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ECC Director Responds to Rumors and Suggestions

The following was published on the Ellis County Coalition for Economic Development’s Facebook page. It has been reprinted here with permission of Aaron White, ECC Executive Director and author of the below post.
Ellis County Coalition for Economic Development
“First, let me say that we are seeing some exciting possibilities right now.  We have had several national retailers reach out to us, and we have also started discussions with others.  This can be a lengthy process, sometimes lasting a year or more. With the dollar figures involved in a large project, no one is willing to move too quickly.

“I would like to take this time to clear the air regarding some retailers.  Hays has not turned away retailers, in particular Target.  Retailers have a set of requirements for a community to be an eligible site.  The last discussion with Target was in 2008.  Target said they are focusing on sites with 85,000 within 4 miles of a location.  The only community with that density in the whole state is Kansas City.  These requirements can change, as the economy shifts.

“Hays is willing to work with potential projects.  We are doing so with one right now. Unfortunately, Hays does not have deep pockets to direct towards retail recruitment.  National chains riding a wave of popularity, such as American Eagle, will often require a building free of charge.  Large mall developers and large communities may be able to give away millions in real estate and infrastructure, but small communities like Hays cannot.  We will continue to identify and work with prospects that are suited for our region.  We have several things going for us as a community: one of the highest retail pull factors in the state (and yes, companies do pay attention to those figures), substantial growth in retail sales since 2008, and a trade area population of over 75,000.  As we continue to show retailers our strengths, we can expect some good success stories in the future.

“Another area I wanted to address is restaurants in Hays.  A lot of comments have been made about the expansion of fast food instead of nice sit-down restaurants.  A lot of that problem can be attributed to the franchise process and requirements. Most of the national chain restaurants are not corporate stores, but franchises.  Let’s look at Buffalo Wild Wings as an example: a new owner is required to open a minimum of 2 stores.  Based on current land and construction costs, building a 4,000 square foot BWW (this is the minimum size allowed) will run about $1 million per store.  On the finance side, BWW requires a new owner to have $750,000 in liquid assets per store, and $1.5 million in net worth per store.  New owners cannot borrow more than 80% of the project cost. So what we have is an owner that must have $3 million in net worth, $1.5 million in liquid assets, and $300,000 of that must be cash.

“There are chains that have even more restricted requirements.  This is why it is a challenge to bring certain chains here: finding a buyer who has the experience and finances to build the restaurant is tough. We continue to identify investors who already have the franchise and are interested in this area.  It is a long process, but we are seeing some interest.

“Patience and persistence is the key for this community. As the economy recovers from the last few years, companies will be in a growth mode again. We will also continue to work with locals who are interested in starting a business. I encourage everyone to explore our boutique shops, particularly in the downtown area. You may be surprised at what you find.”

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  • confused

    I was following until that last paragraph….what?

  • bosco

    in other words national chains are saying to themselves, “Hays sucks.”

  • Jim

    I don’t understand why we need agencies like yours & DHDC? These companies do their own marketing/development. When they see the resumes of these two agencies they not going to be impressed.

    • Reality

      Companies interested in expansion like to have a “face” of the community to deal with — someone who can answer questions about land prices/availability, vacancies, local retail history and who are familiar with zoning/building regulations and restrictions. Having one person to deal with, vice having to come in and try to seek out all these folks on their own, is part of what ECED and DHDC do. They do a good job.

      • Jim

        That’s why we have a Chamber of Commerce for that kind of data! Obviously ECED & DHDC aren’t working. Open your eyes and look around.

        • johnson

          i agree. how many faces does the community need? don’t we have a chamber of commerce? economic development? great job you folks are doing getting empty downtown buildings filled. waste of money.

          • research!

            Do you guys even know what a Chamber of Commerce does?? A chamber of commerce promotes business that ARE ALREADY ESTABLISHED! The connect their members with each other and the community. Their job is not to go out and find people to compete with their own membership. If Home Depot is a Chamber member, why would they go out and bring in Lowes to compete with them?

            Again, people spout off and don’t know what they are talking about.

  • Discussion > Presentation

    Asking the writer to respond:

    I have heard a “rumor” that the plot of land that sits directly north of IHOP was broken for a Buffalo Wild Wings in the past, but, they pulled out of the deal because the City of Hays and other organizations had “to many stupid rules” for them, so they left.

    I am saying this because it is a rumor I have been hearing for years and it is a business that you mentioned in your article. If that rumor is true, it would have nothing to do with how much it costs to start the business, but rather something the people running the area are doing to chase businesses off. I think this is where the idea of “turning away” retailers comes from. I wouldn’t think that businesses would come and want to open and the city would say, NOPE! But the idea of the area having some rediculus regulations is a common thing, and I think that is more what the public is thinking.

    So, the simple question here is: Is there regulations in place that discourage new businesses from starting here? (and this does not include regulations like population, but rather, things we could have direct control of)

    • Aaron

      The simple answer is no, the city does not have specific policies in place to discourage business. But it is more complicated than that, when a potential company asks for millions in incentives to locate. Hays does not have the resources to buy in projects like that. Some major chains are willing to work with a community on those term, such as Home Depot, when they see a market they really want to enter. Others will not.

      As far as the BWW project near Home Depot that you referenced, the lack of development was not due to city regulations.

  • Frustrated

    So what you’re saying is Hays doesn’t get anything but maybe another Wendy’s or McDonald’s and an empty Mall … is that what you’re really saying? Seems Hays has plenty of “economic development” groups but not enough new industry/stores coming into Hays. Long clarification of nothing.

    • Frustrated

      Re-reading the last paragraph … Boutique shops? Really? The only ones that can afford those are the those folks living in the northwest part of Hays. I do most of my shopping online or in Salina; I need clothes to put on my kids not expensive boutique items.

      • Getting what you ask for

        That is why Hays only gets “McDonalds” type business plans. No one in Hays demands anything else, at least not in the numbers needed to support a business.
        As for industry, there have been a lot of speculation but the water situation does not make Hays an ideal location either. Whenever the topic of hog farms and slaughterhouses comes up, the citizens get in an uproar. Hays is its own worst enemy.

        • Joe Friday

          Agree that sometimes Hays is it’s own worst enemy when you ask the ECED if they are looking for “industry” to move to Hays they will tell you that they don’t want “those” type of jobs in Hays and want to be like Manhattan and Lawrence and be a college town with service industy jobs. Also “frustrated” that Hays keeps pushing the idea that they have a water problem…They do not, they have any number of options to provide water to the citizens but they, following the guidence of the cities counsel put politics above solutions…SAD.

        • No Bull

          Packing house wages ($11 avg in 2011 according to Dept. of Labor) are not going to draw workers, when places like Enersys struggle to fill the jobs they have now, starting at $13+ an hour. Hog farms and slaughterhouses change cities, and typically not in a positive way. For proof, visit Dodge City or Emporia.

  • ?????

    The rumor I have heard is that the property costs are much more than other competing towns. The cost to buy a house here and the cost of contractors has long been an obvious disconnect with Hays and other similar-sized towns. Any truth to that as a barrier to new business development?