Future tax increment financing packages for Starkville developments should see consistent opposition from at least one alderman after Vice Mayor Roy A. Perkins pledged Tuesday to not grant tax waivers for new businesses.
Perkins was the lone vote against a $3 million-maximum improvement package for HPM Development LLC’s proposed $21.9 million project that aims to build a car dealership complex, 20,000 square feet of office space, convenience store, restaurant and 15 single-family homes on almost 26 acres of land along eastern Highway 12.
As approved, the TIF plan will divert 50 percent of sales tax receipts — an estimated $421,335 in annual sales — and 50 percent of increased ad valorem revenues toward debt service for up to 15 years once bonds are issued. Proceeds from bond sales will pay for roadway, water, sanitary sewer, signalization and other needed infrastructure improvements near Old West Point and Pat Station roads.
Three phases of development are expected to create $8.4 million in construction payroll alone. The first phase should create 70 full-time and 10 part-time jobs, while the second and third phases could produce an additional 50-75 positions.
Perkins, who described himself as an ardent support of local businesses and economic development, said he opposed the matter because it diverts taxes away from the city’s coffers.
Other businesses have opened their doors in Starkville, the vice mayor said, without requiring tax abatements.
“If another business were to come up and ask for this same or a similar arrangement, then I would have, in my opinion, a very difficult time saying ‘No.’ It is very important to me that I treat all businesses similar. I have a hard time carving out an exception here for one,” he said. “I want developers to know … that when the next group comes here, I’ll give them the same talk. If I’m (an alderman) 10 years from now … I’m going to have the same approach for this.”
Perkins’ comments found no support at the table as other aldermen pledged to continue working with developers attempting to invest in Starkville.
“I respect the vice mayor’s opinion on this, but if there was another dealership that wanted to build on the other end of town next week, I’d certainly entertain a similar process,” said Ward 3 Alderman David Little. “There aren’t many businesses that can … bring in the tax revenue that you’re going to bring in. It’s a good deal for the city.”
Citing the projected tax impact for the upcoming consolidated school district — an estimated $133,536 in school taxes that cannot be waived, specifically — and how the bonds are expected to fund the construction of about 1,500 linear feet of roadway, Ward 4 Alderman Jason Walker called the TIF proposal “a pretty easy decision.”
“If we have developer after developer line up (with) $20 million projects that will be long-term contributors to our community, I’m going to let them do a TIF on every single one of them. That’s how you build a community,” he said. “That’s how you build a tax base so you’re able to go out and fix the potholes in our streets or fix the drainage problems we all have in our wards without having to (issue) general obligation bonds that cost the taxpayers.”
Tuesday’s board action does not immediately issue debt. Officials will have the option later to determine how much of the $3 million to borrow and for how long. The approved proposal estimates $234,402 in annual payments on a 15-year note at about 5 percent interest.
HPM’s proposal uses a conservative estimate on the amount of generated sales taxes, which means the bonds could be paid off before the 15-year window, said development representative Chris Gouras. The development agreement also has “checks and balances where the city can go forward when, in its sole discretion, is satisfied with the numbers,” he said.
Carl Smith covers Starkville and Oktibbeha County for The Dispatch. Follow him on Twitter @StarkDispatch
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