Town staff is asking commissioners to consider changing incentives for new businesses, saying existing policies are too lenient in most cases and ineffective in some.
“It’s just that when we started looking at it and as inquiries are coming in, almost everything would qualify for an incentive, and I’m not sure that we can either afford that or that was the intent of an incentive policy,” Town Manager Teresa Piner told the Town Board on Monday.
Wendell’s tax base is about 25 percent commercial and 75 percent residential.
Under the current policy for large businesses, those that invest either $1 million in a building or $2 million in a building plus land can be considered for tax relief of 75 percent for five years.
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Planning Director David Bergmark said most new commercial projects would meet those standards, which could lead to shortfalls in the town’s property tax revenue over time. He said the threshold should be more in the range of $5 million, and pitched the idea of a step-down approach to the tax relief percentage.
“What we don’t want is a situation where we simply just find ourselves behind over the next five years because we’re only getting 25 percent of the taxes from virtually every new business coming in,” Bergmark said. “Definitely in terms of the threshold, at least in staff’s opinion, we might need to look at increasing that (threshold), but as part of that discussion also a much more broader look at what are we trying to incentivize – what type of uses – and how do we want to incentivize.”
Commissioner Jon Lutz said he thinks some large businesses do enough market research to decide on a location regardless of whether an incentive is offered.
“Are we just hurting our tax base?” he asked.
There is currently no investment threshold attached to the incentive policy for small businesses, those with under 15 employees or gross sales under $1 million.
That policy offers breaks like parking reductions, development fee exemptions or reductions, and accelerated review processes, but no tax relief. Staff said those incentives are probably insufficient to lure a small business to town in most cases.
Bergmark polled the board members on specific types of development they think should be eligible for some type of incentive.
“Restaurants,” Mayor Ginna Gray was quick to reply.
“To me, this is like dangling a carrot,” she said. “If we’re going to dangle a carrot, I want it to be attractive to what we don’t have and things that people tell me that they want. A sit-down restaurant is one of the biggest things I hear every day.”
Commissioner David Myrick said he likes incentivizing industrial development in certain locations, but wants to tie the policy to how many employees they would bring to town.
Commissioner Jason Joyner said he would like to focus on filling vacant buildings. Commissioner Ben Carroll agreed and said the town should promote those spaces as it recruits new members of the community.
“Even outside of downtown, if we’re considering creating incentive packages for buildings, maybe we lower that threshold for the filling an empty shell type deal,” Carroll said. “Obviously, if I move into a building that’s already built, I’m probably not going to hit the $1 million mark because I didn’t have to build it from the ground up.”
The group also discussed incentivizing residential spaces in the downtown district.
“The intention behind that is, with having upper-story apartments or condos, is to help create patronage, create a base for those downtown businesses to have regular customers as a result,” Bergmark said. “It’s not a tax generator, like other ones are, but it does help support those small businesses that create a more vibrant downtown.”
Joyner said he doesn’t see the economic impact of the town giving incentives to fill residential spaces.
“To me, that’s a loss leader that we’re really not going to gain any tax dollars from that,” Carroll said.
Planner Patrick Reidy said such incentives could lead to higher-end residential spaces in downtown.
“Because you have an incentive, somebody could put nicer finishes into a space and charge more rent,” Reidy said.
Piner noted whatever the board decides would need to be revisited periodically to determine if it meets the the town leaders’ latest desires.