Friday, October 16, 2015

Sponsored post: Costco & Kemper

by Kelley Williams.

What do Costco and Mississippi Power’s Kemper lignite plant have in common? Say what? Costco is a popular successful big box retailer. It is known for quality and fair prices. It’s welcome wherever it goes (well almost). Customers love it. Kemper is an unpopular unsuccessful experimental power plant. It’s known for design and broken promises, construction mistakes, cost overruns, and broken promises. It’s higher electric rates are an unwelcome disaster. Customers hate it. How could Costco and Kemper have anything in common? Well, try this.

Secret deals. Costco is coming (or trying to come) to a location in Ridgeland that was determined by secret deals between private investors and elected officials. Kemper is the result of secret deals between private investors and elected officials. Elected officials won’t tell citizens hurt by the secret deals about the deals because they told the private investors they wouldn’t. So that would be a breach of confidence that might embarrass everyone. Honor among, you know? Not to worry about the harm to neighborhood property values in the case of Costco or to customers captive to a monopoly’s higher rates in the case of Kemper.

The private investors in the Costco scheme are the real estate developers and promoters who will profit from the sale or lease of the site to Costco. The elected officials are the mayor and aldermen of Ridgeland who facilitated the deal and tweaked the zoning ordinances to make the location legal. The Mississippi Development Authority is also teed up to provide some bait to develop the site. It’s possible this was encouraged by other elected officials. The bait is $30 million of sales tax rebates authorized under a “cultural” incentive bill that gave MDA a slush fund to promote worthy projects. Costco is defined as a worthy cultural project even though it redefines culture. Some skeptics suspect campaign contributions really define worthy projects.

Worthy projects. Other worthy projects include Kior, Stion, the Outlet Mall in Pearl, and other sweetheart deals with MDA. It’s not just private investors in worthy projects who appreciate elected officials who declare them worthy. Contractors, and lawyers, and engineers, and consultants, who work on worthy projects are also appreciative. According to Mississippi Power’s most recent 8K there are 524 companies and firms and individuals in Mississippi that have provided $1.6 billion of goods and service to Kemper. Since the company was spending or thought it was spending other people’s money (i.e.,customers), it’s reasonable to assume it was generous with its suppliers (e.g., no bid contracts) who in turn were happy advocates for Kemper. And appreciative for elected officials who declared it worthy.

There are problems with politically worthy projects. It’s not just that secret insider deals benefit insiders. It’s the broader harm they do. This harm can dwarf the petty or not so petty political favors. It can hurt hundreds of existing businesses and hundreds of thousands of taxpayers, customers, and citizens. Economists say these deals misallocate capital and send perverse signals throughout the economy. They encourage investments that pay off for insiders instead of creating better and cheaper products and services that boost our economy and improve the quality of life for our people. And perversely, they don’t boost tax revenues either.

Tax breaks. Tax breaks are a favorite tool of legislators and the MDA. They are supposed to encourage investments to grow the economy and boost tax revenues to offset the tax breaks. Many don’t. They are just give aways. Consider these questions about the tax break for Costco’s developer: One, will Costco increase retail sales in Mississippi or just rob sales from other retailers? Like the Outlet Mall that got $22 million in tax breaks. Two, would Costco come to Mississippi without developer tax breaks? Three, is the contentious Renaissance location the only site acceptable to Costco? And four, how is Costco a cultural attraction?

Mississippi’s politically worthy projects may due more to bad judgement than to corruption. A recent Wall Street Journal article about the New Jersey Port Authority says corruption is “…when bureaucrats abuse power for personal gain.” There seems to be a lot of corruption there. There seems to be a lot of bad judgement here. Especially at the Mississippi Development Authority. A leading presidential candidate might say it’s stupid.

Lost trust. And he might have a point. If you want to encourage real investments in Mississippi vs political investments, it’s probably stupid to lose the trust of real investors. Breaking promises is a good way to do that. Investors in homes and properties in Ridgeland relied on the promise of zoning laws and codes to protect their investments. They think they have been betrayed. They seem to have a point. Word gets around. It’s true: capital goes where it is welcome. It doesn’t go where it’s abused and confiscated. At least it doesn’t go there again.

Another way to lose the trust of real investors is to give MDA bureaucrats money to invest in the name of jobs. They don’t try to pick losers. They just do it a lot. Why? No skin in the game? Never played themselves? Suggestions from the governor? Whatever. Their investments are often loans that don’t get repaid. Kior’s $69 million is an example. This experimental plant to make diesel from pine trees was a 1000:1 long shot. Not surprisingly it didn’t work. Its promised thousand jobs is just another broken promise. But hey, it was other people’s money (taxpayers). We are big on experimental plants paid for with other people’s money. Kemper is the $6.3 billion all time biggest broken promise ever. But dollar-for-dollar Costco may be more contentious.

We must be really slow learners in Mississippi. We keep doing the same stupid things over and over while expecting different results. It really is insanity.

Mr. Williams is the Chairman of the Bigger Pie Forum. 


Anonymous said...

So, you're running Northside Sun editorials now? Thought this was ridiculous when I read it there. Slippery slope.

Anonymous said...

What a crock. It's far fetched to compare Kemper to Costco. Kemper is a scam. Costco is a very respected and successful retail solution that is highly sought after in areas of high intelligence.

Anonymous said...

But there is a point to will Costco create more retail or just redistribute current spending. I still have to by the same amount of tp. My cost savings at Costco would be redistributed to the wine section. Guess that's why Costco would never consider Rankin County. That area next to Home Depot in Brandon would be perfect, except no wine sales so it will stay vacant.

Anonymous said...

Nice to know Costco is up early this morning.

Anonymous said...

Looks like Andrew Mattiace and Jim Barksdale are up early this morning. (Let's be honest, Buster Bailey and Gene McGee don't know how to post comments.)

Kingfish said...

Bigger Pie is a sponsor and has the right to post content. Deal with it.

Anonymous said...

In "areas of high intelligence"? Gotta link for that?

Anonymous said...

This is laughable. I'm not sure what Bigger Pie Forum is, but it can't be taken seriously. The only people who'll be deceived by this foolishness are those who decry the economic development decisions of Ridgeland which led to the home run attraction of Costco. Those people will likely open up their wallets and make Mr. Kelly's Christmas much better, though. So, he's probably done what he wanted.

You People Just Shut Up said...

" a sponsor and has a right to content". What the hell does that even mean?

I think what it means, "You people just shut up. They pay me well and can put whatever they want on here. Just be glad comments are allowed and not banned like with most posts from those who pay me".

I see.

Anonymous said...

The Bigger Pie is a "free market" Koch-Tea Party-McDaniel group. Love them some Federal money, (since we "elmiminated traceable'earmarks'" in theory), but want to "git" Jackson and whoever didn't support their agenda. "Anti-tax" zealots who love their own tax expenditures but hate others'. Grover Norquist-millionaire tax break type folks. You know-lots of Reagan pictures (without mentioning his tax hikes), Franklin quotes out of context, tricorner hats, harrumph, "me thinks" will slip occasionally as a Freudian shibboleth showing their genesis as Web bboard commandos of the mid 90s. The guys who'd throw out Reagan and Bush and vote for loons like Cruz (whose wife is at Government Sachs). McDanielLand. All talk, minus a radio. Gulf Zone money-good. MDA money-bad. Phil- a hero until election. A zero once in office. The paranoid who turn on folks who actually have to govern the minute they are in office. Being "Patriots" and all. LMAO.

Anonymous said...

Amen Mr. WIlliams

thusbloggedanderson said...

I'm pretty sure no one's ever mistaken me for a Tea Party fan, but there is obvious room for corruption here, with mayors and aldermen "captured" by developers who obtain tax breaks, i.e., who take your tax money & mine. Might as well say everyone who builds a house in Bridgewater will be buying lots of stuff in Ridgeland and Madison County, so they shouldn't have to pay any city or county taxes.

The evident belief of Gene McGee & his merry band of aldermen that they work for Mattiace, not for the citizens of Ridgeland, is creepy.

Anonymous said...

Kudos to Kingfish for tolerating all these know-it-alls who lack the stones to start their own gig!

Anonymous said...

@8:35 That is too funny. JJ, need to compile a "best of" comments section ha. Where does one learn how to get a piece of this "republican welfare?"

Anonymous said...

Considering the source, this is an amusing blog post. If ISIS bought some ad space, could we get a "We're Not Bad Dudes, Just Misunderstood" sponsored entry?

Anonymous said...

KF, you hit the proverbial nail on the head with this article. It took guts to publish this.

You might also want to check into the new strip mall about to built east of Brandon. It will receive the same tax breaks as others that have been built.

Value Road in Brandon is being extended as a service road to the new development. A 4-lane is being built from Hwy 471 to the new development. a lot of big-name investors are involved.

Brandon touts the project as economic development. Not too sure about that. Roughly 90-95% of the jobs generated will be part-time minimum wage. And that constitutes economic development - for whom.

Anonymous said...

The Kemper case is coming back up before the MPSC Nov. 10 on the issue of whether the Commission grants rates that MPC has asked covering $1.1 Bil in expenditures for the natural gas portion of the plant--but twice the normal cost of an off the shelf natural gas plant. The MPSC might give MPC less if they can get beyond MPC entreaties they are running out of money. We will see. My point is it is time once again to pay attention to the issue. Heads up. Kelley Williams needs to continue being a gad fly on the issue--a thankless but necessary task.

Anonymous said...

Where have Bigger Pie and Ashby Foote been on the Gulf Zone abuses, or the MDEQ welfare for the District at Eastover? Oh, it's in their backyard. (At least KF covered it.) That's why folks turn off the radio when Bigger Pie (for Me and My Buddies Only) comes on. Because you are making your piece bigger but complain if someone else does it. The classic Tea Party rant. Look! He's trying to take your cookie! After the TP and Country Club GOP took 9 cookies. And you'll whine when Hillary waltzes into office. NE Jackson at its hypocritical finest. Look! Rankin is doing this! Look! Ridgeland is doing this! (Just look away from Twin Lakes, Capitol Green, ad nauseum).

Anonymous said...

Highland Colony Parkway is a 4 land road with easy interstate access. It was built for commercial development. See the Renaissance. I live close by and have no problem with Costco. Now, I do not think it should be subsidized. There is an office park buffer between this and the neighborhoods. There are several neighborhoods in Madison that are much closer to the Kroger on Bozeman Road. Madison also has a Sams with a TIF (subsidy). No complaints from the citizens there.

Anonymous said...

The article said what needed saying.

** Sock Puppet ALERT ** said...

Everyone reading here (and in Ridgeland involved in the Costco controversy) should take heed to this cautionary story from the Jackson Jambalaya archives:

Be careful what you post here. Gene is watching you.

Kingfish Note: "I've had some time to think about this post. Hart uses the phrase "control conversations". So Gene is pretty much paying someone to cyberstalk and then shut down anything conflicts with his message. Careful Leadify, this site can play rough too. Harass anyone who comments on this site and we find out about it, it will be made known."

Be sure to read the comments.

Anonymous said...

Would these tax incentives be considered tax abatements for GASB 77 purposes? If so, starting in July they will have to be disclosed in the notes to the government's financial statements.

Kingfish said...

If Jobskeepers wants to start posting comments here, it can buy an ad.

I Shop At Macs Fresh Market said...

So, Kingfish gets kudos for 'saying what needed to be said' but admits it was a paid ad?

And to 12:34, I don't know a single damned soul in Madison who wanted Sams. I certainly didn't and don't and live nearby. All it does it attract hundreds into the area from outlying counties that have black sheriff's who can't keep order on their own doorsteps.

Costco will be Sam's X 5.

Anonymous said...


"...crock, scam, (or) very respected and successful", it doesn't matter, they're spending my money.

"No skin in the game" is the best take on it.

Anonymous said...

Plenty - o - skin. Not yo' money. Economic development incentive/startup, whichever is easier for you to understand.

Anonymous said...

I've read the articles and I've lived in Jackson for 10 years--do ANY of you have ANY idea what would be built in Chimneyville WITHOUT tax breaks? How bout zilch--nuttin--ZERO--this one horse town is full of people w champagne tastes and beer budgets !!! Based on demographics and fundamentals of supply, demand and AFFORDABILITY we're lucky to get anyone to take an economic risk here!!

Anonymous said...

Amen, 3:53. And they act like breaks and incentives are criminal.

Anonymous said...

3:53 I'm concerned with ROI and current state leadership subsidizing strip malls. Economic risk doesn't mean much when the state is paying tens of millions for part-time, minimum wage or slightly above minimum wage jobs at a retail outlet.

AV8NLVR said...

10:56, what is the story behind that Brandon development. I have noticed a wide road being built off of 471 that seems to go into nowhere. I haven't read anything about it. Who are the anchor stores going to be? Is it going to have access to I-20?

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