According to a letter sent by Mayor Stephen J. Wukela to Florence County Council Chairman K.G. “Rusty”Smith andFlorence County County Administrator Richard Starks, doing so would allow the county to provide “special source revenue tax credits” of 85 percent for seven years.
In doing so, the tax burden is lessened during a time when property values and their associated taxes would otherwise go up as improvements are made to the property.
“That gives a developer on the front end, who is just getting established, an opportunity to get his business going and reduce the burden on his investment,” Wukela said following a city council meeting Monday. “And it encourages him to bring that investment downtown where other places that benefit would be available tohim.”
Even with the tax credits in place, city officials said total tax revenues for the county would actually increase significantly from their current levels. Based on 2010 millage levels, taxes collected on the old Cosmos building are $2,600 and would increase to $14,000 in year one, with $3,200 of that going to Florence County.
At the end of the seven-year window, total net taxes produced from the deal would reach about $87,000, with roughly $20,000 of that going to the county.
That means that in giving a tax break to investors, the county will increase the amount of taxes it collects on the existing property.
There were other incentive options considered in the deal.
The area where the old Cosmos building is located is what is known as a Tax Increment Financing district (TIF). The theory behind a TIF is to encourage investment in an area that will, in turn, raise property taxes as improvements are made. As those taxes go up, the TIF channels portions toward funding projects related to development normally associated with the infrastructure of the area in question.
In the case of the proposed hotel and restaurant, the amount of investment is not enough to trigger the TIF. In order to enact the special business district proposed in the plan, the old Cosmos building must be removed from the TIF district. That way, the property can receive the special tax credits and the TIF remains intact.
It took the city six weeks to construct the deal, mainly because officials wanted to make sure whatever incentives offered wouldn’t be so extravagant they could not be repeated.
On the county level, such packages are generally reserved to large-scale manufacturing projects. To avoid setting an unreasonable precedent, developers propose the incentive package they are requesting be offered for investments of at least $2.5 million and be located in a historic district of one of the county’s nine municipalities.
Attorney Ben Zeigler, a principal investor in the project who spoke on behalf of the group, said the incentive package would be repeatable and offer a unique opportunity for a city-county economic partnership.
“We really hope it’s going to be a way for the city and county to work together on a significant economic project,” he said. “We think it should be a pretty easy decision to support.”
Attempts to contact Smith and Starks for comment were unsuccessful Monday.
City officials who have been in contact with county officials said they plan to take up the issue after the start of the fiscal year July 1.
http://www2.scnow.com/news/pee-dee/2011/jun/13/florence-officials-hotel-deal-benefits-government--ar-1969577/