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Businessman Pits Principle Against Politics
[September 15, 2003]

By S. M. Oliva

It’s considered a political truism that an incumbent officeholder’s fortune is tied directly to the state of the economy. If things are going well economically, the politician takes credit; if things aren’t going so well, the politician’s opponent assigns blame. As a result of this thinking, there is a general sense among most politicians that economic matters, notably economic “development”, are the appropriate province of the state. After all, if politicians are elected and defeated based on the economy, they should exercise some say in the matter.

In many urban communities, local politicians exercise power through various “economic development” schemes. The essential purpose of these schemes is to confiscate private wealth through taxation, then redistribute that wealth to businesses favored by the politicians. One of the more popular schemes is using tax revenue to finance professional sports stadiums. But even more mundane retail markets have seen the impact of economic development initiatives, such as the case of Bass Pro Shops and Oklahoma City.

In 1993, Oklahoma City launched the Metropolitan Area Projects program, known as MAPS. From 1993 until 1999, the city levied a one-cent sales tax that generated $309 million plus another $47.5 million in interest. These funds were then used to finance a variety of business projects in the city, including a convention center, a music hall, and yes, even a baseball stadium. All of these things could have been built without the government’s “assistance,” but then local politicians would have had no record of achievement to take back to the voters.

One of the crown jewels of the MAPS program is the Bricktown Entertainment Center, a retail and entertainment complex being built along an artificial canal. Bricktown’s anchor tenant is Bass Pro Shops, a Missouri-based sporting goods retailer. To get Bass Pro into Oklahoma City, local officials gave the company more than $17 million in subsidies using public funds. Under a 15-year lease, Bass Pro will pay the city approximately $6 per square foot per year for 110,000 square feet of retail space. Oklahoma City may not be New York or San Francisco, but that’s a below market rate by any standard.

The $17 million comes from three city tax funds—the MAPS operation and maintenance fund, a fund used to finance capital improvements for the city’s schools, and a third fund used to finance equipment for public safety agencies. City officials say the sales taxes generated by Bass Pro over the 15 years of the lease will cover this $17 million “loan”. But this claim covers up a key fact: most of Bass Pro’s sales will come from existing businesses forced to compete with the government-sponsored retailer. Oklahoma City’s own analyst said that 41% of Bass Pro’s expected sales will be “transfers,” meaning they’ll come at the expense of the city’s 65 existing sporting goods retailers (and that doesn’t include large discount stores like Wal-Mart). Thus, Oklahoma City residents and businesses are forcing a transfer of wealth from local merchants to a larger national merchant; what they’re not doing is promoting “economic development” or growing the economy in any substantial manner.

What’s especially galling here is that Oklahoma City officials could have supported a Bricktown development that would have used no taxpayer funds whatsoever. During the bidding process for Bricktown’s development rights, local businessman Moshe Tal submitted a proposal for a privately financed Bricktown Entertainment Center. The city rejected his offer, instead awarding the contract to developer Randy Hogan. Hogan then turned around and demanded the $17 million in taxpayer funds to get Bass Pro into his development.

Tal says Hogan got the contract because of political connections to local officials, including Oklahoma City Mayor Kirk Humphreys, who allegedly owned real estate holdings once managed by Hogan. Tal accuses dozens of city officials of “self-dealing” with one another to promote Hogan’s development—and the Bass Pro subsidy—to the detriment of the taxpayers.

In May, Tal and his advocacy group, Taxpayers for Honest Government, filed a qui tam lawsuit against Humphreys and about 40 other parties seeking a judgment nullifying the Bass Pro deal. “Qui tam” means Tal and taxpayers brought their action on behalf of the State of Oklahoma. This is similar to the “private attorney general” claim made infamous in Nike v. Kasky. But unlike the Nike case, Tal is not an uninformed activist trying to harm a private business, but an injured businessman trying to remedy the economic damage inflicted by the government.

The case is still in its early stages. In a bizarre move, the city’s Urban Renewal Agency, which supervises the MAPS program, sued the city, seeking a judicial declaration that the Bass Pro deal was legal. This is sham litigation, since the city obviously won’t oppose its own subsidy scheme. Urban Renewal’s objective is to short-circuit Tal’s case by getting a judge to sign off on the city’s actions.

Tal’s lawsuit is an all-too-rare example of individuals fighting back against corrupt government action. Just as religious freedom requires the separation of church and state, economic freedom requires the separation of economics and state. In an era where complacency and settlement are considered civic virtues, the mere notion of fighting on principle is considered radical, if not outright insane. But until more Moshe Tals stand up and fight for their rights, the belief that politicians are the rightful agents of economic development will remain a false governing principle of our society.

 

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