Columbus City Council approved a 10-year tax exemption for downtown business owner Tom Velek during its Tuesday night meeting.
Velek owns the building at 322 Fifth St. S., which is adjacent to the former downtown Fred’s location. He purchased it in early 2021, and went before the council later that year to request an intent resolution for a 10-year ad valorem tax exemption, which was approved.
He returned Tuesday night to ask the city to honor that commitment, as renovation work has been finished.
The property renovation is eligible for local ad valorem tax exemptions of up to 10 years under two state statutes, since it is located in both the central business district and a historic district.
Ward 5 Councilman Stephen Jones — in whose ward the building sits — moved to grant the exemption, with a second from Ward 1 Councilwoman Ethel Taylor Stewart.
Vice Mayor Joseph Mickens had some qualms, though.
“The city is in business to collect taxes,” he said. “I don’t really like going down this path. We got raises we’re doing, we need equipment here and there, and we’re constantly giving away our ad valorem taxes. … We need to look at that deeply. Very deeply.”
Ad valorem taxes are collected annually on real and personal property.
Despite his reservations, Mickens joined the council in approving Velek’s request, which passed unanimously.
“As a small businessman, I appreciate your support,” Velek told the council. “This is something I probably would not have taken on if I didn’t know the city was behind me. I understand where you’re coming from, but I do appreciate it.”
The tax break does not entirely exempt the property from taxation, it just means that it is taxed at its old value. In other words, if a property is worth $1 million and gets a $500,000 expansion, it is taxed as if it were still worth $1 million.
According to tax records, the building’s current assessed value is $66,370.
Velek, speaking to The Dispatch Tuesday evening, said the building was about 6,000 square feet spread evenly across two stories. It was built in 1953, and has housed many businesses, including Elaine Evans CPA, J’nell’s, Rainbow of Columbus, Kirby Sales and Service and Perkins Sporting Goods.
“The second floor had previously housed the Mississippi Forestry Commission and some small businesses, and it had been vacant since 1989,” he said. “Going on 40 years it was vacant.”
About a quarter of the downstairs had been used by Elaine Evans’ accounting office until about six years ago, he said, and has also been vacant since then.
“This property was empty and getting derelict,” he said.
Velek is using the building for a mixture of commercial and residential space.
“There’s commercial on the front 1,400 square feet that faces Fifth Street,” he said. “Upstairs are two 1,400-square-foot apartments. We divided the downstairs and created an entrance through the back and put a one-bedroom apartment back there.”
The commercial space is under contract, he said, and all three apartments are occupied.
Velek estimated that he spent around $750,000 on the project, including buying the building.
Jim Mauldin bought 322 Fifth St. S. along with the old Fred’s location back in 2021, Velek said. Velek bought his piece of the building from Mauldin, who turned the old Fred’s location into climate-controlled mini-storage.
Velek said he did not seek historic tax credits from the Mississippi Department of Archives and History.
“It ended up not being a good option because of some of the requirements on it,” he said.
Velek said local interest was the best hope for vacant downtown buildings.
“When it comes to downtown, there’s no Walmart coming,” he said. “Target ain’t coming to renovate it. If local people, with the support of the council, don’t do it, it’s going to sit empty.”
Several downtown properties have been granted the same exemption. Mauldin’s renovation of the old Fred’s got it on a split vote last year, as well as the Stone Hotel on Fifth Street South, Gail Guynup’s properties on College Street and Mark Alexander Sr.’s on Fifth Street North.
The exemption does not affect taxes for the school district.
Brian Jones is the local government reporter for Columbus and Lowndes County.
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