City administrators will consider resolution 52-22 regarding an economic development agreement for a new shopping center at Tuesday’s city council meeting.
If approved, the project with Burk Collins and Company will see the construction of a new 50,125 square foot retail development consisting of three retail bays to be built on the vacant land between the Walmart Supercenter and Lowe’s, according to a staff report prepared by City Administrator Phillip Patterson on August 8th.
The developer has letters of intent for 10-year leases signed by three clothing retailers, Five Below, Ross Dress for Less and TJ Maxx, the report said.
For several reasons, including the high cost of construction, the site having no plots for potential sales, and retailers perceiving Siloam Springs as a smaller market, the developer’s pro forma (financial statement) is not generating enough cash. so that the promoter’s investors could fund the project, the report said.
The developer has asked the city to help fund the project and fill the financial gap, the report said. The requested incentive program is valued at $1,500,000 and is broken down as follows:
• Waiver of all permit and impact fees related to construction, which is valued at $131,613.
• Extension of sanitary sewer, water and electricity to the project site. The total value to the developer is $165,000 and the cost of materials to the city is estimated at $58,000.
• Reimbursement to the developer of a percentage of projected sales tax revenues generated by the project, totaling $1,203,387.
According to developer and brokers Ross and TJ Maxx, retailers expect to generate $6,000,000 in annual sales, otherwise they would not be interested in investing in the Siloam Springs market, the report said.
Based on city staff research, the average annual sales per square foot for Ross for the years 2014-2020 was $391, the report said.
Using this figure, Ross could generate $7,045,714 in annual sales based on the 18,000 square foot store and TJ Maxx could generate $8,797,500 in annual sales tax based on the proposed 22,500 square foot store. , says the report.
Five Below generated annual sales per store between 2016 and 2020 of $2,120,000, the report said. Based on these annual projections, the city’s new annual sales tax could reach $359,264, the report said.
Using the developer’s and broker’s minimum expectations of $6 million in annual sales each for Ross and TJ Maxx and only $2 million for Five Below, the city’s new annual sales tax would be $280,000, indicates the report.
For the purpose of developing a sales tax revenue refund proposal, staff felt it was appropriate to use a more conservative projection of annual sales so that staff would reduce projected sales by 20% or $4.8 million each for Ross and TJ Maxx and $1.6 million for Five Below. , says the report.
Based on this conservative projection, the new annual sales tax revenue would be $224,000, the report said. The proposed $1,203,387 will be repaid to the developer over seven years, the report said.
According to the following breakdown of the projected $224,000, the total amount reimbursed to the developer over the seven-year period will be $1,203,387 and the amount retained by the city over a 10-year period will be $1,036,813, indicates the report.
The state of Arkansas collects all sales taxes for cities and counties, but does not provide information regarding the specific sales tax generated by individual retailers, the report said.
For this reason, the rebate offered by the developer is based on an annual sales tax basis rather than an actual sales tax generated by the three retailers, the report said.
City managers will also consider and hear from the following:
• Minutes of the August 2 City Council workshop.
• Regular minutes of the municipal council meeting of August 2nd.
• First renewal of the City Lake Water Use Agreement.
• Landowner’s agreement with the Illinois River Watershed Partnership for the Kayak Park Conservation Plan in the amount of $102,000.
• Approval of the contract with Less Lethal Axon Enterprise Inc. for seven Tasers in the amount of $191,107 and to amend the 2022 budget in the amount of $19,110.
• Budget amendment for the purchase of a vehicle for the Superior Automotive police department in the amount of $43,483.00.
• Framework Service Agreement between the Community Development Department and Garver Engineering.
• Budget amendment for the purchase of a vehicle for the Superior Automotive fire department in the amount of $48,000.
• Approval of the contract with Howard Technology Solutions for the Town Hall meeting room renovation project in the amount of $114,989.
• Presentation of new police officers Esteban Gallegos, Ben Taylor, Prentice Carter and Daniel Newton.
• Place Ordinance 22-20 regarding annexation of 14,087 acres for block 21000 of Arkansas Highway 16 and proceed to a separate vote to pass the ordinance.
• Place Ordinance 22-21 regarding the rezoning of the 2400 to 2600 block of East Kenwood Street from R-3 (Two-Family Residential) to R-2 (Medium Residential) at second reading.
• Place Order 22-22 regarding the annexation of 1.96 acres of 21733 Carousel Drive for second reading.
• Place Ordinance 22-23 establishing a Public Utilities Commission at second reading.
• Administrator’s report.