one of the other communities, and then (that community) is going to get the benefit of having a destination retailer,” he said.

What kind of lobbying effort can be expected from City Hall in favor of the deal? Hanks said he sees his responsibility more as educating the public about the facts, not actively campaigning for the “pro” side.

But make no mistake, Hanks supports the incentive package because of the benefit Cabela’s and the larger Foursquare Properties development will bring to Rapid City in the form of hundreds of new jobs, an additional $4 million per year in sales taxes and an estimated $1.4 million a year in new property-tax revenue.

“That’s what economic development is all about. Jobs and adding to the tax base,” he said.

Hanks said the city pays for services – fire and police protection, roads, parks, operating swimming pools and ice rinks – through taxes, especially sales taxes.

Critics of the Cabela’s deal are correct when they say the store can’t possibly generate $4 million annually in sales taxes, Hanks said. But the critics aren’t telling the whole story.

Hanks said the sales-tax estimate is based on projections of a larger, 600,000-square-foot development of which Cabela’s is part.

“What they’re missing is the fact that all the other development -- the hotels, the restaurants and the other major big box retailers -- that are going to come in,” he said. “Everybody is focused on Cabela’s, but Cabela’s is a small portion of the overall development.” 

Cabela’s Arterburn said the $4 million in sales tax is based on 2 percent of $200 million in sales projected for the entire Foursquare development, not just from the Cabela’s store. 

Arterburn said the projection is based on sales per square foot, but he was unsure whether the data is from similar Foursquare properties or based on national retail-industry statistics.

“It’s not just Cabela’s square footage, it’s all the other retail square footage planned there,” he said. “We don’t know for sure what types of stores there are going to be, so it’s a general projected number.”

As for jobs, Cabela’s expects to employ about 150 people. Arterburn said the number of new jobs created in the rest of the Foursquare development depends on the businesses that come in, but based on square footage, it’s easy to estimate jobs in the hundreds.

Hanks said another important part of the Cabela’s deal is the tax-increment-financing district the city approved to reimburse itself for all of the value of the incentive package.

“The TIF is strictly for the benefit of the city. It does not affect Cabela’s. The city created a TIF to recapture, with interest, 100 percent of our investment in the incentive package,” he said.

With the TIF, the value of the land and the $2 million paid to Cabela’s upfront will be paid back by the property taxes the development generates when it’s built. Without the TIF, taxpayers would not recover that value.

“A lot of people seem to think Cabela’s is getting a TIF. They’re not. The city applied for TIF so we could be paid back for the incentive package,” he said.

The last day to register to vote for the special election is Tuesday, Sept. 4.

Absentee or early voting for the Sept. 18 special election about part of the Cabela’s incentives is open for registered Rapid City voters at the Pennington County auditor’s office inside the courthouse, 315 St. Joseph St., or at the city finance office, 300 Sixth St., from 8 a.m. to 5 p.m. Monday through Friday.

Contact Scott Aust at 394-8415, or scott.aust@rapidcityjournal.com