ATHENS, Tenn. — A shopping center going up in north Cleveland has Athens officials worried about a shopping migration that could hurt the town’s sales tax collections.
The center on Cleveland’s Paul Huff Parkway will be anchored by Target, Kohl’s and Circuit City, which don’t have stores in Athens.
Though Athens has Belk, Wal-Mart, Lowe’s and Staples, it doesn’t have a centralized shopping center.
“This is only 22 miles down the road, and from what I see there, they will have more than just Target and Kohl’s,” City Manager Mitchell Moore said during a recent council planning retreat. “The impact will not be good for us.”
The potential sales tax loss could come up when the council and city school board meet tonight, officials said. Half of local sales tax collections go to schools.
Councilwoman Shannon Alvey said the town likely will “see a lot of leakage” as local shoppers head down Interstate 75 to the new development.
When we have a slowdown, it shows up at the collection point,” Vice Mayor Bo Perkinson said.
Officials said the impact could add to a potential lull in property tax collections caused by the housing slowdown and the closure in August of the Collins & Aikman plant, which put more than 400 people out of work.
Business and industry make up about 70 percent of the property tax collection in the city, officials said.
Finance Director Brad Harris said sales tax collections have gone up in each of the last three years, but “it’s hard to know” what will happen once the Cleveland center opens.
Council members and school officials both said any reduction in tax collections will have a definite effect on next year’s budget planning.
Dayton, Tenn., also could be affected by the shopping complex in Bradley County, but Finance Director Tom Solomon said he doesn’t expect any negative results.
“I don’t foresee it affecting our sales taxes numbers,” he said.
“We have had other expansions and the ladies that go to those stores now don’t shop in Dayton,” he said. They prefer Chattanooga or similar areas.
And Mr. Solomon said he doubts people will drive to Cleveland to shop at Target when there’s a Wal-Mart in Dayton.
Cleveland Finance Director Mike Keith said city officials believe the shopping area for the new center will include McMinn, Meigs, Polk and Rhea counties.
“We are hoping it will increase our sales tax numbers,” Mr. Keith said.
And while it could affect McMinn sales taxes, he also believes some residents who currently may go to the Turkey Creek shopping area south of Knoxville may switch to Cleveland, since it is several miles closer.
Athens has sought similar retail businesses, but Mr. Moore said most large chain stores won’t build unless an area has a certain population.
That has often eliminated Athens from consideration for those businesses and franchised restaurants, he said.
REGIONAL SALES TAXES
City Cleveland Dayton Athens
2005: 7.1 million $3.2 million $3.4 million
2006: $7.6 million $3.3 million $3.8 million
2007 $8 million $3.4 million $3.9 million
Source: City finance officers
