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Posted: May 3, 2013 2:16 p.m.

Officials explore incentives for retail

Residents want more restaurants and places to shop, and local officials think tax breaks may be the way to get them.

Locals have complained for years about a lack of dining and shopping options in Newton County, but city and chamber officials are expressing growing interest in aggressively pursuing those companies by offering incentives like the ones currently available only to industries.

Hunter Hall, president of the Covington-Newton County Chamber of Commerce, raised the issue to the Newton County Industrial Development Authority Thursday, asking if that body would be a player in offering incentives for retail.

Authority members expressed tentative support for the incentives, but discussed limiting incentives only to larger retail options that would bring a certain level of investment and potentially limiting incentives to a handful of companies on a trial, first-come, first-serve basis.

Hall said the next step will be for him to sit down with Chief Tax Appraiser Tommy Knight to find out where “break-even point” is related to how much money in incentives the authority should offer compared to the amount of money a company would be investing.

The authority could offer incentives to larger retail options, like hotels, large sit-down restaurants and major retailers, while smaller businesses could seek incentives from the city of Covington, which recently passed its own limited retail incentive plan at the behest of Mayor Ronnie Johnston. The city’s plan includes potential breaks on utility rates, various permit and plan review fees and property taxes.

Authority attorney Frank Turner Jr. said the authority would have to be careful about discrimination issues if it choose to give incentives to one retail company and not another, which is where the specific criteria for offering incentives would come into play. The criteria could include number of jobs, average wage or investment in building and equipment — the same type of factors that play into industrial recruitment.

Authority member Danny Stone said he hears the desire for more retail, but questioned whether incentives would really make a difference in recruiting retail, since those businesses open locations when the demographics — population and household income — are high enough.

Mayor Johnston, who is also an authority member, said, in some ways, the perception of an active community more important.

“I agree that the demographics do not line up, but I believe in the story we have going on. I’d like to incentivize some retail to come here, and maybe they’ll take a risk because they buy into our story. We’d be giving them something for that risk.
“For (the city’s plan) it’s not as much about the money, but more a statement about the community. We’re serious about encouraging businesses to come here.”

County Chairman Keith Ellis did not attend the authority meeting because of a scheduling conflict, but Johnston said he hoped the county would consider a small incentive retail package as well so businesses would have multiple options of places to locate.

Hall said the timing is also important, as the Baxter International’s $1 billion pharmaceutical manufacturing plant on the Newton/Walton county border makes Newton County an attractive place to locate.

However, it might be difficult to convince future Baxter employees to live in Newton County if it doesn’t have the amenities to keep them entertained.

Hall said the chamber has the data it needs to know where the county is losing money and is particularly deficient — one major deficiency is restaurants that sell alcohol — and it can attempt to recruit specific businesses to fill those needs. As a private organization, the chamber doesn’t have to worry about selective recruiting; however, the groups offering the incentives still need to operate objectively.

During a recent pitch to a private equity firm looking to invest in Newton County, Hall showed off the county’s numerous studies and plans, including those related to future growth, and workforce, retail and industrial development. The private equity employee said he had seen tens of dozens of pitches from communities but had never seen so much data and planning and was impressed.

One aspect of the 2050 Plan that intrigued this person was the special zoning overlays, including those that are being implemented in the Almon and Salem communities. The overlays call for the creation of town centers in those areas with mixed-use retail, while the surrounding areas would have light retail uses but be primarily residential.

The employee said that intrigued him, because he could theoretically buy all the commercial property in those town centers, and the land prices would shoot up because there would be no more surrounding competition.
Turner asked if the chamber could do research on how retail incentives are structured nationally, and Courtney Bernardi, the new senior vice president of economic development, said she’s already pursuing that. A presentation could be ready by the next authority meeting.

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