Retail Subsidies Questioned in Alabama

November 4, 2008


For years Good Jobs First has been warning of the dangers of subsidizing retail development—overbuilding, sprawl, fiscal weakness, creation of low-quality jobs, etc.—so it is reassuring when we see our message starting to get through in unlikely places.

Recently, the

Montgomery Advertiser

published a

2,000-word story

that dared to raise some questions about the wisdom of continuing to pile on sales tax rebates and other deals for retailers in Prattville, a suburb of Montgomery that is apparently a shopping paradise. The town, with a population of some 32,000, has added some 1.3 million square feet of retail space over the past three years, much of it for national chains such as J.C. Penney, Best Buy, Target, Home Depot, Circuit City and Bass Pro. It already had other big boxes such as a Wal-Mart Supercenter and a Lowe’s home improvement store.

Given the town’s location along Interstate 65, this kind of development was probably inevitable. But rather than letting the market work its magic, officials in Prattville made abundant use of a 2004 change in Alabama law that permitted localities to offer low-cost financing and other incentives directly to developers. For Prattville this included, for instance, a $23 million sales tax rebate for a Bass Pro hunting and fishing superstore (photo).

Local officials were comfortable with the subsidies as long as economic growth was strong. Now that hard times are looming, some of those officials began to show resistance to a new $9 million subsidy package sought by the developer of a shopping center featuring a Kohl’s. The


quoted City Councilman Bill Gillespie as saying: “I don’t think the customers are there to support the retail space we have now, much less these new stores. The economy is soft, and there’s a lot of empty stores up at High Point. I think we need to fill up what we have now, not add space. It’s a poor use of public dollars.”

Alas, Gillespie failed to persuade his fellow council members. A few days after the


article was published, the council


5-2 to approve the new package. I guess the effort to stop retail giveaways still has a long way to go.