SCPC, Sembler Officials to Speak in Beaufort

February 8, 2010

Investigative Reports

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The NerveSembler Co. officials will make their case before the Beaufort County Council Monday afternoon as to why they should receive incentives for a proposed $400 million upscale mall.

Jeff Fuqua, president of Sembler, will speak to the county council during the session, set to begin at 4 p.m. at the county administration building at 100 Ribaut Road in Beaufort.

Also speaking will be Ashley Landess, president of the South Carolina Policy Council, which opposes state-funded incentives for the $262 million project, which have been valued at between $40 million and $130 million.

“That doesn’t make sense when legislators are talking about raising taxes, forcing teachers to take unpaid furlough and exploring ways to make existing businesses pay for the Employment Security Commission debacle,” Landess said.

Late last month, Jasper County Council approved a resolution urging state lawmakers to approve incentives for the planned 1.5-million-square-foot shopping center near the intersection of S.C. 170 and U.S. 278 in Hardeeville.

That resolution countered one adopted by the Beaufort County Council which denounced the incentives.

Beaufort County officials are concerned that Sembler’s development, which would straddle the two counties, would hurt existing businesses that don’t have the benefit of incentives.

Beaufort County Council members sent a message to state lawmakers on Jan. 11 that they didn’t want Sembler to receive any form of state tax breaks.

The council unanimously passed 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 measure specifically cited outlet shopping centers Tanger I and Tanger II in greater Bluffton.

“When the project was introduced in Beaufort County, it was introduced as something different from anything else,” County Council Vice Chairman Paul Sommerville told the Hilton Head Island Packet. “But when I look at their proposal, I see more of the same – Kroger, Target, Sam’s Club, Lowe’s. It didn’t take long for me to figure out they’re going to be in competition with our malls.

The county resolution objected to Sembler incentives because it claims the company will compete directly with the Tanger outlets and said Sembler tried to lure Tanger tenants to its development, the paper reported.

“The question becomes, do we as taxpayers want to subsidize this?” said Sommerville, who drafted the resolution. “The government shouldn’t be in a position to pick winners and losers.”

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.

Company representatives told the General Assembly that Okatie Crossings would be an outdoor “destination mall” unlike others within hundreds of miles.

They say it will create 2,000 to 2,500 jobs and generate sales tax revenues of $175 million over 15 years. The S.C. House and Senate approved different versions of tax incentives last year. The legislation progressed to a House-Senate conference committee before the session ended in June.

Last week, the Senate Finance Committee approved a bill that would grant the subsidies to the Florida-based Sembler but raised job creation and capital investment thresholds for Sembler from 1,000 to 1,250 and $100 million to $200 million, respectively.

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