August 27, 2008

City of Spring Hill expects to have more than enough made up for its tax loss with retail boom

Shoppers help cities cope in economy
By Tennessean- August 27, 2008
When Kroger relocates early next year, it will take hundreds of thousands of dollars in sales tax revenues with it. The supermarket is moving less than a mile up Main Street into Thompson's Station.
That's bad news for Spring Hill. The good news is that by the time the store leaves, the city expects to have more than made up for its loss with a retail boom that includes another new Kroger and more big-box stores in The Crossings retail development.
Spring Hill Finance Director Jim Smith has been tracking the upswing in sales tax revenues since the first few businesses opened this spring: Super Target, Kohl's, Cracker Barrel and Logan's Roadhouse. Those businesses have helped the city's sales tax revenues increase 69 percent over the same months last year.
And if those stores continue to do
as well as they have, the city will bring in the $2.8 million expected in the 2008-09 budget, Smith said.
That means for each saucepan sold at Bed, Bath & Beyond, each gadget sold at Circuit City, and anything sold at any new store, shoppers will help the city build back its reserves from zero.
"It looks like we're right on target," Smith said, no pun intended.
Thompson's Station booms
Still under construction, the new "marketplace" store is starting to look like a Kroger on Thompsons Ridge Way. Kroger opted for the new location when it decided to expand but had no room to do so in the existing Campbell Station location a short way down the road.
The 125,000-square-foot store is expected to open in the first quarter of 2009. Another new location, a 66,000-square-foot store on Port Royal Road, will open by the end of 2009, said Melissa Eads, corporate spokeswoman. There's no word on a buyer yet for the Campbell Station store, but Eads said they hope to have a tenant lined up by the time they move out.
Eads said the company does not disclose the amount of anticipated sales, or sales tax revenues, it will generate. But town staff anticipates the new Kroger could boost the town's 2008-2009 budget by $102,000 over last year. Town Recorder Doug Goetsch said that amount may have to be lessened, however, depending upon when the story opens.
The Crossings is close to full
It's been half a year since Super Target opened in The Crossings. It started a lineup of roughly a half-million square feet of new retail property on the Maury County side of Spring Hill.
There are only a few lease spaces left, said Geren Moor, chief financial officer for GBT Realty, the Brentwood firm that created The Crossings. So far, business has been good.
"They don't give us their numbers, but they say they've been above their projections,' Moor said. "That helps us sell the remaining spaces. They're very marketable."
The development also includes several out parcels, not counted in that square footage. Altogether The Crossings is expected to generate roughly $175 million in annual sales, based on calculations used by the International Council of Shopping Centers. From that, $3.5 million a year will come to Spring Hill in the form of sales tax revenues.
Moor said the big box anchors in a commercial development are attractive to small businesses, which are greater in number.
"They create a lot of foot traffic, and the smaller shops tend to do well when there's more traffic coming through," he said.
A second phase, planned on the adjacent 50 acres, is expected to include a movie theater, more restaurants, hotels and more retailers.
Shoppers help rebuild savings
City leaders used a conservative estimate for sales tax revenues in the 2008-09 budget because they didn't know how much money the new stores could generate as they opened in the last half and last quarter of the fiscal year. Last year, The Crossings yielded $2,157,000 for the city. This year, the expectation is for $2.8 million.
The goal is to use money above that $2.8 million to build back the city's reserves, which were depleted last fiscal year to cover expenses.
Ideally, the city's fund balance should be 20 percent of the general fund budget, which is $11 million this year. Smith said his counterparts in other cities advised him that amount is sufficient to cover any unexpected expense.
"It will be a multi-year project," Smith said, noting that the city could save about $220,000 this year — a tenth of that $2.2 million goal. "I'd say it's certainly possible."
Building fees had long been the city's main revenue stream, but now retail is the great hope among city leaders. Spring Hill is also seeing more retail development in Campbell Station and along Port Royal Road and Saturn Parkway.
When Super Target and Kohl's opened in March, it took about a two-month turnaround for the state to collect the sales tax money and send the city its share. By May, the city noticed a $68,446 jump on the Maury side above April's receipts. It also perked up by nearly $38,000 on the Williamson side. Smith said that's a sign that more people are shopping closer to home.
"They might have slowed down their spending a bit, but it looks like they are doing their shopping here, which is good. It supports Spring Hill and it helps provide the services. Otherwise, they're helping Franklin or Columbia provide their services."

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