What almost $3 million tax dollars and five years produced. Somebody please buy this slate dump.
Nicewonder Property Fiasco in Bristol, Virginia
by Lewis Loflin
To quote the Bristol Herald Courier on January 12, 2005,
A good investment? Bristol Virginia invested $2.5 million in a 23-acre speculative real estate deal in the Exit 7 area off Interstate 81. It coughed up $175,000 to lure a Red Lobster to the same area. The city's public utility anted up another $50,000 on the same deal. So far, there's nothing to show for it, and all that city leaders can do is urge us to wait patiently. Meanwhile, plenty of people are asking if the city will see a return on its investment. Good question.
Update November 15 2009: The property sold for $700,000 for an almost $2 million loss. As of 2015 we have a single motel and a Cracker Barrel restaurant.
Update July 2006: Another $5 million tax dollars for a strip mall. In an unbelievable turn of events, the out going city council approved another massive corporate welfare package. This development at Bristol Exit 5 will compete directly with the stalled $2.5 million Exit 7 retail development. As of July 2006 they claim to have a Cracker Barrel coming in, but three years and $2.5 million has produced nothing. This must be some of what former Mayor Weberling calls "voodoo bookkeeping."
I attended the hearings on the $2.5 million land deal and spoke to city officials on this issue. I asked directly for information on this project and was refused. In 2005 I finally got the material under the freedom of information act while controversy rages over the lack of progress at the site.
To quote the Bristol Herald Courier, Only one resident spoke at the hearing. "It's not the function of government to engage in private business ventures," Lewis Loflin told the council. "I'd like to see full disclosure of all financial information surrounding this business decision." Much of the council's talks about the impending purchase were held in closed session under Virginia law allowing such private discussion of prospective new businesses. Loflin questioned what he called "replacing a $15-an-hour job with a $6-an-hour job" with the project's focus on retail and restaurant development.
It took a year to get the agreement under the Freedom of Information Act and I knew when I read it we were in trouble. The City went and borrowed $2.5 million then handed the deed to Tim Carter, who also got the $225,000 for the Red Lobster deal. Carter owns Starwood Properties. To quote the Starwood website www.starwoodproperty.com;
Starwood Properties has been largely responsible for the development of Exit 7, an ideally-situated retail location off Interstate 81 in Bristol, VA. Exit 7 projects such as Tinseltown (a 14-theater Carmike Cinema), Old Dominion Market Place, Bristol Commons, Old Bakery Place, Dominoes Pizza, Red Lobster, and the forthcoming Village at Exit 7 retail center, offer direct interstate visibility and roadways which support regional shopping.
Starwood's Exit 7 developments have attracted successful national retailers such as O'Charley's, Ruby Tuesday, International House of Pancakes (IHOP), Advance Auto Parts, Cato and Cato Plus, Subway, Sagebrush Steakhouse, Sally Beauty Supply, Rent-A-Center, and TCBY.
If he is so successful why does he need millions in corporate welfare and money from the City? At the time "the project as potentially generating up to $50 million and attracting major national retailers and restaurants." The City was supposed to approve the sale of each parcel, which I believe was 10 or 11 total.
(January 20, 2005) I talked to Mr. Brown of Bristol, Virginia economic development. Besides sounding really annoyed, he stated that Tim Carter was supposed to pay for all infrastructure at the Nicewonder Property the city purchased ($2.5 million) for him. It seems either Mr. Brown was uniformed or just lied about Carter spending his own money on this deal. In fact from my reading of the agreement the whole deal was so vague and had no enforcement mechanism or real specifics on that.
I felt he was in default in 2005, but later they got a single Cracker Barrel restaurant up there and another parcel was bought by Virginia Premier Health Plan operated by Virginia Commonwealth University. (A government contractor contracting back to the government.) They're part of the welfare industry. See www.vapremier.com The public calls the property "the slate dump."
When I asked Mr. Brown why we are using $175,000 in economic development funds for a private seafood restaurant, he claimed it's a good investment for Bristol. "People will come for miles" and the meals tax will keep the city form raising property taxes. When I asked why the city owned utility waved a $12,000 water tap fee and gave Carter $50,000, he said so they could buy a power transformer, etc. When I asked did the utility do this for other businesses, he said, "no." To quote Mr. Brown (Herald Courier Oct 30, 2003) "The jobs we're creating aren't as high-paying, but they're jobs."
An empty Bob Evans below the "Village" development at Exit 7.
As of September 2007 they got a Bob Evans Restaurant, which closed down soon after a Cracker Barrel located on the property above. $2.5 million plus for a single restaurant? By 2012 something else has located there.
Shutdowns at Exit 7 Rattles City Leaders
February 2009: Bristol, VA is reeling under massive store closures at its Exit 7 retail mecca. I warned them about speculating on retail and going on a massive spending spree based on it. Now the bubble has burst leaving Bristol in real trouble. In the last 18 months Exit 7 has lost 15 businesses while gaining a Sam's Club, that jumped the state line from Sullivan County Tennessee, for who knows how much corporate welfare. First went Bob Evens, the Jumbo Buffet Chinese restaurant, a steak house, etc. Now the press reports an additional 11 businesses have shut down in the last six months alone. I interviewed several merchants there, and they are worried.
The Bristol Chamber of Commerce calls the problems "challenging for both large and small businesses." They've begun assorted educational type programs to help business owners. I'd suggest instead of the dishonest representation of Bristol being a good place for business, they instead be honest about the high poverty levels and low pay (that the Chamber supports) making business risky because working people here have little deposable income. They can't live off just retirees.
City leaders. already dealing with $112 million in debt, are worried. "I don't know if the economy is the total reason for the closures or not, but we have seen an exit of businesses and it is a concern," says Mayor Jim Rector. "First is the lost revenue as a result of the closings. Certainly, that will affect the city. But more importantly is the loss of jobs. All of these retail establishments employed local people, so that will have a negative impact too. That's money that won't be used in our local economy." Yet they don't give a damn about the low pay of these jobs when they sunk millions of tax dollars into underwriting this risky development. Again, to quote Mr. Brown of Bristol, Virginia economic development, "The jobs we're creating aren't as high-paying, but they're jobs." Ref. BHC February 7, 2009
Starwood Has Defaulted
None of the members of the present Bristol City Council were in office when I addressed it over this foolish decision December 3, 2003. The City gave $2.5 to Tim Carter and Starwood Properties anyway. Now the new members get to clean up the mess. In the original agreement and what I was told by City officials, Carter was supposed to spend $900,000 of HIS money to develop the Nicewonder "slate dump" Property. Instead, it seems according to the Bristol Herald Courier he used the property itself to borrow the money, and has defaulted on the bank. To quote them February 24, 2009:
Vacant property at The Village at Exit 7 will soon be sold at auction to avoid foreclosure...In a Feb. 15 letter to city leaders, Starwood President Tim Carter asked the City Council to approve his plans for an absolute auction of the remaining eight parcels....Records show Carter borrowed $894,000 to develop the site and still owes Citizen's Bank about $700,000.
BHC February 25
A bank will likely foreclose on eight parcels from The Village at Exit 7, after the City Council declined to act on a developer's request to put the property on the auction block...Carter currently owes Citizens Bank about $700,000, with that loan secured by the property, near the northbound ramps of Interstate 81's Exit 7...
(The City Council did nothing.)
"I can do the arithmetic," an obviously surprised Carter said Tuesday. "If that land sold for $2 million, the city would get about $1 million. If the bank sells it on the courthouse steps, they [city] get nothing...I thought the auction was what they wanted to do."
Councilman Guy Odum thought inaction was best. To quote, "It's probably the best thing. I've weighed the options and this gives the city and Mr. Carter a chance to work out the details. It also takes out some of the negativity associated with that kind of auction."
And to quote an unhappy Mayor Jim Rector, "When your choices are public auction or let the bank foreclose, I don't know which is the best option. I wish we had a crystal ball. We stood a better chance of recouping some money if it had gone to auction, but council has made their decision."
They claim they will get some of the money back sometime from property taxes, etc. They still got stuck for $2.5 million in a deal they should never have been involved in. In the October 15 2007 Kingsport Times-News Tim Carter had this to say,
"I didn't understand it for a long time. It's out in the middle of nowhere and the demographic isn't the standard demographic. But you have to understand the dynamics that make Exit 7 the success it is."
County Estimates for People of All Ages in Poverty for Virginia: 1997
Table A97-51. Estimated Number and Percent People of all Ages in Poverty by County: Virginia 1997 (Estimates model 1997 income reported in the March 1998 Current Population Survey.)
Washington County 14.3, 11.2 to 17.4
Poverty rate, Bristol city 21.1, 16.1 to 26.0
Better jobs needed, not Exit 7
How Washington Country destroyed 50 families for a strip mall that will cost citizens $40-$50 million.
SeeTrailer park lies in ruins
Published December 19, 2003 in the Bristol Herald Courier,
My compliments to the Bristol Herald Courier for reporting (Dec. 3 and Dec. 4) on the Exit 7 deal. I appreciate the council's honesty on their agenda, but reject their reasoning.
According to ETSU economist Steb Hipple, service jobs produce a shrinking payroll. A good job can create an additional one to two jobs in the service sector. Statistics from 1997 for Bristol show a 3 percent unemployment rate, but a 21-26 percent poverty rate. That's comparable with Dickenson County at 15 percent. It's much worse today as reflected in the almost 45 percent of Bristol children on free and reduced price lunch.
According to Steve Fisher at Emory & Henry College on this area, "It all comes back to jobs. ... Even two minimum-wage jobs together won't take a family above the poverty line. ... There are pockets of wealth (but) ... in general, it's pretty poor." (Herald Courier, June. 22). Council acknowledged this Tuesday night, but seemed indifferent to it.
They revealed their real agenda and Mr. Wolfe admitted this development would not address the chronic underemployment, low wages, and poverty suffered by exploding ranks of the Bristol working poor. Their sole concern is tax revenue and continued public funding of private pet projects and pork-barrel waste.
Additional tax revenue will be used to pay for the train station, new library, etc. They want a high-class retirement community and plan to fund it with the misery and hardship of others. As for keeping down property taxes, that mainly benefits the wealthy (and some retirees) but not working-class Bristol residents, who can't afford much anyway. Most property in Bristol is either tax-exempt or owned by important people that want a train station but won't pay for it.
Mr. Brown's excuses about his failure to get decent jobs to Bristol are nonsense. Land didn't stop them from buying 23 acres for a Red Lobster instead of 15 for AFG. They can't levy an income tax on wages and better paying jobs threaten established low-wage employers.
The tax revenue from a Red Lobster they can get and poor people are that source of revenue. Maintaining a permanent underclass of cheap labor for the retail/service industries is the only way to make this work.
Bristol leaders must begin to serve all the people, not just their own narrow social class. Conducting public business in secret only undermines faith in our institutions. Let's see real leadership for all the people and open government.
Myself in the news:
- Nicewonder Property Fiasco in Bristol, Virginia
- Blogging sites (this one) in the news
- Local activist working to help displaced trailer park residents
- A Town's Future Is Leaving the Country LA Times
- My letters printed in the Bristol Herald Courier
- 400 New Jobs is Just 20 Jobs
- Bristol Compressors Closes Cost Taxpayers Millions
- Government Agriculture Grants Pork Barrel Waste
- Bristol Schools to Teach Cannabis Farming?
- Bristol Compressors Stabs Workers-Taxpayers in the Back
- ALICE in Poverty Land in Southwest Virginia
- Morgan Griffith, Phil Roe Betray American Workers
- Morgan Griffith Wrong about Volvo Trucks
- Illegal Aliens Hurt Poor Tennessee Workers
- Virginia Tobacco Commission Loses $1.1 Billion
- 30 Years of Failure in Southwest Virginia
- Exide to Rehire 40 Bristol Workers - Not After All
- Disability Still Big Business 2017 in Southwest Virginia
- Disability the Hidden Unemployment Program
- $6 Million Bristol Trainstation 2022 Still Producing Nothing
- Appalachian Regional Commission is a Waste
- Address Corporate Culture Before Handing Out Money
Note that minimum wage in 1970 was $1.60 adjusted for inflation is $10.46 in 2018. That is what I call adjusted minimum wage. Assuming one even gets 40 per week that's for 52 weeks that equals $21,756. Per capita income in Bristol Virginia 2018 is $21,589. It is similar to this across the whole region.
Third world? Some have called us the China of America minus jobs.
Just a few of hundreds of plant closings see Smyth County the China of America loses jobs.
Update September 3, 2019. Based on data from Dr. Steb Hipple economist at East Tennessee State University (retired), his data goes to the 3rd. quarter of 2016. The level of job losses is Tri-Cities is staggering, worse than what even I thought.
(The Tri-Cities Consolidated Statistical Area is composed of the Kingsport/Bristol MSA and the Johnson City MSA.).
The Bristol TN-VA, Kingsport, and Johnson City Urbanized Area Labor Market lost thousands of jobs shrinking the labor force that shrank the unemployment rates. The above table shows a decline of labor force by almost 18,000. But it gets worse.
Includes: Johnson City, TN, Carter County, Unicoi County, Washington County.
All workers BLS:
2016 78,140 workers, Median hourly wage $14.47, Annual $40,140
2018 77,020 workers, Median hourly wage $15.38, Annual $42,740
Labor force fell 1120 jobs in 2 years.
Kingsport-Bristol-Bristol, TN-VA MSA includes: Bristol city, VA, Hawkins County, TN, Scott County, VA, Sullivan County, TN, Washington County, VA.
All workers BLS:
2016: 118,470, Median hourly wage $15.27, Annual $41,050
2018: 116,150, Median hourly wage $16.50, Annual $43,480
Labor force fell 2,320 in in 2 years.
That's not the worst of it still. For Tri-Cities the total labor force is 193,170. The labor force shrank by 3,440 jobs in 2 years - during a so-called boom. In 2009 the labor force was 247,965, minus 193,170 equals a staggering loss of 54,795 less people are working in 2019 than in 2009!.
I can't believe this myself. Anyone working here knows it is bad. That could be explained by high poverty and disability rates, and large numbers of retirees leaving the labor force. I don't know because a lot of data is hidden from the public. But makes sense when we look at the national labor force declines.
- No Private Sector Job Creation 1999-2009
- Wise Virginia Call Center Another Sykes Fiasco
- Tobacco Commission Sykes Fiasco Reveals Government Waste