STARKVILLE — The Oktibbeha County Board of Supervisors could adjust its part of a proposed tax increment financing (TIF) package for a potential Academy Sports retail store after city aldermen lowballed the development Tuesday, but Golden Triangle Development LINK Chief Executive Officer Joe Max Higgins says the adjustment is unlikely to meet the developer’s needs.
The proposed $11 million investment hit a snag this week when aldermen approved public hearings for a 15-year, $1.5 million-maximum TIF package, not the full $1.8 developers say they need to cover costs associated with infrastructure improvements.
Developers asked the city to divert 50 percent of ad valorem receipts and 50 percent of sales taxes from the national sports chain’s development, but aldermen countered by offering 100 percent of city property taxes and only 25 percent of sales taxes, saying further sales tax obligations could hurt the city’s financial picture.
On Monday, county supervisors heard the developer’s request for a 50 percent property tax TIF — their portion of the financing package — which would divert an estimated $28,000 annually for reimbursements on the projects’ parking lot, lighting and other infrastructure improvements.
County numbers leave gap
Yesterday, county board President Orlando Trainer said supervisors could come back at their next meeting and discuss a higher percentage. A full 100 percent property tax TIF by the county — an estimated $56,000 — wouldn’t come close to the $300,000 gap created with the city’s offer.
The county does not collect sales taxes, so it has no say in adjusting those numbers.
“That does not get the number that they asked for,” Higgins said of what an increased county property tax pledge would mean.
It rests with the city to move on its pledge “or the developer if they are willing to take a haircut,” he said.
“If a new request comes back to us, we’ll have to consider it. I guess it comes down to how much the board wants it. I’m of the opinion that I’ll consider whatever comes to us,” Trainer said. “I guess I’m a little concerned about (the perception of outside developers) after all of this. We’re open for business here in Oktibbeha County.”
LINK officials were hopeful county and city representatives would bite at the developer’s ask since TIF packages in Lowndes County for higher percentages of property and sales taxes helped land national outlets Dick’s Sporting Goods and Michaels arts and crafts store.
The project
If a deal is accepted and the project moves forward, developers would build a 62,000-square-foot facility behind Sweet Peppers on Highway 12, near Walmart. The project also includes a yet-to-be-named 4,600-square-foot restaurant.
Ad valorem collections on the 8.4-acre site would increase dramatically, attorney Chris Gouras said. It currently generates about $5,400 annually for the city, and Starkville alone would see that yearly total increase by about $24,000.
The Starkville-Oktibbeha County School District’s tax receipts, which cannot be waived by law, would increase from $18,000 to about $91,000 annually upon the project’s completion.
In total, Gouras estimated Academy Sports could generate about $26 million in annual retail sales, which would provide a $336,000 rebate for the city. The restaurant, he said, would generate about $60,000 in 2 percent food and beverage tax returns.
About 140 jobs would come with the development, which doesn’t include the 120 construction jobs expected to handle the build.
Other TIF packages
In the last 10 years, Starkville has pledged about 13 million to four projects utilizing TIF packages. Only $510,000 of the total amount has been issued, and that was for a portion of the Middleton Court project.
If all TIF debt is issued — a move Mayor Parker Wiseman said is unlikely since TIFs rarely max out — the city would be obligated to pay $102,000 in property taxes and about $954,000 in sales taxes annually.
Aldermen lowered their TIF proposal Tuesday after the mayor’s presentation on pledged taxes.
He said the new deal lowers the city’s financial exposure, as some of the new sales taxes generated by Academy Sports are expected to be transfer purchases — sales that would have occurred at already existing stores.
“(The property tax pledge) does not scare me because it is less than what we average in one year of property tax growth. Even if all TIF pledges come … we’d still have more property tax growth than we’d have obligated in new debt against our property taxes,” Wiseman said. “(The sales tax pledge) is a figure that does concern me. That is just over 15 percent of our current citywide sales tax collection. In addition, it’s four years of sales tax growth city-wide on the rate we’re on now. If we have, over the next two years, three or four of these TIF projects that issue bonds — which is quite possible — that number could be high enough to create a hole in our budget.”
Carl Smith covers Starkville and Oktibbeha County for The Dispatch. Follow him on Twitter @StarkDispatch
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