County Commission approves Food City retail tax incentive package

Jasper, Tenn. – In a vote that has been brewing for a few months, the County Commission voted to extend a tax incentive program to Food City this week. The 10-year program allows Food City to pay a structured property tax that is reduced to only the portion that is paid to the school district while the rest is deferred. Food City, which has already received considerations from the Town of Kimball, contends that the tax consideration is a small fraction of the year one investment that the development will bring to the area. Opposition to the incentive stems from concern over the equity of treatment of existing retailers that were not beneficiaries of such tax incentives. Verbal commitments for tax breaks for existing businesses have not been ironed out. The commissioners finally voted 13-1 to extend the tax break to Food City to encourage the construction of the supermarket on Main Street in Kimball.

Food City’s representative Steven Spangler fielded questions form the County Commission before the board approved the company’s tax incentive package – Marion County News

Steven Spangler, Vice President of Real Estate for Food City’s parent company, was invited to give a presentation to the board and answer the commissioner’s question. Spangler said, “It’s a program we’ve used pretty successfully with other counties. Unfortunately in today’s market, our costs are up about 40% over where they were two years ago. I’ve provided some investment detail to the mayor. We’re looking to spend close to $16 million in the next year for this project. And the way we underwrite the projects, we do have a gap based on these increased construction costs along with what the town of Kimball has voted to approve. And this pilot gets us over that gap to be able to fund this project. The gross dollars {which we glean} over the 10-year period equate to 3% of what we are going to invest in the next year’s private capital from the corporation. So, in the overall scheme of things, it’s a relatively minor ask in our opinion, but it’s something that we absolutely need to get this project approved and to move forward.” Spangler addressed a question about the proposed timeline saying, “If this project was approved, this pilot was approved. Along with the town of Kimbal’s package that they put together we would be able to break ground in the next 90 days. And the store would be open spring of 2023.”

Prompted by Commissioner Hargis, Mayor David Jackson gave some projected sales tax revenue. “You’d have about $583,000 collected, yearly based on the 21 million,” referring to sales projections from Food City.  Jackson broke down fees that come out of the number and ultimately said that “somewhere around $450,000” would be split between Kimball and the county general fund. Spangler said that the company expected that the store would glean “about 30%” of the sales volume from “new customers” to the marketplace. SPangler also acknowledged that there would be some dollars traded within the county as customers would be spending money that would already have been spent inside the county. Neither the commissioners nor Spangler discussed the impact of municipal sales tax might be lost from other municipalities to Kimball with the new Food City facility.

Protesting a comparison between the manufacturing tax incentives and the proposed retail incentives, Commissioner

Commissioner Gene Hargis explains his support of the incentive stems from the long-term benefit of the increase revenue on the improved property – Marion County News

Gene Hargis said, “I think there is there’s a difference when you compare what we’re doing for manufacturers because it’s a different type of tax. What we’re doing is a property tax abatement. And right now that property tax is generating $2600 a year right now… generating toward our fund balance. And what I’m saying is once that store is built there and after the 10-year period, that amount is gonna be substantially more than they do pay in property tax. But during that 10 years, they’re also gonna be contributing to the school system. And that’s where I stand on it.”

Commissioner Blevins (left), who stuck to his original opposition casting the single dissenting vote against the resolution, explains his opposition – Marion County News

Joey Blevins maintained his skepticism of the program saying, “This is I just wanna be on record saying that we already have a lot of businesses in this county. That’s been here for years and years. That’s gonna be a direct competition with someone with the new company. I’m really glad they’re coming, but These other companies or businesses or friends and neighbors that’s been here, some of ’em their entire lives have never received a dime county assistance, or I would even say from their own towns. And I just think it’s inappropriate that we as a governing body pick winners and losers at the retail level when we’ll be given an advantage to someone that our own folks haven’t ever received.”

A comment about a forthcoming “scaled-down” program that smaller retailers could apply for was mentioned but no commitment to when those criteria or program would be announced was established. Given a timeline as “in the future.”

Pursuant to what was unveiled in the meeting, the community can look forward to a groundbreaking no later than October of this year and a store opening roughly a year from now.