To prosper, city must embrace development
In response to the letters regarding the large home improvementstore, all that responded are good people who have made acommitment to providing products and services to Brookhaven andhave legitimate business competition concerns. I value and respecttheir opinions.
But first, we have to clear some things up. The Tax IncrementFinancing (TIF) law only allows revenue bonds to be issued for thepurpose of paying for public infrastructure. The bonds will pay forwater, sewer, roads, drainage, and traffic signals only. When adevelopment of this size occurs and a city does not have sufficientinfrastructure in place, that infrastructure is extended throughmany different means.
In this case, the city and county have the opportunity toprovide that infrastructure through the issuance of TIF bonds. TIFbonds, authorized under legislation passed in the mid-1980s, weredesigned to help offset the cost of commercial development. TIFbonds are bonds issued to pay for the cost of providing publicinfrastructure.
The most important part of TIF is that the city and county areallowed to offer this financing at no cost to the taxpayer. Theserevenue bonds are tied to the project and are repaid by theincreased tax revenues generated from it. TIF bonds do not countagainst the city’s overall bonded indebtedness.
With TIF bonds, there are several streams of income that can beused to retire the bonds including ad valorem tax increases fromreal and personal property from the city and the county and thecity’s portion of projected sales tax increases from the project.School taxes earned on any project will never be subject todiversion.
As an example, if the city and county were receiving $1,000 inproperty taxes from a piece of property and a company invested abuilding and inventory to that same piece of property bringing thetaxes up to $10,000, the city and county could pledge thedifference of $9,000 to pay for the public infrastructure that wasrequired to make the project happen.
There are no exemptions or reductions on taxes of any kind forthe company. The company pays its taxes, and those taxes arediverted to pay the debt service on the bonds, which are used topay for public infrastructure improvements.
Do most businesses have access to a public street? Do mostbusinesses have access to public water lines and sewer lines? Havewe considered all the implications and run various scenarios? Theanswers to these questions are yes. TIF bonds have been around foralmost 20 years, and many communities, mostly growing andprosperous, access this tool to booster their commercial growth.Brookhaven should do the same.
In Table 1 are estimates of anticipated tax revenues for thisparticular project that illustrate why this development is a solidinvestment for the city and the county. These estimates areconservative and in speaking with other developers and taxassessors, these estimates favor the low side of the picture.
It is expected that first-year sales from this store will reach$15,000,000. Sales taxes generated for the state of Mississippi areexpected to be about $1,050,000 in the first year with rebates tothe city reaching about $194,000. It is anticipated that sales willincrease and stabilize at $19,000,000 per year or about $260,000 insales tax rebates annually.
It is expected that debt service on the proposed $825,000 bondissue will be approximately $105,000 per year if the bonds areissued for 10 years.
In summary, the development of the project will result inincreased ad valorem taxes of approximately $35,330 for the cityand $42,482 for the county. It is expected that the city’s salestax rebate will reach approximately $194,000 in the initial year.These revenues total $271,813, which will be available for TIF bonddebt service that is estimated to be $105,000 over a ten-yearperiod. This does not include $67,466 in new school taxes, whichwill be created from this project.
Over a 10-year period, the total revenues for the city, county,and school district will exceed $3,300,000 versus the total cost ofthe project – $1,050,000 ($825,000 plus interest).
This does not take into account the multiplier effect ofconstruction payrolls and permanent jobs payrolls nor does itconsider the jobs, sales taxes, and ad valorem taxes for the city,county, and school district from the development of the remaining15 acres of property for which all the necessary infrastructurewill be in place to meet those future needs. It also fails tocalculate the additional sales tax generated from increasedconsumer traffic.
The last time you went to Jackson, McComb, Hattiesburg or NewOrleans to shop, did you purchase food, gas, and other consumeritems? Will Brookhaven be different?
In addition, please explore the areas and communities in whichthese types of companies are located. They are all in a growthmode. They are all seeing additional commercial development andthey are all in the top of the sales tax collections statewide.Brookhaven’s future is bright.
In analyzing the numbers, once the remaining 15 acres ofproperty is fully developed based on conservative estimates, itshould generate a total $434,288 for the city of Brookhaven,$57,222 for Lincoln County, and $87,665 for the school district.This is in addition to the tax revenues projected to be created bythe large commercial retailer.
Remember that isolationism works both ways. As you work to keepcompetitors out, you also keep out other customers. How manyLincoln County residents have shopped at Lowe’s or Home Depot inthe last year? Keep our tax dollars in Brookhaven; continue to growour market share in the region by attracting outside consumers andstop spending our dollars in McComb, Jackson, and Hattiesburg.
A fundamental question is will Brookhaven continue to grow andprosper expanding its commercial offerings, add to its tax base,provide choices to it citizens, create jobs, and be progressive, orwill we try to shut out competitors, thus shutting out additionalcustomers, work to maintain the status quo, and send a poor messageto the rest of the state? Yes!
It is that simple.
And if those were not enough benefits, here are just a fewmore:
* Construction Jobs: The home improvement store will createapproximately 100 construction jobs over an eight (8) month periodwith an excess payroll of $2,250,000. Construction jobs from thedevelopment of 15 additional acres are unknown.
*Permanent Jobs: It is anticipated that the home improvementsstore will employ approximately 75-100 full and part-time jobs withan estimated annual payroll of $2,000,000. It is expected that theadditional jobs will be created as a result of the development ofthe properties adjacent to the project.
*The project will enhance development opportunity forsignificant acreage adjacent to the site that presently suffersfrom limited accessibility.
* The project will attract new retailers to Brookhaven.
* The project will provide the city opportunity to expandCommercial Development west of Interstate 55.
*The project will spur additional development, which willincrease investment, jobs, payroll, property taxes, and sales taxrebates.
Chandler Russ is executive vice president of theBrookhaven-Lincoln County Chamber of Commerce.