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• Mitchell Schnurman: Big hype yields little at Cabela's
  By Mitchell Schnurman

  The giant Cabela's store in far north Fort Worth is impressive by many measures. It's a retail paradise for sportsmen and a feast for the eyes for anyone who loves the outdoors.But it was supposed to be a lot more, which is why city leaders agreed to give Cabela's up to $42 million in incentives over a 20-year period. They even went to court to defend the tax breaks.Fort Worth doesn't usually give retailers a shot at so much public money. Unlike a corporate headquarters or manufacturing facility, retail doesn't generate many high-paying jobs or attract suppliers.But Cabela's was portrayed as an economic force by itself and a big-time catalyst. Proponents said it would pull in a hotel and more than $500 million of nearby retail and commercial development. The hype even claimed that Cabela's would rival the Alamo as a tourist attraction.Promises, promises.Two-and-a-half years after opening, Cabela's is falling short of projections. It's not even hitting the relatively low marks tied to its tax breaks.As a result, the Sidney, Neb., firm has paid back more than $70,000 to the state because it didn't create the jobs it promised in Fort Worth and at a second store in Buda, south of Austin. An additional $200,000 in state funds, linked to new hires, is out of reach now, too.Cabela's also lost out on $68,000 in tax rebates from Fort Worth last year because it didn't meet local goals. To get the full tax break, Cabela's was required to have at least 60 full-time employees from Fort Worth, including 10 from the central city, and spend $5,000 with minority- and women-owned businesses.Those aren't exactly killer thresholds, and the shortfall gives an indication of the disappointing performance.There's more.In 2004, when the City Council was evaluating the elaborate incentive package for Cabela's, the staff described the scope of the project and the potential impact.Cabela's was supposed to have about 500 employees in Fort Worth. The number last week was 340, including part-timers, a spokesman said.It was supposed to generate $67.5 million in first-year sales; in 2006, the store did more like $41 million -- at least in taxable sales. The spokesman said Cabela's "is comfortable" with the early forecast, but city sales-tax records indicate that the total was much lower.Cabela's arrival was projected to spur development on 125 adjacent acres, including a 234-room full-service hotel and eight restaurants. More than $573 million was forecast to be invested in that area in the next 20 years. So far, Cabela's has spent $51 million to build its store, but nobody else has stepped forward with another project.It's still early, and Cabela's may eventually live up to the lofty expectations. For years, both the Alliance area and downtown Fort Worth seemed to have little activity after major investments were made there. Then, almost overnight, they exploded with development.Even if Cabela's disappoints, it remains an important asset and a unique retail anchor. It adds to the momentum in the Alliance corridor, which has been a driving force behind Fort Worth's continual growth.And it probably helped persuade J.C. Penney and Sam Moon to put stores at Alliance Town Center, a mall about three miles south.The warning to heed from Cabela's -- and all economic-development projects -- is beware of the hype.Last week, an Austin watchdog group, Texans for Public Justice, released a report on the incentives doled out by the Texas Enterprise Fund. About $359 million has been given to 38 recipients from the governor's "deal-closing" fund, and the report says that almost two-thirds of the grants went to companies that later announced layoffs or failed to create the jobs they promised.The report cites Cabela's, which received $400,000 from the state in 2005. That was based on having 400 full-time employees in Texas and at least 160 in each store.

• Thinking ahead on reverse mortgages
  By MITCHELL SCHNURMAN

  So long subprime, no-doc and ninja loans -- short for no income, no job, no assets.Hello, reverse mortgages?Most people wouldn't connect these financial instruments. The first group includes anything-goes loans that fueled the housing bust and global market meltdown. Reverse mortgages, in contrast, are about the most conservative vehicle around. You have to be at least 62 to get one, and the vast majority share the same closing costs and interest rates, regardless of lender.Yet a week ago, a Senate panel convened in Washington to talk about the risks of reverse mortgages and drew some scary parallels."We have gone through a savings-and-loan collapse, a stock-market bubble and are currently in the middle of a lending mess," said Sen. Claire McCaskill, D-Mo. "Our goal is to make sure that reverse mortgages don't become the scandal of the next decade."That doesn't seem likely, given that reverse mortgages are a niche product comprising just a tiny fraction of the mortgage industry.They'll account for fewer than 5,000 loans in Texas this year and about 107,000 nationwide.But the specialty is growing fast, tripling in the past three years. Judith O. Smith, a broker in Fort Worth, says she's doing 35 reverse mortgages a month, up from 50 in all of 2004.The market is expected to explode in the next two decades, as aging baby boomers seek to unlock trillions in home equity.Reverses are not right for everyone -- nor is a conventional home loan -- but officials say they're es- pecially ripe for abuse, because seniors can be misled easily. Senators were told about some borrowers who were sold a reverse mortgage and an annuity from the same salesman, generating huge fees and tying up the homeowners' money.These appear to be extreme cases, because most people who were surveyed said they're happy with the loans.Reverse mortgages were created 20 years ago, but they've been available in Texas just since the end of 2000. They were developed for seniors who are short on cash and want to tap the equity in their homes without taking on a monthly payment.In most situations, they let borrowers stay in their house and free up money for personal expenses, healthcare, even taxes and insurance. According to an AARP survey, 93 percent of borrowers reported that the mortgages had a positive effect on their lives, and 83 percent said they completely or mostly met their financial needs.What's worrisome, McCaskill said, is that the mortgage industry's marketing machine is gearing up as if this is the next big thing. It's running financial seminars on reverse mortgages -- remember the "no-money down" sessions on real estate? -- lining up celebrity endorsements and recruiting salespeople."The easiest sale you've ever made," boasts one ad."Here is the opportunity to get in on the ground floor of a business that could make you incredibly rich," says another."You, too, can cash in on this once-in-a-lifetime boom," proposes a third ad.Lawmakers are trying to raise awareness of the loans and add consumer safeguards, but they need to be careful: too much negative publicity will scare off prospective borrowers, including those who would be well-served by a reverse mortgage.The major complaint, from both borrowers and people who passed on the loans, is that fees are too high. It's a legitimate gripe, because upfront costs can be two to three times higher than a conventional mortgage, and origination fees tripled from 2000 to 2006, AARP says.For a 70-year-old, a $100,000 reverse mortgage has fees of almost $7,000, plus an additional $5,000 to be set aside for service fees, according to an online calculator at reversemortgage.org. Borrowing the same amount for a conventional mortgage would require about $2,800 upfront.

• Don't expect a high-spirited welcome for Eagle spinoff
  By Mitchell Schnurman

  In 2000, AMR Corp. spun off its travel subsidiary, the Sabre Group, and employees were so thrilled they held a pep rally at Texas Stadium.Dot-coms were booming, and Sabre's stock was worth more than AMR's giant airline operation. Going independent rewarded shareholders, and Sabre believed that its growth would take off, because it could bid for more business from American Airlines' competitors.Things didn't work out as planned. Sabre, like American, was soon roiled by recession, 9-11 and the wholesale restructuring of the legacy airlines. It sold lines, slashed employee rolls, outsourced call centers and still saw its stock price tumble. Early this year, it was acquired by a private-equity firm, and the downsizing has continued.Sabre would have faced disruptive changes, regardless of whether it was under AMR's umbrella. Arguably, it fared better by being able to chart its own course and diversify its business.But its experience helps explain why American Eagle employees are anxious about the prospect of being spun off by AMR -- an idea the parent company proposed three weeks ago and aims to complete next year."We're not planning any tent rallies," said James Magee, an Eagle pilot for eight years and a spokesman for the union. "Nobody's excited about this opportunity. We can't even define the opportunity."Eagle workers are right to be worried, not because spinoffs are inherently bad but because the airline industry