Senate to weigh huge tax breaks for mall

By RODDIE BURRIS - rburris@thestate.com

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Whether South Carolina should give a mall developer $100 million in tax incentives could be debated as early as today in the state Senate.

Okatie Crossings, a proposed $400 million shopping mall outside Hardeeville, has stirred a heated debate over when the state should give businesses money to set up shop.

The Okatie project has gained wide support in the General Assembly because it is expected to boost jobs in one of the poorest tourism economies in the state.

$100 million tax break
The Senate could decide as early as today whether to award up to $100 million in tax breaks for a proposed $400 million retail complex in Jasper County. Details about the project:

- Officials for Atlanta-based The Sembler Co. say the project could produce up to 2,500 jobs. The incentive plans would make developers eligible for more than $100 million in state money to help offset infrastructure costs.

- Developers project Okatie Crossings could generate $11.6 million in tax revenue annually for the state. This is what the state would get after developers are awarded incentives.

- The incentives wouldn't activate until developers have spent $100 million and created 1,000 jobs. Additionally, the development must maintain at least 500 jobs at all times to continue to receive incentives, which are paid annually.

- The incentives would sunset after five years.

But opponents say retail development is not a good use of state money.

"Can you believe they are against a jobs program in one of the poorest counties in the state?" asked Sen. Robert Ford, D-Charleston, while locked in a Senate floor debate Tuesday over union voting.

Facts and figures have been all over the map on the Okatie project.

As the Legislature has neared a long-sought decision on the project, the possibility it may succeed has created some interesting crossroads.

For example, the South Carolina Policy Council, a conservative think tank, vehemently opposes incentives for the mall. But another conservative organization that often agrees with the SCPC, South Carolinians for a Responsible Government, has come out in favor of the tax rebates.

Critics such as Republican Sens. Greg Ryberg of Aiken and Tom Davis of Beaufort are trying to rally support to kill the tax incentives, which Atlanta-based Sembler says would kill the project.

"As a practical matter, retail incentives are nothing but a corporate welfare outlay of the taxpayers' money," Davis said Tuesday, brandishing a Sembler schematic of the 1.5-million-square-foot mall layout. "Study after study show retail incentives shift jobs, not create jobs."

That has been one of Ryberg's primary arguments against the project, too.

South Carolina tourism experts offer a different perspective, however.

In addition to the 2,500 permanent employees Sembler says the mall would hire, and the 800 construction jobs needed to build it, demand for other amenities such as lodging, entertainment and recreation would create 970 leisure and hospitality jobs in that Lowcountry region, with a $72 million payroll, said Julie Flowers, a former state Parks, Recreation and Tourism Department economist.

"These ripple effects will bring the total expected job creation to 4,900 with an annual payroll of $117 million," with a state and local tax impact of more than $450 million, Flowers said in a letter last month to Sembler president Jeff Fuqua.

Okatie Crossings is promoted as a tourist destination for travelers and planned on 280 acres across from Hilton Head's upscale Sun City residential retirement community.

Sembler says it will feature 500,000 square feet of upscale retailers such as Gucci, Ferragamo, Loro Piana and Yves Saint Laurent, within a landscaped ring of more traditional mall occupants such as Target and Publix.

"Most taxpayers probably wouldn't invest in a mall right now if they were given the choice," said Ashley Landess, South Carolina Policy Council president. "It is ridiculous for legislators to even consider doing so in this economy."

"Simply put, no mall has ever been constructed in South Carolina with a capital investment of $100 million - much less $400 million," said Columbia attorney Burnie Maybank, a former Board of Economic Advisors member and Department of Revenue director, in a letter to Jasper Sen. Clementa Pinckney. Pinckney has led the effort to get the incentives passed by the General Assembly.

There is strong local support for the mall, particularly in Jasper County, where the unemployment rate is 11.5 percent.

"It is ironic that the groups opposing jobs for Jasper County under the (cover) of the free-market marketplace do not contribute much to that marketplace," said Hardeeville Mayor Bronco Bostick, who attended the Policy Council's press conference Tuesday.

Jasper residents will be able to make their case for the mall today. It's Jasper County Day at the State House, and a few hundred Lowcountry residents are slated to visit the Capitol.

Pinckney said he is anxious to have the merits of the proposed incentives debated on the Senate floor.

"We are just taking it one step at a time," Pinckney said.