Retailer incentives called 'can of worms'

Retailer incentives called 'can of worms'

December 6th, 2010 by Andy Johns in News

Staff photo by Dan Henry/Chattanooga Times Free Press - In this file photo, construction is going on at the Costco site on Cloud Springs Road. Some local officials worry that incentives offered to Costco might become the rule for other businesses looking at locating in Catoosa County.

Fort Oglethorpe recently approved its share of $900,000 in incentives to help lure a Kroger supermarket to Ringgold, Ga., but the new mayor says government officials have "opened up a can of worms" by offering perks to retailers.

Catoosa County, Ringgold and Fort Oglethorpe took out a loan to prepare land for a Costco Warehouse Club that opened in October. They plan to do the same for Kroger if the Cincinnati-based supermarket chain decides to build a store on Battlefield Parkway in Ringgold.

"That's the one that opened up Pandora's box," said Fort Oglethorpe Mayor Lynn Long, referring to the Costco deal. "The reality is that precedent that has already been set."

Long said Costco is the first retailer to receive incentives to locate in the county and he expects Kroger and most other prospective retailers to ask for similar incentives.

The county government bought the $4.8 million Costco site, pumped about $4.5 million into improving the land, then sold it to the retailer for $4.8 million. The Kroger project would include $904,000 in sewer, stormwater and environmental work.

Long, who took over for the late Mayor Ronnie Cobb in November, said the Fort Oglethorpe council voted to enter the agreement with Ringgold because Ringgold had done the same for Fort Oglethorpe with the Costco deal.

"I think long term it's just a matter of cooperation," Long said. "What's good for Ringgold is good for Fort Oglethorpe."

During his campaign for mayor, Long said incentives "are going to have to be there in the future."

Jim Cutler, whose district includes most of Ringgold, said Long might be overstating the situation.

"This isn't an open invitation to anyone saying we're going to open up the checkbook and here you go," said Cutler. "Will businesses ask for it? They could, but that doesn't mean we have to give it to them."

Cutler said the county and cities would grant incentives to businesses only when it made sense -- for instance, if the company would bring significant sales tax revenues or jobs to Catoosa County.

About 170 people, including 112 part-timers, will work at the Kroger store, according to the officials. Kroger is expected to contribute about $222,000 in sales taxes the first year, according to officials. In contrast, Costco is expected to bring in about $1.5 million in sales taxes in its first year.

Randall Peters, chairman of the Catoosa County Economic Development Authority, said officials took a hard look at both stores' expected sales and the revenue they would generate. He said tax break requests from smaller businesses with smaller impacts on jobs and revenues have been denied in the past.

"We have had a number of parties come to us and ask for incentives that haven't gotten through," Peters said.

Ringgold Councilman Larry Black, who has been on the council for 12 years, said the Kroger vote was the first time he can remember the city offering incentives for a business. The taxpayer-funded benefits are a new wrinkle in development, but they are not likely to go away, Black said.

"I guess that's just part of the culture now," he said.

Contact staff writer Andy Johns at ajohns@timesfreepress.com or 423-757-6324.