Kingsport officials said Tuesday that Sullivan County actually does benefit financially from TIF projects like East Stone Commons inside Kingsport and Bristol, and that the county is losing sight of why the projects are undertaken in the first place: to create jobs. Photo by David Grace.
KINGSPORT - Cooperation between Sullivan County and its cities has made the local retail sales tax base stronger - and it needed to be strengthened, Kingsport City Manager John Campbell said Tuesday.
The city wants to continue that partnership, Campbell said.
"Our working relationship between the cities and county must continue to be strong if we are to succeed in building a community that keeps our best and brightest at home," Campbell said in a statement issued by the city's community relations officer. "I am hopeful we can continue to work together for the benefit of the entire county."
The Times-News asked Campbell to respond to action a day earlier by a group of Sullivan County commissioners.
On Monday, the Sullivan County Commission's Administrative Committee endorsed asking the cities of Kingsport and Bristol to each split local-option sales tax revenues generated by tax increment financing (TIF) projects.
When local governments agree to TIF for a redevelopment projects, it means the county and city each agree that any growth in property taxes paid on the properties would be diverted to help pay for redevelopment.
Campbell said a recent market study indicated Sullivan County faces at least $650 million in lost retail market potential each year.
"I believe the Sullivan County Commission is to be applauded for taking concrete steps to address this loss and grow the local economy through TIF agreements," Campbell said. "Working together through TIF, Kingsport, Bristol and Sullivan County have redirected a certain number of property tax dollars in the short term to incent new development."
In all, Sullivan County and the cities have approved TIF for five projects:
•East Stone Commons, at Eastman Road and East Stone Drive in Kingsport.
•Westridge, a former Wal-Mart site on West State Street (U.S. 11-W) in Bristol.
•A property on Volunteer Parkway in Bristol where a new Lowe's and a new Food City opened.
•Crown Point Shopping Center on Eastman Road in Kingsport.
•A second property on Volunteer Parkway in Bristol where a Cheddar's restaurant and a new BB&T Bank facility are to be built.
Campbell described the results as "phenomenal" and said all three entities are beginning to "recapture hundreds of jobs and millions of lost sales tax dollars through new investment in retail amenities."
"These investments, jobs and new tax dollars were previously leaving Sullivan County for neighboring cities and Virginia," Campbell said. "In fact, without TIF and similar agreements, these new investments would likely not exist at all. Any analysis of the benefits and costs of TIF must also consider spin-off commercial development in areas not covered by these TIF agreements. And, with new retail amenities in place, we are seeing a marked increase in high-quality residential development, which adds to the total health of the community as a whole."
Dave Light, assistant to the city manager, said Kingsport can't give specific figures for sales tax collections for a certain development because the information is "proprietary."
"In most cases, we don't even know it," Light said.
But in the case of East Stone Commons, the first local project approved for TIF by Sullivan County and the city, Kingsport estimated that when the development was 100 percent complete, it would generate $1 million in local-option sales taxes.
Development of East Stone Commons is not yet finished "and it has exceeded that estimate," Light said.
Of that money, Kingsport keeps 50 percent based on state tax law. State law requires that the other half goes to the three school systems in Sullivan County, the division based on student population.
According to Sullivan County's own current budget document, for last fiscal year, more than $43.5 million in local-option sales tax was collected countywide. Sullivan County's school system received more than $12.25 million. Kingsport's city school system received about $5.8 million. And Bristol's city school system received more than $3.7 million.
Looking back, some commissioners said Monday they now think they acted in "ignorance" in approving TIF projects to date and should have investigated the county's options and leveraged the commission's authority - since the cities couldn't move ahead with TIF projects without approval from the County Commission.
County Commissioner John McKamey said splitting the local-option sales tax revenue from TIF projects is simply "the fair" and "the right" thing to do.
State law requires the involvement of a housing and redevelopment authority for TIF to be used. McKamey said that means TIF projects are spurring redevelopment - and sales tax growth - only inside the cities, and that's not fair to county taxpayers.
While the cities recoup their forgone property taxes on TIF projects from new sales tax revenues, the county loses property taxes "but gets nothing back," McKamey said.
His plan: Ask each city to give Sullivan County's general fund 50 percent of the 50 percent of sales taxes that now go to city coffers.
McKamey's proposal to ask for a split of sales tax revenues from TIF projects will be on the agendas of the commission's Executive Committee today at 6 p.m. and its Budget Committee Thursday at 7 p.m. It could come for a vote by the full commission on June 18. All three meetings are scheduled for the commission room on the second floor of the historic Sullivan County Courthouse.