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City, chamber to explore retail development tools

CouncilChamberRetail01Paris plans to explore some new tools for retail development.

“Economic development is defined as bringing money to the community,” City Manager John Godwin said at a joint meeting of the City Council and Lamar County Chamber of Commerce’s retail committee Monday. “If it’s the same money going around and around, it’s just circulating, not creating anything.”

Economic development traditionally focuses on industry and manufacturing, but that approach leaves out a major piece of the economic puzzle, he said. About 65 percent of the nation’s economy is retail.

One of the chamber’s main goals is to fill in Paris’ retail “gaps” so that locals will shop here instead of going out of town and people will come here from other cities, chamber Chairman Erik Roddy said.

The chamber committee asked for a meeting with the City Council to discuss ways to promote retail development, particularly something known as 380 agreements. An economic development tool, the agreements are named for the part of Texas law that created them.

Chapter 380 of the Local Government Code lets cities offer incentives for commercial, retail and other projects that promote economic development. The law specifically provides for loans and grants of city funds or services at little or no cost for economic development and to stimulate business and commercial activity.

Retail development in the past talked about demographics at the city, county and regional level, but shoppers don’t think in such terms, Godwin said. Instead, most are concerned with how long it takes to get there and whether it’s worth the trip.

“You can’t draw a circle,” he said. “How long will people go for a donut store? About 10 minutes. How far will people go for a Cabela’s? People will drive three hours for a Cabela’s. How far for a mattress? Probably somewhere in between them.”

Although people often talk about specific stores and restaurants they would like to see, he said it’s important to think bigger.

“For the most part, you want to talk to developers, not individual stores,” he said. “You need to talk to the guy who will build a center or something unique.”

Fairview built $200 million in one million square feet of new retail space in less than three years during Godwin’s tenure as city manager there. That added up to a lot of sales tax revenue, and allowed the town to keep its property tax at 36 cents, which he said is about half the Dallas-area average.

“People from Plano were paying our bills. People from McKinney were paying our bills,” he said. “I know this is not the same community as Fairview, but some of the things we did are scalable.”

Chapter 380 agreements are one such tool, Godwin said. Although economic development corporations such as PEDC may be limited in the projects they can offer incentives to, the 380 agreements are not subject to such limitations, and they cost the city nothing up front.

“We never thought about giving them incentives or infrastructure,” he said. “I don’t like giving stuff away. It was we’ll give you something if you give us something.”

CouncilChamberRetail02Godwin pointed to a major Dillards development that required $10 million up front. The city’s 380 agreement paid it out through future sales tax – which meant Dillards only got paid if it generated sales tax.

“The thing that’s attractive about the 380 agreements in my mind is that it costs the city nothing up front,” said Vic Ressler, owner of Century 21 Executive Realty. “If they don’t succeed, it costs the city nothing. If they succeed, we win.”

The City Council directed Godwin to draft a policy on 380 agreements with input from the Chamber of Commerce within the next month.

Godwin said retail also plays an important secondary role. Potential manufacturing developers often visit a town to scope out the sort of amenities available for workers who may relocate – parks, schools, restaurants and shopping.

Mayor A.J. Hashmi said the Chamber of Commerce should play a key role in all things retail.

“As far as retail development is concerned, I think it should be the chamber’s responsibility. Our responsibility is to support you 100 percent,” he said. “I think it should be a joint decision between the council and chamber. We should not work separately.”

The chamber has the expertise and experience in retail, not the city, Hashmi said. The Chamber of Commerce is not geared to spearhead such an effort, Roddy said. Both sides agreed that it should be a partnership.

“Ultimately, it comes down to what you are and are not willing to do,” Ressler told the council.

Council members expressed support for pursuing retail development. Councilman Dr. Richard D. Grossnickle said Godwin’s experience and contacts in Fairview were part of the reason he supported him for city manager.
Councilwoman Cleonne Drake said the city needs to also focus on keeping retail, including studying why businesses close and seeing what could be done to keep it from happening again.

The city needs a professional to help in its retail recruitment, Ressler said.

“The money is there,” he said. “We just need to find a professional who can recruit – maybe a little more recruiting and a little less consulting.”

The term “consultant” seemed to leave a bad taste with Ressler and several others at the meeting. Consultants are frequently found in education said past Chairman Robert High, who works as Paris ISD’s assistant superintendent for human resources.

“Some of our people describe a consultant as someone who blows in, blows off and blows away with your check,” he said.

Any agreement with a retail consultant should require detailed reports of recruiting efforts and incentives to perform, he said.

The city set aside about $36,000 in this year’s budget for a retail consultant. The money was allocated for retail development and should be used, Hashmi said, but it is important that the city not use tax funds to undermine existing businesses by offering some sort of incentives to competitors.

“Yes, I’m concerned about competition, but competition makes me better,” said James Brockway, owner of Sofas and Such. “It makes me sharpen my pencil and see what else I could be doing.”

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