Ridgeland awards bonds to help develop Costco
The state is out and Ridgeland is in as public financiers for the Ridgeland Costco project.
Last week, the Ridgeland board of aldermen narrowly approved awarding up to $12.5 million in tax-increment financing (TIF) bonds for the third phase of Renaissance at Colony Park.
The third phase of the development is located along Highland Colony Parkway, and will be home to a Costco Wholesale.
The measure was approved on a 4-3 vote, despite an outcry from residents.
Project developers Andrew Mattiace and H.C. Bailey had previously hoped to use nearly $30 million in sales tax diversions from the Mississippi Development Authority (MDA) to fund the development.
Developers had asked to use some $29.6 million in cultural retail attraction (CRA) dollars for the development, but the request was rejected by the MDA, the agency that oversees the CRA program.
Developers were approved, though, to use the funds for the second phase of Renaissance, which would be located north of the current shopping center, also along Highland Colony.
Despite opponents’ concerns, Mayor Gene McGee said he was pleased with the board’s decision. “The vote is very good for economic growth in Ridgeland.”
Approximately 50 people attended the standing room only meeting at the Ridgeland City Hall. Numerous people spoke out against awarding the TIF.
“Why give away money to a development that says they’re coming anyway when we don’t have to?” asked Greenwood Lane resident Karen Bush.
Ward Six Alderman Wesley Hamlin responded: “Public money was figured into the cost of the project from the very beginning,” he said. “Originally, (it) was MDA grant money and now that’s not happening. When you take $28 million or $29 million out of a project, you get a different project,” he said.
Old Agency Road resident Deloris Holman also wasn’t pleased with the TIF proposal.
“Mayor and board of aldermen please help me to understand why you’re giving a TIF to a millionaire developer who defaulted on a previous TIF and left taxpayers holding the bag? No bank or responsible financial institution would make such a loan,” she said.
Holman was referring to a previous TIF that was awarded to Mattiace for Lowe’s project on East County Line Road.
In December 2005, Ridgeland officials issued $5.3 million in TIF bonds to fund improvements for the Lowe’s center. However, the center could not generate enough property and sales tax revenue to retire the debt.
Approximately $680,000 a year was needed to repay the loan, but the project was only generating around $500,000. Ridgeland dipped into its general fund to pay the debt, and eventually refinanced bonds to reduce payments.
McGee told Holman that Mattiace had to pay a “large amount out of (his own) pocket” to make up the shortfall.
TIFs are typically issued to developers to reimburse them for installation of public infrastructure associated with their projects, such as roads, sidewalks and the like.
For this project, in particular, the TIF will be used, among other things, to reimburse developers for the construction of a water retention pond.
The bonds will be retired with the increased property and sales tax revenue generated by the projects.
Under terms of the phase three agreement, Ridgeland would dedicate 100 percent of the project’s increase in ad valorem taxes and 50 percent of the increase in sales taxes to repayments.
The Costco will be located on approximately 45 acres south of the Old Agency roundabout, on the east side of the parkway.
Currently the undeveloped acreage generates about $7,300 a year in property taxes for Ridgeland and $12,200 in property taxes for Madison County. It generates zero dollars in sales taxes, according to Chris Gouras, with Gouras and Associates, a firm representing developers.
Once the Costco and its surrounding stores are completed, the third phase will generate around $146,000 in property taxes for the city and $242,000 in property taxes for the county. Property taxes for the Madison County School District also will increase, to more than $300,000 a year, he said.
The third phase is projected to have around $130 million a year in retail sales, generating around $1.7 million in sales tax revenue for the city, Gouras told the board.
Counties do not receive sales tax revenue.
Bonds would not be issued until one year after the completion of the development, and nine months after the project begins generating sales taxes.
The agreement is for up to $12.5 million, but the amount issued could be less, based on actual revenues, Ridgeland attorney Jerry Mills said at the meeting.
Mattiace and Bailey received previous TIFs from the city, including a large portion of the $35 million issued as part of the original Colony Park TIF, and $5.3 million in TIF bonds for the Lowe’s shopping center on County Line Road.
That night, the board also approved awarding another $5 million more in TIFs for the second phase of Renaissance, which is part of the Colony Park TIF District. Mattiace will use the $5 million to do infrastructure work on between nine and 15 acres north and east of the current shopping center, McGee said.
Phase three will be constructed in two parts, with the first being a Costco and an accompanying gas station. The store itself will be approximately 150,000 square feet, and will include 966 parking spaces. The second portion will include five additional buildings, that will total 8,000 square feet and will include additional parking spaces.
Elements making up the Costco will include bricks, concrete and stucco, as well as corrugated metal.
Mattiace couldn’t be reached for comment.