Waldrop Explains Commercial Recruitment Efforts
(Continued From Letters Home Page)

Dear Editor:

March 7, 2008
I have been involved with retail development for the past several years in Arab and have been involved with Applebee's project since late last summer when it began. Mayor Cox and I have met with the QRC owners and their architect many times over the past several months and have worked extremely hard to get to this point.

Here is some history/background so everyone is aware. Over the past several years, we (the city) have provided incentives to various businesses and developers have also provided some in order to locate these retail businesses in Arab. However, along with the incentives we have also required some guarantees from these businesses. We did roadwork for Wal-Mart. Nobody has to be reminded what Wal-Mart means to our economy. The developers in Heritage Plaza and the Old Wal-Mart gave incentives to Tractor Supply, Marvin's, Blockbuster, and Cato in order to get them here. Again, nobody has to be reminded what this means to our economy.

The retail-recruiting world has changed over the past few years, especially in Alabama. Because we are so dependent on sales taxes, and the retailers know it, they have the advantage and are using it. Arab is not a highly populated city and not a hot bed of economic growth like Huntsville. We have to make locating here worthwhile. We need the retailers, they do not need us. In addition, yes the alcohol situation hurts us, not only in restaurants but also in other areas that accompany restaurants.

When we started the talks with QRC, they ran business models that gave them sales information based on their own demographics. This data said Arab would not support an Applebee's. We countered with the demographic information we have and use in retail recruiting that says there is a 14.5 million dollar opportunity of untapped restaurant dollars available in the Arab trade area. This is when they came with an incentive package request. They proposed that if their numbers were true then they needed some incentives to make it work. We countered with a proposal that if we are right in the potential business in Arab and the city voted in alcohol, then they would have a windfall profit and we needed to share that. Thus, the proposal for a diminishing sales tax incentive. They agreed in principal to this. The numbers were not finalized because we did not know the full cost of the project. We did not know the cost of the property and site work, which is a big part of the costs. We would not have this finalized until it was presented to Applebee's International for approval and a site selected. Which may or may not have been approved by Applebee's International, if not then it is a dead issue.

What the council was being asked to do is to provide assurances to QRC and Applebee's International that the city of Arab supported the concept and would negotiate in good faith the final details of that agreement.

It was my opinion, and I stated this to the council, that if they did not support this and tried to stall that QRC would walk away and that is what has happened.

The location of an Applebee’s was not the only piece of the project. I am not at liberty to discuss all of the pieces of this project, but one was a motel chain. I received notice last Friday that it was also withdrawing. Other pieces most likely will be withdrawn over the next week or two.

Giving incentives is not desirable from the city’s point of view, but it is sometimes necessary to achieve a greater goal. Giving tax breaks to receive money you would never receive otherwise is like the business saying of “spending money to make money”. Giving fifty cents to get a dollar is still getting money that you would never have gotten anyway. In addition, over a million dollars in payroll would be added to local economy. Whether it is 75 jobs or 125 jobs, it is jobs that we do not have. However, this is just the start. Once you have the first prospect landed, then others will follow.

I have seen and heard the statements from the current restaurant owners that they got no help. The CDA, which has the authority to do revenue bonds and grant property tax abatements with the exception for the school taxes, however, has only been in existence for about two years. When this Applebee’s proposal was brought to the CDA, a concern and much discussion was given to the existing restaurants and any future opportunities. If this offer was made to one then it had to be available to all. It is available to all providing they meet all the requirements and will provide the guarantees that are required. The sales tax incentives are only available through the city and will have to be approved by the city.

Will there be other opportunities? I hope but they will most likely be asking for incentives also. What if the city approves the sale of alcohol? There will probably be others and they may or may not ask for incentives. Remember we need them they do not need us. If alcohol sales does happen it will most likely be mid to late 2010 before any results will be realized. By the time the election is held, these retailers will have the 2009 capital plans in place and we will not get in until 2010 at best.

If the sale of alcohol is not approved then we are in the same boat we are in now, except the boat has a hole in it since we have shown we are not willing to work with the retailers.

This council and the next have the opportunity to move Arab forward. It starts now! Will there be other opportunities, I do not know, but I personally am not willing to bet on it. If we are not willing to work with business, then we need to stop trying to recruit them and wasting the time and money spent trying.

I guess it is still true, what everyone else in the county and surrounding area says about Arab, "Arab is its own worst enemy".

Sammy Waldrop
Arab, AL