Proposed Okatie Crossing development denied incentives by legislature

COLUMBIA -- Okatie Crossings is no Boeing.

But, to Jasper County, it's more important.

Over two days in October, a $450 million tax package that helped entice aircraft giant Boeing - and its 3,600 high-paying jobs - to expand in urban North Charleston unanimously sailed through the General Assembly.

But incentives to land Okatie Crossings - a 261-acre high-end retail center off Interstate 95 inJasper County - have languished in the Legislature for months, even after the incentives were approved by the S.C. House.

So why does one project soar while another founders?

Blame a rift in the General Assembly over whether incentives should be given to commercial developers.

Blame differences among lawmakers about whether incentives should be used solely to create "high-tech" jobs, a standard some argue might exclude some rural South Carolina counties from getting critical state help in creating jobs.

And blame Sen. Greg Ryberg, an Aiken Republican who stopped the Okatie Crossings legislation cold, terming the incentives anti-competitive.

"I don't think it's government's job to be in the business of picking winners and losers," Ryberg said. The Okatie Crossings incentives centered on a 3 percent sales tax break for the developers and tenants.

Ryberg argues that tax advantage hurts existing retailers and gives the Okatie Crossings businesses an unfair competitive advantage.

Where Ryberg sees a potential business problem, state Sen. Clementa Pinckney, D-Jasper, sees a way to help a pair of high-poverty counties overcome unemployment problems.

"To Jasper and Hampton counties, (this means) jobs - and jobs we desperately need," said Pinckney, who distributed a letter making the case for the sales tax break to his Senate colleagues during the Legislature's recent two-day session to pass incentives for Boeing, making the case for the sales tax break for Okatie Crossings.

Jasper County administrator Andrew Fulghum wonders if lawmakers understand how incentives for retailers are more vital to lesser developed counties than for larger, urban areas.

"It comes down to what is economic development for each of our communities," Fulghum said. "This is important to us. In the context of a small, rural county, it could have a huge impact."

Okatie Crossings, slated for the growing city of Hardeeville, would bring 2,000-2,500 new jobs to the area, according to developers, and generate sales tax revenue approaching $175 million over 15 years.

It is being billed as a first-of-its-kind outdoor shopping mall in the Southeast. For their $400 million in private, up-front investment, developers are betting the high-end retail center will draw shoppers from all over.

Atlanta-based The Sembler Company is banking on drawing Midwestern and Northeastern snowbirds traveling Interstate 95 and affluent residents and visitors to Hilton Head Island.

The 261-acre development would be built just off I-95 in southern Jasper County, an interstate the county counts as one of its top economic development assets.

Proposed features include direct-from-the-manufacturer, high-end retail outlets not found elsewhere in South Carolina, complemented by several hotels and more than 30 restaurants, all on a manicured landscape.

But Ryberg, chairman of the Senate Labor, Commerce and Industry Committee, thinks providing incentives for retail sets a bad precedent by giving a tax break for a relatively common type of development.

Ryberg also disputes the mall is merely a local project, saying that, by design, it would draw from a huge area and therefore impact competition for businesses over a wide area.

Giving The Sembler Company $100 million in tax breaks to build a high-end shopping mall, Ryberg said, would reward the developer simply for having the resources to hire high-powered lobbyists.

"Boeing is a vastly (different) and unique opportunity for South Carolina," Ryberg said.

That misses the point, said former Department of Revenue director Burnie Maybank, an attorney in the Nexsen Pruet law firm who helped with the Jasper project's proposed legislation.

"The theory of a good incentive is one that attracts or serves a project development that is not already here, or wouldn't come here except for the incentives," Maybank said.

Ryberg said it is "totally inconsistent" that Maybank, who heads the Tax Realignment Commission - a legislative panel looking for ways to get rid of tax exemptions - is pushing for incentives for the Jasper project.

"That's the real irony," Ryberg said. "I think he's working both ends at the same time."

Though the Okatie Crossings incentives bill cleared the full House and the necessary Senate committees, Ryberg would not allow the measure to be debated on the Senate floor. Under Senate rules a single member can block legislation.

Ryberg's actions has some additional effects, too, all of which may be remedied when the General Assembly convenes in January.The Jasper Project resides in a voluminous, catch-all piece of legislation lawmakers commonly refer to as a BAT bill. The legislation, H.3722, mostly contains technical changes for certain existing legislation that periodically must be updated.

Ironically, the bill also contains a tax incentive package for the Upstate - one that Ryberg said he supports.

That package offers incentives to rehabilitate the closed Celanese Americas Fiber mill in Rock Hill, and further, to help rehabilitate the area of town the former mill lies in.

Ryberg said those are incentives he supports to help those communities rebuild.

But Pinckney, an African Methodist Episcopal minister who was newly appointed to pastor a church in nearby Bluffton, had to pull out his Okatie Crossings incentives from the overall bill, or Ryberg said he would block the entire bill.

Ryberg stood alone in opposition.

"I have no problem with (the) Jasper County (project) - Sen. Ryberg does," said Sen. Wes Hayes, R-York, whose district includes Rock Hill. "This would be tremendous for them."

So, the Senate version of the BAT bill was passed without the Jasper Project in it. But it had to be reconciled in a House-Senate conference committee with the House's BAT bill, which included the Jasper Project.

Hayes, Ryberg, and Sen. Creighton Coleman, D-Fairfield, represented the Senate in the six-lawmaker conference.

The House was represented by Rep. Kenny Bingham, R-Lexington, Rep. Brian White, R-Anderson, and Rep. Herb Kirsh, D-York, all at loggerheads with Ryberg.

"Sen. Ryberg would not agree to leave Jasper County in it, and the House would not agree to take it out," said Sen. Hayes, a conference committee member.

Hayes declared the conferees to be at an impasse and asked Senate President Glenn McConnell, R-Charleston, to dissolve the committee.

It is unclear what will happen with tax incentives for Okatie Crossings, or other provisions, in the bill come January.

But the Okatie Crossings project has in its favor bipartisan support from other parts of the state, perhaps due in part to the state's persistent unemployment problem.

South Carolina's unemployment rate for October was 12.1 percent.

"Everything is not going to be Boeing," said conferee Bingham, the House majority leader. "These are real jobs for real people, and I will do everything I can to get this passed."

Like Boeing, The Sembler Company wants the state to allow for a 3 percent sales tax break to defray infrastructure costs for its "extraordinary" economic development project in what is a multicounty industrial park.

Jasper County, where unemployment is 11.4 percent, and Hampton County, where unemployment is 16.4 percent, share park ownership.

Proponents of the incentives say Sembler, unlike Boeing, would invest the money for the project up front, and not get any tax incentives until the company has invested $100 million and created 1,000 new jobs.

If the number of permanent jobs created falls below 500 at any time, the incentives shut off until that threshold is reached again.

That severely limits the state's exposure in providing the sales tax break, Bingham said. Also, the state's offer would not be forever because the legislation sunsets after five years.

"In this environment, we cannot afford to thumb our noses at this kind of investment," Bingham said. "Money is hard to come by."

Project supporters say Okatie Crossings' plans include local vendors, disputing Ryberg's criticisms.

Marty Sauls, president of the 400-member Jasper County Chamber of Commerce, said the organization has not taken a position on Okatie Crossings.

Ryberg said and he hopes the Jasper project will be stripped out the comprehensive legislation package and made to stand for a vote on its own merit.

Meanwhile, The Sembler Company said it is awaiting action from the Legislature.

"If incentive legislation is enacted, we are prepared to put together a retail center that will be the first of its kind in South Carolina and the region," said Jeff Fuqua, president of the company's development division.

"We are shovel ready and awaiting legislative action so we can finish the financial package and begin work."