Granting a quarter of a million dollar tax abatement to a McDonalds franchisee illustrates how little our elected officials understand Economic Development. I want to discuss several points:
What is a small business?
First of all I want to talk about small businesses. If the owner of this McDonalds franchise that got the tax abatement owns only one franchise location then they ARE a small business per the SBA as I have previously posted. The SBA has specific rules based on NAICS code, number of employees, etc that define whether you are a small business or not. Per the SBA, the McDonalds franchise in question is a small business if its owner owns only one location.
Please realize that many people who own a McDonalds franchise own several McDonalds franchises. If you own ten McDOnalds franchises then you certainly are not a small business by anyone's definition.
I do not know how many locations this franchise owner has; I would bet that none of the eight City Council members who voted on the issue (All BUT Sam Talarico) know either. I doubt if they even considered asking the question.
There are a lot of definitions for a small business. The SBA definition is often used since those businesses that qualify as a small business per their rules can get beneficial loans at a very low interest rate.
The Department of Labor has a definition for a small business as well. Per the Department of Labor any business with fewer then 50 employees is considered a small business. For example these businesses do not have to comply with the Family Medical Leave Act! Per the Department of Labor a McDonalds franchise owner with one location IS NOT considered a small business.
Sam Talarico questioned whether I knew what a small business was in an earlier comment. I agree with Sam that I tend to relate to my clients rather then the legal definitions. I do this because I am an advocate for my clients and not an attorney. I do this because I feel that truly small businesses have been 100% ignored by our City and that they are vital to our city.
Is this Economic Development or is it Economic Re-arrangement?
Per our City Council and the Fort Wayne Economic Development professionals granting a tax abatement to a McDonalds franchise in Fort Wayne is considered economic development. This blows my mind and illustrates that backwards thinking going on in Fort Wayne government.
Economic Re-arrangement is a term I coined and use when I speak at public events. This tax abatement is a great example of it.
Fort Wayne has a huge number of restaurants. The residents of Fort Wayne and those who visit Fort Wayne spend a fairly predictable amount of money eating out. There are only a few things that will cause Fort Wayne restaurants to do more business:
1. More tourists coming to Fort Wayne and spending their money. I am sure no one thinks a new McDonalds will draw tourists to our City; at least I hope they do not think it will.
2. Wages in the area must increase relative to real inflation. I certainly hope that no one thinks that adding a new McDonalds to the area will cause wages to increase...
3. It is possible that a new restaurant could draw people from Auburn, Kendallville, etc to Fort Wayne; in essence causing those people to not eat out in their home City and to come to Fort Wayne to eat. I certainly hope that no one thinks a new McDonalds will draw people from outlying cities.
If none of the three items listed above occurs; then the project is Ecnomic Re-arrangement and not Economic Development.
This new McDonalds will do one thing and one thing only in my opinion. It will cause people to eat at McDonalds rather then other nearby restaurants. It will shift the consumers from one restaurant to another... It will not create ANYTHING.
This new McDonalds will cause other restaurants to make less profit and possibly lay off employees or close their doors.
This is unfair because the other nearby restaurants are not receiving tax incentives. City Council is interfering in the private market and influencing which restaurants will succeed and which will fail.
Granting a tax abatement to a McDonalds Franchisee is a perfect example of what is wrong with the direction Fort Wayne is taking. This project will not create high-paying jobs and should not qualify for a tax abatement.
This same City Council banned smoking in bars and restaurants. I wonder when they will consider banning unhealthy fast food establishments?
Please get out and vote November 6th!
I suggest you vote Libertarian and for Democrat and Republican candidates who OPPOSE this tax abatement.
P.S. I will be contacting Karen Goldner to see where she stands on this topic...