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Mall proposal rejected by city council
Above, John Mulherin, vice president of government relations for Hull Storey Gibson, speaks Tuesday to the Martinsville City Council. Hull Storey Gibson had sought to keep a portion of sales tax generated by Liberty Fair Mall over the next 10 years. The council denied the request. (Bulletin photo by Mike Wray)
Wednesday, August 13, 2014
By MICKEY POWELL - Bulletin Staff Writer
Martinsville City Council on Tuesday turned down a request for money to help attract stores to Liberty Fair Mall as the shopping center is redeveloped.
Officials with the mall’s owner, the Hull Storey Gibson Companies LLC, said the firm remains committed to redeveloping the mall, but it might be harder to attract stores without providing them financial incentives.
Hull Storey Gibson requested that the city, via its Industrial Development Authority, enter into a shared sales tax agreement with the firm.
Basically, money that Hull Storey Gibson collected as a result of the pact would have enabled the firm to offer lower-than-usual leasing rates and other financial assistance to retail chains that otherwise might not open a store in a small retail market like Martinsville, according to officials with the firm.
Danny Turner was the only council member who supported the proposal. A motion he made for the city to enter an agreement with Hull Storey Gibson died for lack of a second.
In expressing opposition, other council members mentioned matters such as the mall being in an enterprise zone, which affords developers other types of economic incentives; a desire for incentives provided by the city to be open to all developers; and the Martinsville-Henry County Economic Development Corp.’s ongoing efforts to attract new retailers to the area.
Hull Storey Gibson should have presented the need for incentives to attract retailers to the mall before renovations got started there, said Councilwoman Sharon Brooks Hodge.
Many stores left the mall in recent years. After acquiring it two years ago, Hull Storey Gibson determined that the mall concept no longer works in the community. It plans to turn Liberty Fair into a traditional shopping center — one in which all stores have entrances that open to the outdoors instead of an interior hallway.
Under the firm’s proposed agreement, Hull Storey Gibson and the city would have decided on a baseline amount of sales tax generated by mall retailers.
Virginia’s state sales tax is 5 percent, with another 2.5 percent tacked onto purchases of prepared foods, equaling a total maximum tax of 7.5 percent.
Martinsville businesses pay the city the money they collect from sales taxes. The city then sends the money to the state, which returns 1 percent of it to the city. That money goes into the city’s general fund.
Under the proposal, If more than the baseline amount of sales tax was generated by Liberty Fair’s retailers following Hull Storey Gibson’s changes to the mall, the firm and the city would have split the 1 percent sales tax return generated by those retailers.
The agreement would have lasted for 10 years with an upper limit of $50,000 a year, totaling — at most — $500,000 over the decade, according to John Mulherin, Hull Storey Gibson’s vice president of government affairs.
Mulherin said the firm is spending $4 million to transform the mall into a shopping center. That includes $2 million spent on demolition work so far.
“We’ve spent all the money we can (afford to) spend” on the property and need help from the city, Mulherin told the council.
“We want to be in the position to help you guys all we can,” Vice Mayor Gene Teague told Hull Storey Gibson representatives.
“But I’m not so sure that your proposal is the best way for us,” Teague said of the city, considering that “our funds are extremely tight” due to economic constraints.
He voiced the possibility of the city helping Hull Storey Gibson develop outparcels at the mall in future stages of the property’s redevelopment.
If the proposed agreement was to have been approved, Teague said other developers would have expected the same type of incentive money.
In an interview with the Martinsville Bulletin earlier in the day, Mulherin said that if other developers could meet criteria that Hull Storey Gibson aimed to meet, such as job creation and investment, perhaps they should receive the incentives.
After the meeting, Mulherin said he is concerned that the council’s decision might give developers the impression that Martinsville is not a good place for them to do business.
Mulherin pledged that Hull Storey Gibson will “work our tail off” to redevelop Liberty Fair. He said the firm thinks Martinsville is a place where stores would find it worthwhile to locate.
Without the incentive money, though, “it’s just going to take longer” to convince them, he said.
The council recently asked the Martinsville Planning Commission to review Hull Storey Gibson’s proposal. In a unanimous vote, the commission did not endorse it, based on information it received from city officials.