Guest Column by Stuart Kennedy
In 2011, the Union Township Trustees approved the purchase of the former Biggs building for $7,500,000 (through the Union Township CIC) and leased it to Jungle Jims. Union Township threw in an additional $1,000,000 at that time for building renovations to make the initial spend $8,500,000.
Concerned residents at the time were told there was little to no risk on the Township’s part because obviously Jungle Jim’s would be good for the rent money and after the approximately 8 year lease the taxpayers’ money would be back in the Union Township Treasury.
As a Township resident, you might find yourself asking:
- If Jungle Jim’s was such a low financial risk why did they not just borrow the money from a commercial bank like most businesses and purchase the building on their own?
- What expertise did our Trustees Timothy Donnellon, Matt Beamer and Robert McGee with their respective backgrounds in auto sales, personal financial planning, and as a court bailiff bring to the table that the professional business lenders at the commercial banks lacked?
- What makes Union Township qualified to enter the commercial real estate business?
- Why should the residents of Union Township be the ones to carry the financial risk of a commercial real estate loan?
The Union Township Trustees stated the $8,500,000 spend was required to bring jobs to Union Township. We now know that was not true. Menards home improvement stores made an offer to purchase the former Biggs building on their own with no financial assistance from local government. Their store would have created jobs similar to Jungle Jim’s and Menards would have even contributed more in sales tax (per dollar of sales) to Clermont County since food items are not subject to sales tax.
- We even know the Union Township Administrator had lunch with an executive of Menards prior to Union Township signing the purchase agreement on the Biggs building but yet “this was the only solution” to fill the vacant retail store location according to the Trustees.
- So, instead of what would have been the only hardware store in Eastgate, due to local government intervention in the free market, we will now get an eighth food retailer (i.e. Sams, Gordon Foods, 2 Kroger stores, Walmart, Aldi, Meijer).
- Never mind the fact that Remke Markets, a company extremely well qualified to make the call, decided that the location warranted the closing of the former Biggs store.
The Tea Party believes in three basic principles: Constitutional Limited Government, Fiscal Responsibility, and Free Markets. This deal went against all three.
- A limited government would not believe it even had jurisdiction to become involved in such a deal. The business of making commercial loans is not the intended purpose of the taxes we are forced to pay to our Township.
- If there is so much money laying around that it demands this deal to achieve a higher “rate of return,” how about returning the money to the taxpayers?
- A fiscally responsible Township would not be accepting the financial risk of a loan/lease to a retailer who possibly could not or chose not to obtain private funding on their own through traditional channels.
- Had free markets been allowed to function properly, this vacant building would have been purchased by another retailer without any government assistance.
- Finally, our existing local food suppliers and employers would not be facing a new competitor with the unfair advantage of government assistance and funding.
As the opening of Jungle Jim’s Eastgate draws near it appears as if the deal might have run a little short on money. On August 15 the Union Township Trustees voted to loan Jungle Jim’s an additional $1,000,000 (that brings the total deal up to $9,500,000). This cannot be explained away as a necessary incentive to attract a business to our area.
Jungle Jim’s is opening later this month in Eastgate regardless. Trustee Robert McGee described the additional $1,000,000 loan as a “line of credit”. I work with many retail business that have lines of credits to aid them with their merchandise purchases and other expenses. The only difference is these lines of credit are with their business bankers, not local governments (i.e. taxpayers).
With a population of 46,416 every resident of Union Township is now Jungle Jim’s landlord with just under $205 per man, woman and child invested in this deal (i.e. $820 per family of four). While it is too late to change course now, we can only hope the deal succeeds – if for no other reason than the sake of the taxpayers whose money has been so brazenly and needlessly put at risk by an overreaching and interventionist local government.