County Council fights tax incentives for Okatie Crossing development

January 11, 2010 

Beaufort County Council members sent a resounding message to state lawmakers Monday that they do not want Okatie Crossings developers to receive any form of state tax breaks for the planned 1.5-million-square-foot shopping center near the intersection of S.C. 170 and U.S. 278 in Hardeeville.

The council unanimously passed a resolution Monday asking state legislators not to grant tax subsidies or abatements to Atlanta-based The Sembler Co. because to do so would interfere with "otherwise fair and open competition." The measure specifically cited outlet shopping centers Tanger I and Tanger II in greater Bluffton.

"When the project was introduced in Beaufort County, it was introduced as something different from anything else," said County Council Vice Chairman Paul Sommerville. "But when I look at their proposal, I see more of the same -- Kroger, Target, Sam's Club, Lowe's. It didn't take long for me to figure out they're going to be in competition with our malls."

Sembler says it plans a $400 million upscale mall on 262 acres in Jasper County near Sun City Hilton Head and is poised to get $100 million in state tax breaks.

Company representatives told the General Assembly that Okatie Crossings would be an outdoor "destination mall" unlike others within hundreds of miles.

They say it will create 2,000 to 2,500 jobs and generate sales tax revenues of $175 million over 15 years. The S.C. House and Senate approved different versions of tax incentives last year. The legislation progressed to a House-Senate conference committee before the session ended in June.

The county resolution objects to Sembler incentives because it claims the company will compete directly with the Tanger outlets and said Sembler tried to lure Tanger tenants to its development.

"The question becomes, do we as taxpayers want to subsidize this?" said Sommerville, who drafted the resolution. "The government shouldn't be in a position to pick winners and losers."

Jeff Fuqua, president of Sembler, said the Beaufort County resolution seeks to prevent needed expansion of the area's tax base and deny more than 2,000 new jobs to a high unemployment area.

"County Council has been ill advised by special interests that development of Okatie Crossings is not in the best interests of other businesses in the Lowcountry, including the Tanger Outlet Malls near Hilton Head, which the resolution specifically seeks to protect," Fuqua said Monday in a statement.

Fuqua said council members drafted the resolution without speaking to any Sembler staff.

He said the company has not solicited any existing businesses in the Lowcountry, but that it has been approached by a handful of retailers about adding an upscale component of their existing operations at Okatie Crossings. No one has indicated a desire to close existing stores, he said.

"The Beaufort County Council resolution unfortunately works to the direct detriment of all the citizens of the county, and its neighbors, including those who work at the Tanger Outlet Malls," he said. "We sincerely hope Beaufort County Council members will realize they have been ill advised in supporting a resolution filled with wrongful statements and will subsequently reconsider their support of it."

Jasper County administrator Andrew Fulghum said he was disappointed that Beaufort County Council members did not notify Jasper officials of the resolution.

"Jasper County respects their decision-making process, but what I don't understand is why they didn't communicate with the county council or any county staff for our input," Fulghum said. "We're for the incentive. In this economic downturn, we think the creation of jobs in the area is the most important thing. It's all about the jobs."

State Rep. Bill Herbkersman, R-Bluffton, said the tax break should be up for a vote within six weeks.

"The sales tax incentive is an incitement for jobs and if it's going to bring in as many jobs as it claims, then it's definitely worth looking at," he said. "But we have to look at whether it's fair to the existing businesses that Sembler gets these incentives. We have to look at whether they're going to pirate jobs from these businesses."

Those in favor of the incentives say Sembler 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 jobs.

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

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