Catoosa County leaders say the cost of developing land for Costco Wholesale at Interstate 75 and Cloud Springs Road will force millage rates up on property taxes, but increased sales tax revenue would keep property tax bills from climbing.
A slide presentation shown at Friday's commission meeting by County Attorney Chad Young said the project would have "no negative impact on property taxes" and any millage rate "adjustments required for the project" would be "offset by increased sales tax revenues."
The millage rate is calculated by dividing the portion of the budget that must be funded through property tax by the total dollar value of taxable property in the county.
As a formality, the millage rate would have to go up, officials said, but the sales tax would then basically be credited back to the property owners.
"There is going to have be a shift a in the millage rate, but we will equally roll back the sales tax to match that so it's not going to affect the taxes," Commission Chairman Keith Greene said.
Under the contracts agreed to Friday, the county will buy the land slated for Costco for $4.8 million, spend $4.5 million to improve it and then sell it to Costco for $4.8 million.
By the numbers* $4.8 million: Cost of property* $4.5 million: Cost of site preparation* $1.5 million: First year projected sales tax revenue* 5: Projected number of years to pay off the improvement loanSource: Catoosa County Commission
Mr. Greene explained that the cost of the development, which will be borrowed, would be paid for by sales tax generated by the new warehouse club.
Mr. Young simplified the situation, explaining that sales tax exists to ease the tax burden on property owners. If the millage rate forces property tax up $1 and sales tax collections go up $1, the county will give that $1 back as a credit so there is no net change, he said.
The opposite scenario happened this fall, Mr. Young said. For the current fiscal year, the millage rate stayed the same but lower-than-expected sales tax revenues forced a few more dollars onto the property tax bills to offset the lost sales tax.
The reverse should be true with Costco coming in and injecting as much as $4 million in sales tax revenue to the county's coffers, he said.
But however you look at it, taxpayers are funding a for-profit business, said Bob Griggs, who, for the past 11 years, has run Millagerate.com, a Web site that says its purpose is "to provide a basic foundational knowledge of the millage rate-setting process."
"You would think, if it was a good market, Costco would pay for it themselves," said Mr. Griggs, a former chairman of the Newton County, Ga., Board of Equalization who now lives in Gwinnett County, Ga.
He said using sales tax to offset property tax is still going to cost local residents. The sales tax rollbacks are essentially a taxpayer "paying himself back."
"The taxpayer's not getting a very good deal on this," Mr. Griggs said.
Public officials have said the store will bring in plenty of customers from Chattanooga as well as other Georgia counties to contribute to Catoosa's tax income.
Costco executives and industry experts have said the clubs can draw shoppers from 30 or 40 miles away, an estimate that puts the customer base for the Fort Oglethorpe store in an area from Cleveland and South Pittsburg, Tenn., to Rising Fawn, Chatsworth and Calhoun, Ga.
While Mr. Griggs acknowledged that a percentage of the sales would be from out of the county, he's still not convinced the deal is a good one for Catoosa County taxpayers.
"The fact is, the overwhelming majority of tax pennies that are going to be collected at Costco are going to be from customers in Catoosa," he said.