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Sembler incentives debate moves to Senate floor

For months, state Sens. Tom Davis and Clementa Pinckney have dueled about a proposal to provide tens of millions of dollars in tax incentives to developers such as the Sembler Co., which plans a 280-acre shopping center and luxury outlet mall in Beaufort and Jasper counties.

On Thursday, they took their debate to the Senate floor.

Each spoke for about an hour before the Senate adjourned for the weekend.

The Senate will continue the debate next week.

THE SUPPORTERPinckney, D-Ridgeland, sponsored the incentives bill with Sen. Gerald Malloy, D-Hartsville.

Pinckney began a passionate case for the bill during a floor speech Wednesday. He said Thursday the plan would lift the people of a relatively poor, rural region from the depths of a recession that has increased rates of unemployment and foreclosure.

For a half century, many of those people have had to work and shop outside Jasper County, often performing menial chores such as housekeeping for minimal pay, he said.

"I believe they deserve an opportunity to make more than just minimum wage making up someone else's bed," Pinckney said.

He said Sembler's project could be as significant for his constituents as Boeing and BMW plants, businesses also lured with incentives, are elsewhere in the state.

Sembler officials say incentives are critical to their plans to invest $400 million and create as many as 2,500 jobs at Okatie Crossings, planned as a destination development of about 1.6 million square feet at the intersection of U.S. 278 and S.C. 170.

The incentives would return to developers a portion of sales tax revenues generated by some "extraordinary commercial facilities" to offset building costs. Developers would have to invest $200 million and create 1,250 jobs for the incentives to kick in.

Pinckney said Sembler's project would be more than "just a strip mall" because it would be bigger than and different from other shopping centers in the state.

He said Okatie Crossings could draw to Jasper County travelers who currently shop at places such as Concord Mills, an outlet mall near Charlotte.

It would employ managers as well as cashiers and clerks, Pinckney said. Average wages would be about $30,000 a year, and some employees could make $50,000 in salary and commissions, he said.

Pinckney took exception to the claims of detractors who argue the project's economic impact would be negligible because it could shift jobs and sales rather than create new ones.

That argument doesn't account for factors such as payroll and income taxes, Pinckney said. The project would generate $9 million in sales taxes on construction materials alone, and it would likely attract additional restaurants and hotels, he said.

Pinckney urged the bill's opponents to drop their theoretical objections and remember the practical benefits the project could provide to families.

"Not words, not thoughts, but real jobs," he told senators.

"I can't eat philosophy," Pinckney said. "Philosophy doesn't pay the mortgage."

If incentives will help the company develop a site that is now empty, why wouldn't the state consider returning a portion of the tax revenues the project produces? Pinckney asked.

"A little bit of something is better than a whole lot of nothing," he said.

Sen. Hugh Leatherman, R-Florence, suggested Pinckney amend the bill to offer incentives only for the third of the project planned as an inner ring of luxury outlets rather than the remaining two-thirds planned to house "run-of-the mill retail."

"If we open that door, senator, there's not enough money in the state treasury," Leatherman said. "I am willing to look at incentives for the high-end core."

THE OPPONENTDavis, R-Beaufort, began his speech Thursday by acknowledging how important the bill is to Pinckney before declaring it bad for the state."I want folks to know it's equally important to me," said Davis, who urged the bill be returned to the Finance Committee.

Davis said he's "OK" with Sembler's plan as long as the company relies solely on its own money to build Okatie Crossings.

He said it would be a crime to grant tax breaks to an out-of-state retail developer when South Carolina is struggling to pay for core government functions and facing budget shortfalls likely to grow once federal stimulus money dries up.

He also said it would be unfair to existing retailers, such as the Mall at Shelter Cove on Hilton Head Island and Berkeley Place shopping center in Bluffton. The mall is fighting to avoid foreclosure; the other is in receivership.

It doesn't make sense to grant incentives to convince a developer to build at one of the busiest intersections in Beaufort County, he said.If lawmakers were a board of directors making an investment for a public company, shareholders could sue for malpractice, Davis said.

Retailers draw from a "fixed pie" of shoppers' dollars, he said, so purchases made at Okatie Crossings would likely have occurred elsewhere in the area without the incentives.

Davis encouraged his colleagues to take a closer look at the bill.

Unlike other incentive legislation in South Carolina, it doesn't include language that calls for cost-benefit analyses and doesn't guard against the shifting of jobs, Davis said.

He said Pinckney's claims are false that Sembler would have to invest $200 million before winning the incentives because the bill is crafted to allow spending by other parties -- including tenants -- to qualify.

The bill even could allow Sembler to count public money from local governments, Davis said.

"It was written very cleverly to allow anybody who puts capital into that perimeter to count toward that $200 million," he said.Davis later likened Sembler's plan to a "ponzi scheme."

"Every single step of the way, they thought of a way to get a better deal," he said.

Nothing in the bill requires the project to attract tourists or guarantees the company will build luxury shops, he said.

"What you have is the word of somebody out in the lobby telling you it's going to be wonderful Italian stores," Davis said.

He decried what he said is growing government involvement in business, a system that he said rewards big companies that can pay lobbyists to seek incentives at the expense of smaller ones that "can't afford to come up here and beg for money."

Sembler has spent a lot of money on lobbyists and even tried to employ Davis as a real estate lawyer, he said. Davis said representatives of Sembler approached him after he began publicly opposing the push for incentives, extending an offer he refused.

Before the Senate adjourned, Davis pledged to continue stating his case and catalog the results of Sembler's previous attempts to seek incentives elsewhere.

"It's going to take me a long time," Davis said. "I'm just getting started."

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