New law helps border towns level field
*Photo by David Grace courtesy of Kingsport Times-News.
Times-News Article by Matthew Lane
KINGSPORT - The city of Kingsport like many other border cities across the state would prefer retailers not to locate just across the state line in order to take advantage of lower sales tax rates in neighboring states.
However, a new state law that allows for the creation of special taxation districts is precisely the tool Kingsport and state legislators believe will help border communities level the playing field in this regard.
The new law approved by the state legislature earlier this year allows municipalities to designate up to 950 acres as a border region retail tourism district and offer potential retailers and property owners incentives for creating and locating business within the district.
Youre seeing a lot of companies choose to locate across the border of Tennessee, such as at Exit 7 in Bristol, Virginia, and in Chattanooga where Costco located just across the state line (in Georgia) attempting to draw in Tennessee shoppers. We needed a piece of legislation to help equalize the playing field, said Tim Whaley, spokesman for the city of Kingsport. This is not a guarantee theyll be successful, but being able to offer reasonable incentives and help on the tremendous cost of infrastructure development, this really puts us back in the game.
According to the law, the special districts can be up to 950 acres in size, no more than a half mile from an interstate, and no more than 12 miles from a state border. One district is allowed per city, and to qualify for incentives, a district must anticipate drawing 1 million visitors a year and generate $2 million in annual sales taxes and $20 million in investment. Property owners can choose not to participate if they so desire.
In return, cities would be able to offer incentives to the retailers and/or property owners, in the form of roads or land or as a direct cash incentive of a building or inventory. The funds for the incentives would likely come from the issuance of bonds, and in order to pay back these bonds, the new law allows cities to keep up to 59 percent of all state sales taxes generated inside the district for up to 30 years.
Whaley said the incentives could vary from business to business, noting that Kingsports incentives have not been determined.
This is really just the first step, Whaley said. We have a ton of work to do, internally among staff, developing additional guidelines and what types of funding were willing to provide.
To prevent existing retailers from simply relocating to the new district in order to receive an incentive, the law states any existing retailer within 15 miles of the district can relocate, but must develop a store with 35 percent more retail sales space. Bristol Regional Medical Center The main target of these dis- designated as a border region retail tourism district.
Deputy City Manager Mike Sparks said the Bristol City Council approved the measure last month but is still working on putting a project together in order to apply with the respective state agencies. Bristols district is approximately 800 acres, Sparks said.
This will be a good opportunity if we can put a good project together, to give us some chance of dealing with the tax discrepancy, Sparks said.
Whaley said Kingsport officials believe the Model City has the premier site for super regional retailers. Though not all of Kingsports proposed district is in the city limits, the remainder is in the citys urban growth boundary, and city officials are working to annex the remaining portion by the end of the year. To further help the project, Kingsport is working to realign a section of Fordtown Road to better improve travel through this area.
This is a key opportunity for the entire region to have a fighting chance of landing and locating one of these retailers in Tennessee, Whaley said.
These types of districts are super regional retailers, said Assistant City Manager for Development Jeff Fleming. Some examples of super regional retailers include Costco, Macys and Dillards, with the closest ones being Hamilton Place in Chattanooga and Pigeon Forge.
(The districts) concentrate on stores that only have one presence in a metropolitan area, Fleming said. With this new law in place it allows these border counties to help mitigate that effect and keep them in Tennessee.
The Kingsport Board of Mayor and Aldermen approved an ordinance last week establishing the Tri-Cities Crossing area of town (the Interstate 26 and 81 interchange) as a border region retail tourism district, thus taking advantage of the new law. The state departments of Economic and Community Development and Revenue first have to approve the district before it becomes official.
Kingsport officials are working on the application to both departments to have the district approved.
At the same time, the city of Bristol is also working to have the Exit 74 area of town around Bristol Regional Medical Center – Designated as a border region retail tourism district.
