5280 Online

September 1 , 2016

by Kelly Bastone

A Fishy Deal?

Since 1983, Ross Reels has proudly advertised the fact that its product is manufactured in Montrose. But in 2014, Dragoo phoned local officials to announce the company was considering relocation proposals from cities in Arizona, Texas, and Utah. If Montrose could offer an attractive retention package, Dragoo suggested during City Council hearings, he might keep the company's 22 employees on the Western Slope—and maybe even add jobs by bringing California-based Abel Reels to the Centennial State. Local representatives initiated talks with Colorado's Office of Economic Development and International Trade (OEDIT), which invited Mayfly to apply for state incentives. Within a week, OEDIT approved a $280,000 package to reward Ross Reels for creating new manufacturing jobs in Montrose. Instead of simply meeting the state's requirement for matching local support, the city and county of Montrose went further and nearly doubled it: In January 2016, the Montrose City Council approved a deal granting Ross Reels $5,000 for every new hire and $50,000 in marketing and advertising funds. The deal also includes a $20,000 loan at one percent interest and $16,500 in abatements for sales tax, use tax, building permits, and water tap fees if Mayfly builds a new factory in Montrose. 

“We are proud to have Mayfly Outdoors as part of the Montrose community, and we are excited to work together to expand their local operations into something even bigger and better,” says Rex Swanson, Montrose's mayor. Mayfly representatives also applauded the partnership. Although Mayfly hasn't yet received any cash payouts for the jobs it has created, “It's really about making a mutual commitment,” Baker says. “We wanted [to be in] a community that was really going to work with us. Montrose has proven that it's pro-business, and for us, it feels great.” But not everyone was as thrilled about the city's play to keep Ross Reels. In fact, some residents were incensed.

“Mayfly held the city hostage, and the city paid the ransom,” says Scott Riba, an independent insurance agent and 15-year Montrose resident, who explains he is pro-business and pro-growth but opposes giving taxpayer dollars to private companies. “Not once has the city come to me and made me an offer of free money to grow my business and keep jobs in Montrose.” When Montrose upgraded its citywide internet service, local businesses had to foot the bill for conversions within their buildings, but Ross Reels received a $5,000 stipend to cover the costs. “If it's available to one, it should be available to all,” says Riba, who was not the only outspoken detractor at public hearings held on the issue. Several others—including business owners Dennis Mitchell, Dee Laird, and Yvonne Meek—were equally frustrated, saying their businesses could also benefit from public support and questioning the justice of funneling taxpayer dollars into private coffers. Indeed, a group of Ohio and Michigan taxpayers sued DaimlerChrysler (which received $280 million in incentives from Ohio and the city of Toledo), claiming it was unfair for one taxpayer to be given a break at the expense of all others. A 2006 Supreme Court ruling, however, determined the plaintiffs did not have the legal standing to challenge Ohio's actions... 

“Companies sponsor champion-level teams and athletes because that association builds valuable brand recognition,” says sports marketing analyst Eric Wright of Joyce Julius and Associates, a Michigan firm that evaluates corporate sponsorships and product placement. Consequently, he believes the incentives granted to Mayfly could be beneficial to both sides. “There's a lot to be said for being affiliated with a winner,” Wright says. Small businesses like Riba's—which only employs two or three people—can't launch Montrose into the limelight. The city needs to sponsor superstars. And with its partnership with Ross Reels, Montrose has, it believes, hitched a ride on a reborn luminary.