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Sembler Incentives Focus of Council Meeting

BEAUFORT – Beaufort-area residents packed the County Council chambers Monday, with several expressing concern over a proposed $400 million upscale mall being planned by the Sembler Co.

 

While some opposed the mall entirely, others focused on the inherent inequality to existing area retailers if Sembler were approved for tens of millions of dollars in state incentives.

 

“It is not the job of government in a free society in a free economy to undermine free competition, to take the money out of taxpayers’ pockets to put it into the pocket of a retail developer,” Beaufort resident Kate Keep told the council. “If it is such a great idea, let it compete fairly with the businesses that already exist here in Beaufort County.”

 

State Sen. Tom Davis, R-Beaufort, state Rep. Shannon Erickson, R-Beaufort, and South Carolina Policy Council President Ashley Landess also spoke against incentivizing Sembler, one of the largest commercial developers in the Southeast.

 

Between 1994 and 2007, annual state incentives increased to $250 million from $34 million, but South Carolina’s economic performance has slumped, Landess said.

 

The state has gone from having the 15th-fastest growing economy to the 12th slowest, its per-capita income is 45th lowest in the country and it has the fourth-highest unemployment rate in the country.

 

Clearly, incentives for selected businesses and industries aren’t working, she added.

 

Davis and Erickson each questioned the incentives proposal pending before state lawmakers in Columbia. They said it could allow the company to meet investment requirements by claiming one-time “soft” costs, such as those for architecture.

 

Council members declined to revisit a Jan. 11 resolution denouncing proposed state tax incentives for such developments.

 

Sen. Clementa Pinckney, D-Jasper, spoke in favor of the project, as did Sembler officials, including company President Jeff Fuqua, who made a presentation to the council about the planned 1.5-million-square-foot shopping center near the intersection of S.C. 170 and U.S. 278 in Hardeeville.

 

Fuqua told the council that Okatie Crossings would be an outdoor destination mall unlike others within hundreds of miles.

 

“We’ve spent $18 million to date chasing this investment,” he said.

 

Sembler officials have said it will create 2,000 to 2,500 jobs and generate sales tax revenues of $175 million over 15 years. The Senate Finance Committee recently approved a bill that would grant the subsidies to Sembler but raised job creation and capital investment thresholds for Sembler from 1,000 to 1,250 and $100 million to $200 million, respectively.

 

Last month, Beaufort County Council members sent a message to state lawmakers that they didn’t want Sembler to receive any form of state tax breaks, unanimously passing a resolution asking state legislators not to grant tax subsidies or abatements to Sembler because to do so would interfere with “otherwise fair and open competition.”

 

The county objected to Sembler incentives, valued at between $40 million and $130 million, because it says the company would compete directly with a nearby Tanger outlet mall and said Sembler tried to lure Tanger tenants to its development.

 

Last Friday, The Nerve reported that chief economist William Gillespie of the S.C. Board of Economic Advisors said the new mall is unlikely to increase overall sales, but instead would probably shift retail patterns in the area.

 

“Because the facility adds to an already well established retail sector,” Gillespie writes, “it is difficult to expect that the facility will create new sales, but rather will shift sales from existing retailers and not add to sales that would otherwise occur in the absence of the (subsidies) provision.”

 

In his projection, Gillespie says the bill is expected to reduce sales tax revenue in the state general fund by an estimated $4.5 million per year for five years, from FY10-2011 through FY14-2015.

 

That would be a total of $22.5 million if the estimate proved accurate.

 

Reach Dietrich at (803) 779-5022 ext. 110, or kevin@scpolicycouncil.com

Economic Development General Assembly Incentives Legislation Local Government Transparency