Corporate Welfare

Your Tax Dollars at Work, Paying Rent for Bankrupt Bookstores

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They can check out any time they like, but you can never leave

This is but a single example of the kind of bankrupt government/development corporate welfare "deals" that get done constantly by objectively evil Redevelopment Agencies, this time in Pico Rivera, California:

The city spent $1.6 million in federal grant money to bring Borders into the Pico Rivera Towne Center and to help pay its rent for nearly eight years.

Now the bookstore at 8852 Washington Blvd. is among the 200 Borders stores closing by April in the wake of the company filing for Chapter 11 bankruptcy reorganization.

But the city still faces paying rent on the soon-to-be vacated 18,100-square-foot site, along with other costs associated with 2002 agreements it made with Borders and with Vestar Development Co., which owns the Towne Center.

If Borders leaves, the contract with Vestar requires the city to pay the company $33,932.91 a month for 72 months until a new tenant comes in. Vestar will get the money on the condition it is making "commercially reasonable efforts" to secure a new tenant for the site, according to the wording of the agreement.

How many more where that came from, I wonder?

How DID they ever manage without Redevelopment Agencies?

Oh, in case you were wondering what the excuses were for wasting tax money on paying a big box retailer's rent:

Officials said the decision to bring a bookstore into the community was a quality-of-life issue.

As spelled out in both agreements, the city and redevelopment agency wanted Borders in the community to enhance educational and cultural opportunities.

The expected benefits included sales tax revenues, job opportunities, plus music, reading material and cultural materials for the community.

"It was a proper investment in literacy," [Councilman Gregory] Salcido said.

A final note: The bookstore was on a 200-acre piece of city-owned property that once housed Northrup Grumman. Can anyone suggest a better, more rational, and less costly public policy outcome than paying rent for seven years on a vacated bookstore in a strip mall?

Link via The Future of Capitalism.

NEXT: Up From the Projects: Walter Williams

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  1. “It was a proper investment in literacy,” [Councilman Gregory] Salcido said.

    Thus saith the innumerate.

    1. Tax subsidies are hard!

    2. Wouldn’t a library be a more appropriate thing for a city to pay for, assuming that promoting literacy is something they should be doing?

      1. Kickbacks are smaller. Also, no coffee shops.

        1. Also no sales tax revenue.

          Although the store would have had to average 3.4 mil / month in sales to cover the rent subsidy.

  2. Contracts that the corrupt government made while screwing taxpayers should be VOID.

  3. Maybe they can get coalition forces to bomb it for the insurance.

  4. If governments wouldn’t do this–better yet, if they couldn’t do this–then companies would select locations based on, I dunno, where they could sell the most stuff.

  5. Math is hard.

  6. Too bad about Borders. Now my B&N is going to be jam-packed.

    1. I thought B&N was on the edge as well.

      AFAIK, they’ve all been Amazoned.*

      *Which, unfortunately is no where near as exciting as it sounds.

      1. I think B&N is doing okay, comparatively speaking, but it’s a tough business these days.

        I buy plenty from Amazon, but it would irk me if bookstores were to vanish. And I do still buy from them, just for that reason.

        1. They won’t vanish, but they will change shape over the next decade or so. The big box bookstore concept just isn’t sustainable in the age of Kindle.

          1. I guess. I have a Kindle, but it’s not replacing my books. Not even close. Maybe with the kids?

            1. I’m a kid only in the sense that I have parents, but I’m borderline pissed that I’m going to have to go to Half Price Books this weekend to snag some stuff that isn’t Kindlefied. The only other downside to it so far is having to turn it off during takeoffs and landings.

              I like bookstores, but I like cheaper books more.

              1. One of the few things I miss about my exile in the northern states is Half-Price Books. Great, great chain. Wish they’d put one in Tampa.

                1. P L – Half Price Books is hq’s in Dallas, Texas – they are a southern company. You can write the headquarters and suggest Tampa as a location – it is closer to Dallas than some of their stores.

                  1. Believe it or not, I actually contacted them about doing just that some time ago (early Aughts). They said that’s nice, and patted me on the head.

          2. The great thing about a bookstore or a library is the chance finds – the odd books that you happen to see out of the corner of your eye, pick up out of curiousity to discover a new author or subject.

            Amazon tries to do that with its suggestions, but it can’t mimic the bookstore browsing experience.

            1. I completely agree.

            2. Amazon’s filtering is way better that Apples iBookstore, which makes randomly looking for something in a genre much better at Amazon.

      2. *Which, unfortunately is no where near as exciting as it sounds.

        The spirit is willing, but….wait, books? Screw that.

      3. I had snoo snoo…

  7. I bet there’s not a single rent-subsidized bookstore in Mogadishu.

    1. It’s like a paradise.

      1. I’m getting a pegleg, a parrot and passage on the next schooner.

      2. Great cell phone service.

    2. Even if there was, there aren’t any roads to get there.

  8. I’m pretty sure that even the Elite Councilmen&women; of the great state of California can find an even worse way to piss away money for seven years but I have to ask another question:

    Did Reason/H&R already post about the Biden Amtrak Ceremony? Because if there was a better example of smoking Joe Insanity Sauce than “Rail station renamed in Vice President’s honour… but Amtrak CEO almost didn’t make event (because his train broke down) I haven’t seen it lately.

    Maybe I just missed it.

  9. 72 months is only six years, not seven. Not that that makes this any less horrible.

    1. They’re metric months.

      1. What is that in kilometers?

        1. 1 metric month @ c = .1 ly = 10^12 km. (approx)

        2. SOMETHING LESS THAN TWELVE PARSECS, FOOLISH MINION.

          1. Oh, I see. So it has something to do with the speed of light?

      2. So you’re saying Welch is secretly Canadian?

        1. I don’t mind Canadians, but I can’t abide secret Canadians. Like James Naismith.

          1. He was the guy from the Monkees, right?

            1. Something like that. His mom invented Liquid Basketball.

    2. From the linked article, the city wants to pay $10,833.33 per month for 7 years instead of $33,932 a month for 6 years. Of course the article fails to mention the additional $2,500 the city agreed to pay.

      However, city officials believe Pico Rivera does not have to pay the $33,932 but only needs to continue shelling out the $10,833.33 a month in rent subsidy to Borders. There are seven years left on the 15-year agreement.
      —- CUT —-
      In a separate agreement, the council also approved reimbursing Vestar $362,000 for special set-up costs and pay the company $2,500 a month in supplemental rent for the next 15 years.

      1. Well that’ll teach me to not read the linked article carefully!

  10. I still think Matt Welch looks uncanily like the Yeasayer drummer.

    1. There is that…but he has a definite HRG flavor as well.

      Sorry Episiarch…I feel compelled to stray every now and then from stalking you, but I still think of you everyday XXOO

  11. Can anyone suggest a better, more rational, and less costly public policy outcome than paying rent for seven years on a vacated bookstore in a strip mall?
    Storage area for all those “Your tax dollars at work.” signs.

  12. Officials said the decision to bring a bookstore into the community was a quality-of-life issue.

    I may be getting a little long in the tooth, but I remember when people wanted to sit around and read books, they went to a library. Plus, building a library is always great street cred at election time.

    1. Hush you! Libraries don’t generate sales taxes.

    2. It’s occurred to me that there might be a market for a private library. With drinks and food and stuff. Kind of like how Borders or B&N work except without book sales. More emphasis on the social, food, drink.

      Maybe a bit like the old London clubs?

      1. With my newspapers ironed?

      2. There are a fistfull of library bars in Los Angeles. I’m really anxious to check one out.

      3. There’s a private library in London. I srsly considered joining when I lived there, since the public libraries sucked, but it’s on the west side and I was all east side.

        1. Imposter. It’s called “West End/East End”.

          Did you date any East End girls while you were there?

          1. Shhh…you’ll fuck it all up. We’ve got ’em fooled.

      4. Will they flag the bathroom books?

  13. Officials said the decision to bring a bookstore into the community was a quality-of-life issue … to enhance educational and cultural opportunities.

    How large was the Spanish-language section?

    1. My first thoughts. I’ve been to Pico Rivera, and the very first thing I noticed was that there is not a large market for English language publications (or, for that matter Spanish language publications considering the literacy among recent immigrants even in la lingua madre is not that high).

      Also, as a former Commercial RE appraiser, I am really curious what the lease terms were on this place. What was the overall SF of store area, and the price/SF, because the way I’m seeing it they might’ve got $2.75-$3.25/SF which is fairly high for a 5,000 SF unit in yuppie Santa Monica, and borderline absurd for a 10,000+ SF store in Pico friggin Rivera (even in 2007/8 before the giant POP sound).

      1. Overpriced real estate was a factor in Borders going into bankruptcy.

        About a year ago, when Borders tried to sell itself, Barnes & Noble looked at the books for the Borders chain. Too many overpriced leases was a big factor in B & N declining to buy out their “competition.”

    2. When Pico Rivera made the deal with Borders it was reported on in Publishers Weekly and other trade publications specifically because Borders agreed that their store would be Hispanic themed, with almost equal selections of books in English and Spanish, along with Hispanic music, Latin American movies and a cafe that served Latin snacks and drinks.

      I actually read about it in a trade publication promoting Spanish books for American libraries and booksellers.

  14. I’m actually not inherently opposed to the idea of tax money spent to make books and music available to the community; I just think the money should go towards a public library rather than a privately owned, for-profit bookstore. Christ on a crutch.

    1. Well, in the case of Borders, it wasn’t ‘for profit’.

      😛

  15. Perhaps subsidizing a Borders was cheaper than running a library and the government actually saved money? Before you call the entire policy a failure you’d have to examine any similar actions taken cumulatively and evaluate their net effect, rather than just look at this one instance. Furthermore, it is entirely a reasonable position to argue that culture, literacy, etc. are intrinsically valuable and are worth spending public money for, beyond what the value of that money would have “earned” on the market. I don’t necessarily agree with that last point, but I don’t think its an uninformed or unsupportable argument.

    1. There’s so much wrong with everything you said… I have to confess I don’t know where to start.

      1. Here are the key parts of its post:

        uninformed
        unsupportable

      2. A good starting place: Pico Rivera has a public library.

  16. If Borders leaves, the contract with Vestar requires the city to pay the company $33,932.91 a month for 72 months until a new tenant comes in.

    Sweet monkey fucking god! Where can some of the mere riff-raff, like me, get a deal like this?

    1. In the Greek pantheon, who is the monkey-fucking god? I’d guess Zeus, but he was more about imitating animals during sex than in having sex with animals.

  17. What, no link to the WSJ carrying the water for corporate leeches?

    All you need to know is that it’s titled “In California, Dreams May Turn to Nightmares.”

    As a silver lining, the comments are almost all against the article.

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