When Hull Property Group struck a deal with the city and the county three years ago, establishing about $3 million in economic incentives for the rehabilitation of the former Leigh Mall property, the deal seemed like a no-brainer.
But in a letter sent to the Hull Group on Wednesday and forwarded to Columbus City Council members, Lowndes County supervisors and local media outlets, Golden Triangle Development LINK CEO Joe Max Higgins said the deal now “seems like a giant waste of everyone’s time.”
“They are the reported experts with malls all over the southeast,” Higgins told The Dispatch on Wednesday afternoon. “If what they signed, they couldn’t do, why the hell did they sign it?”
Georgia-based Hull Property Group purchased the mall for $3.5 million via online auction in October 2019 and obtained a $3.1 million economic incentive package from the city and county in May 2022 to start renovations.
The LINK advised the parties throughout the creation of the deal, following a new structure outlined in the Mississippi Regional Economic Development Act (REDA), Higgins said. Other tax incentive structures wouldn’t have applied, he said, since the Hull Group could not provide names or sizes of potential tenants for the mall at that time.
Under the terms of the REDA deal, Hull Group was required to pay taxes on the mall at its pre-renovation assessed value, Higgins explained. The ad valorem value of any additions would then be repaid to the company, along with 75% on any increase in sales tax collected on non-grocery sales.
The arrangement was intended to last until the Hull Group recovered the approximately $3.125 million cost of engineering work to “flip the building inside-out” and of demolishing the Sears Automotive building on the southwest corner of the lot, or for 15 years, Higgins told The Dispatch when the county approved the deal.
However, the deal required the Hull Group to establish a baseline of the sales tax generated by tenants, so the increase in sales tax could be calculated. The amount of sales tax each business generated is held by the state Department of Revenue, and it cannot be released without authorization from each mall tenant.
Without any of the releases, Higgins wrote in his letter that the part of the deal involving sales tax is “effectively moot.”
“When we entered into this with Hull, we told them, ‘It will be incumbent upon you to get each of your tenants to fill out a waiver, authorizing for their information to be released to us so we can do the calculation,’” Higgins told The Dispatch.
Lack of liability releases
But Higgins said the LINK never received any of the limited liability releases needed to calculate the sales tax rebates. Meanwhile, retailers like Claire’s and Cato were leaving the mall.
“And about a year ago, we said, ‘Hey, you’re going to screw around and not be able to determine a benchmark, and your whole incentive is predicated on what that benchmark is,’” Higgins said.
But in a Tuesday email to Higgins, Hull Group Vice President of Government Relations John Mulherin said the group has “thus far been unsuccessful in obtaining the limited liability releases from any” of the remaining national tenants in the mall. He also said he doubts “those will be forthcoming as there is no pre-existing lease language requiring such.”
Mulherin said there is also a “disincentive” for some tenants to report sales numbers to their landlords accurately, since some have “breakpoint sales” language in their leases that requires rental payments to increase as sales do.
Even without the baseline sales tax information in place, the county still executed its part of the agreement involving ad valorem increase rebates.
‘Unilateral discussions’
In the middle of waiting for the releases, Higgins said the Hull Group asked to renegotiate its deal in January based on its purchase of new outparcels for the mall – including three outparcels near the LaQuinta Inn and one in front of the Ross Dress For Less.
Hull Group also requested an increase to the amount of money and length of time involved in the tax incentive agreement, Higgins said, though it did not specify amounts.
Higgins said the LINK was willing to help renegotiate the deal to include the outparcels if the Hull Group was willing to front the legal fees to do so, but not to recommend the city or county raise the amount of the deal or extend the time frame. Instead, he proposed lowering the percentage of sales tax involved to 50%.
Higgins said he is not planning to bring an amended deal to the company until “we get a new mayor and a new city council.”
Higgins sent this alternative proposal to the Hull Group in February, he said, and he received no answer until Mulherin’s email this week. Mulherin responded that he thought the points in Higgins’ proposal could be worked through quickly, but the Hull Group has been “solely focused” on meeting the requirements of its REDA agreement.
Even though Higgins did not hear back from the Hull Group for an extended period, that did not mean conversations between the company and interested parties stopped. Higgins wrote in his letter that he believed Hull Group was having “ongoing unilateral discussions between you and the city [or perhaps just the mayor], but those discussions omitted the county, which is a party, and they omitted my organization.”
Higgins told The Dispatch the conversations between the Hull Group and Mayor Keith Gaskin “makes you wonder” if the relationship between the two is “inappropriate.” Higgins did not elaborate on what he meant by that.
Gaskin, who is seeking election as a councilman instead of standing for reelection as mayor, told The Dispatch on Wednesday he agreed the decision should be left up to the next administration. But he said calling his relationship with the Hull Group inappropriate is “absurd,” and he clarified he does not accept campaign funds from any companies that work with the city.
Still, Gaskin said he is proud of the relationship he has worked to build with the Hull Group, which he believes led the company to purchase other properties around the mall.
“I will continue to have those kinds of conversations with them, but there has been nothing to do with a ‘unilateral’ … move around his office or the county,” Gaskin said. “That’s just not the case. It’s all been positive investment in Columbus.”
Board of Supervisors President Trip Hairston told The Dispatch on Wednesday he defers all conversations about tax incentives to the LINK, as he does not believe it is “appropriate” to have those discussions without the county’s economic development liaison in the room. While conversations about sales tax do not involve the county, Hairston said he is open to discussions around amending the tax incentive as the Hull Group purchases more property.
While Higgins expressed frustrations at the Hull Group in his letter, even suggesting the best approach would be to abandon the current agreement and negotiate a new one, he wrote that he is still willing to work with the company.
“… But we are not going to support doubling down on an arrangement that has resulted in little, if any, success to date,” he wrote.
The Dispatch could not reach Mulherin by press time.
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You can help your community
Quality, in-depth journalism is essential to a healthy community. The Dispatch brings you the most complete reporting and insightful commentary in the Golden Triangle, but we need your help to continue our efforts. In the past week, our reporters have posted 32 articles to cdispatch.com. Please consider subscribing to our website for only $2.30 per week to help support local journalism and our community.
