When officials with Cabela’s recently made their first presentation to the Oklahoma City Economic Development Trust, they were treated to a round of compliments capped with a playful debate between City Council members Pat Ryan and Larry McAttee over the location of the store.
Hostile questions and accusations of extortion voiced just a week earlier by Ed Shadid in response to a $3.5 million incentives deal for the outdoor goods retailer were not to be heard, though Shadid quietly sat in on the presentation.
John Castillo, corporate affairs manager at Cabela’s, spent 25 minutes telling the economic development trust members about the retailer’s history and bragged about the stores’ products, staff and customer amenities.
Not once did he explain why the retailer is asking for the $3.5 million, which will be paid from the city’s general fund as the store begins to pay sales taxes.
The company, however, rarely misses an opportunity to collect incentives for new stores, which it is on track to open at a rate of 15 a year over the next several years. The deal is up for a final vote by the Oklahoma City Council on Tuesday.
“It’s a situation where we are working with the program the city offers,” Castillo said. “It’s something the city is out there offering not just to Cabela’s but also to any retailer that is interested. Cabela’s has a wonderful relationship with the city, and this is something that will be mutually beneficial for both parties.”
A 2012 study by the Franklin Center for Government and Public Integrity calculated incentives to Cabela’s over the past two decades from 20 cities totaling more than $550 million. At least another half dozen such deals have concluded since, though at least one city, Greenville, S.C., was able to land a store without any incentives for the company.
Oklahoma City’s first modern retail incentives deal was a dozen years ago when it agreed to build a $20 million store for a Bass Pro Shops in Lower Bricktown. At that time, city officials secured a deal from the retailer that it would not open another store within 70 miles of Oklahoma City. Officials at the time discounted the chance of Bass Pro rival Cabela’s entering the market.
Two existing locally owned outdoor sporting goods retailers unsuccessfully protested – a smaller Bass Pro franchisee and Outdoor Outfitters. Both retailers went out of business after Bass Pro Shops opened to large crowds.
Miles Hall, owner of H&H Gun Range, 400 S Vermont, bought some of the remains of the Outdoor Outfitters store and is questioning whether this latest deal is really necessary. Hall has grown his business from a 4,800-square-foot shooting range in 1981 to a 90,000-square-foot, 129-employee retail operation featuring its own restaurant.
A recent analysis of sales proceeds, Hall said, showed the store draws from every ZIP code in the state. H&H draws customers from states throughout the country and is a frequent stop for international visitors to Oklahoma City.
“We had to do our range rules into nine other languages because we have so many international visitors,” Hall said. “They’re not just coming to see us, but while they’re here, they want to do something that is unique to Oklahoma and America – and that is shooting.”
If the city is looking for a destination sporting goods retailer — one built by long-time residents — Hall suggests his store is a good example of what can be built without public incentives.
“It’s a big operation,” Hall said. “We’ve done all of these things. We proved the market is here. We were here before the others were. But this is part of their business model now.”
Cathy O’Connor, general manager of the Oklahoma City Economic Development Trust, and Brent Bryant, director of economic development programs at City Hall, both say the deal with Cabela’s is better than the prospect of losing the retailer to a competing suburb. Their analysis shows the retailer annually will generate $720,000 in general fund sales taxes, $360,000 in MAPS 3 sales taxes, $270,000 in public safety sales taxes and $45,000 in zoo sales taxes.
The deal caps the incentives at $3.5 million over 10 years based on 1.2 percent of sales by the store, which will be built as part of the Chisholm Creek shopping center at Memorial Road and Western Avenue.
The forecast also predicts the store will draw from a trade area of up to 120 minutes away or greater and generate up to 1.35 million visitors a year. And while the forecast anticipates the retailer will draw visitors from outside the region, the deal does not prevent Cabela’s from opening a store elsewhere in the metro or state.
“We haven’t done many retail incentive deals,” O’Connor said. “This is our fourth to date. Two are active — Bass Pro and the outlet shops (at Interstate 40 and Council Road) are open and producing sales taxes. Von Maur is the third, the renovation is underway (at the old Sears at Quail Springs Mall) and they plan to open later this year. In all of the deals we’ve done, particularly the outlet mall, Von Maur and this one, they are performance based. The money is not received until the sales taxes are generated.”
O’Connor said all four retail deals involve stores that are unique to the area.
“This is a regional destination retailer,” O’Connor said. “Von Maur is at a regional mall, and the outlet shops is a regional retail destination. In this case, Cabela’s fits the parameters of a new to market retailer and providing a product that can’t be purchased in city limits at this time.”
Hall, meanwhile, emphasizes he is not going to lead a protest similar to those waged against the Bass Pro Shops deal. But he questions whether the city needs to give Cabela’s money to open a store in what Hall considers to be a very hot market.
“Have faith in the city,” Hall said. “This is not a manufacturing company. I’m a big believer in providing seed money for that. In the world of retail, you’re only recycling money. Will they bring enough additional money to make it worth it? I have questions about that. But one thing we’ve always talked here at H&H is growing the shooting sports. If they can do that, we’re excited for them.”