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Funding plan on Liberty Fair Mall not endorsed
Proposal to go to city council
Sunday, August 10, 2014
By BEN R. WILLIAMS - Bulletin Staff Writer
The Martinsville Planning Commission unanimously voted Tuesday not to endorse a proposed financial incentive involving Liberty Fair Mall.
According to Wayne Knox, assistant city manager/director of community development, Hull Storey Gibson Companies LLC, the owners of Liberty Fair Mall, recently submitted a proposal to city council, which asked the planning commission to consider it.
Now it will return to city council, which has the final say on it.
John Mulherin, vice president of government relations for Hull Storey, said Hull Storey requested that the city, through the Industrial Development Authority, enter into a shared sales tax agreement with the company.
The way the agreement would work, Mulherin said, is that the city and Hull Storey would agree upon an average baseline amount of sales tax generated by mall retailers.
In Virginia, he said, the state sales tax is 5 percent and food purchases have a 2.5 percent sales tax for a total of 7.5 percent.
Of the total amount generated by that 7.5 percent, Mulherin said, 1 percent is returned to the city where it goes into the general fund.
If more than the baseline amount of sales tax was generated by mall retailers following Hull Storey’s improvements to the mall, Mulherin said, Hull Storey proposed that the city would split its 1 percent sales tax return 50/50 with Hull Storey.
State code, Mulherin said, allows the city to enter into such an agreement if the money is first allocated to the city’s IDA, which then would allocate it to Hull Storey.
Also, Mulherin said, the proposed shared sales tax agreement would last for 10 years with an upper limit of $50,000 per year, totaling, at most, $500,000 over 10 years.
Mulherin said that Hull Storey’s renovation plans for the mall include five phases.
The first phase, he said, was renovating the mall’s facade to maintain Kroger, the mall’s largest tenant. The second phase, he said, was improving visibility at the mall, followed by phase three, which was “de-malling” it and turning the interior mall into an exterior shopping center. Those renovations currently are taking place.
Phase four, Mulherin said, is working with “out-parcels” — standalone buildings within the mall property, such as the Kroger Fuel Station and the former Blockbuster Video — to attract more restaurants and retailers to the property.
Phase five, he said, is working with the community to create a retail corridor to ensure success for the property.
“We’re committed to Martinsville whether (city council approves the proposal) or not,” Mulherin said, “because we think we’ve got the right formula in Martinsville. What it may do (if council denies the proposal) is it may delay how aggressive we are in carrying out phase three, phase four, phase five. For us to do particularly phase four ... you’re talking about a lot of money trying to attract people in. It will impact us in that we will not be as aggressive to move onto phase 4 and phase 5, but that is not to say we won’t do it.”
Hull Storey representatives did not attend the planning commission meeting Tuesday. Mulherin said that representatives “asked twice if we could provide information to the planning commission so that there would be no confusion, and we were told we were not needed.”
However, Knox said, “I don’t know who told them that. I know I didn’t. As far as I know, no one from the planning commission did.”
Planning commission chairman Tim Martin said that “they were asked to be at our meeting and they did not come. I don’t know why they didn’t come. ... Those letters went out.”
Knox said that several aspects of the proposal raised concerns among city staff.
First, he said, the proposal falls outside of the normal budget process for the city. The city’s current budget went into effect July 1.
Also, Knox said, “if council were to approve this, it would set a precedent that would probably have to be replicated throughout the city for other businesses.”
Knox said no other businesses in the city receive a percentage of their sales tax.
Another issue, Knox and Martin both said, was one of confidentiality. According to city attorney Eric Monday and Commissioner of Revenue Ruth Easley, Martin said, the city cannot release sales tax information for individual businesses to a third party, which would be necessary in order to calculate the split.
“That’s a very touchy issue as far as what information can be shared and how and through what process,” Knox said. “I haven’t heard a clear legal explanation as to how you would do that. To me, it’s still an unanswered question.”
The planning commission’s decision largely was based “on what the city attorney told us and what the commissioner of revenue told us,” Martin said. “That’s how the planning commission voted. It was a unanimous vote not to proceed.”
“This deal should have been done before (Hull Storey) made the commitment to renovate the mall,” he added.
The proposal now goes to city council. Mulherin said that Hull Storey representatives will attend Tuesday’s city council meeting.