Your tax dollars and business
South Carolina newspapers have recently reported on legislation that provides taxpayer funds for a shopping mall in Jasper County. The developers of the mall, based upon their own projections, would receive the benefit of $131.5 million of your tax money. That provision led me to block the bill in the Senate. I oppose taxpayer funding of common economic activities such as building a shopping mall.
The article quoted several public officials who either expressed confusion at my stance or charged that I simply misunderstand the definition of economic development.
Optimal tax policy rewards all individuals, personal or corporate, in the same way and to the same degree merely by their engagement in the free market. Tax breaks should not be used to pick winners and losers.
The article also quoted one well-paid Columbia insider who has lobbied my office for this specific tax break. He asserted that I stood in the way of a deal that, "would bring 2,000-2,500 new jobs to the area."
My office received an e-mail following the appearance of the article from Costa Land Company. Costa owns Hilton Head Village in Bluffton, and they told us that Sembler, the developer of the proposed taxpayer-funded mall, has been contacting the tenants of Hilton Head Village and attempting to lure them away. Sembler has called at least two Costa tenants - Marshall's and Bed, Bath and Beyond.
My office then received, on the Wednesday before Thanksgiving, a site plan that shows Sembler's Okatie project. It shows the proposed taxpayer-funded mall and its proposed tenants. The tenants include the two noted above along with others such as Kroger, Kohl's, Michaels, Staples, Target, Sam's Club, Zaxby's, Wendy's, Chick-fil-A, Cracker Barrel and many more.
Nearly all of the retailers listed on the plan already do business within a very short distance of the proposed taxpayer-funded Sembler development. Their presence in the proposed taxpayer-funded mall will not create "new jobs." The current employees would simply drive 10 minutes more to work.
The Sembler site plan is dated July 2009 or about two months after the well-paid Columbia insiders told the General Assembly that this mall would bring "new retailers" and "new jobs" to Jasper County. That claim is clearly false.
The simple fact is that Sembler plans to attract tenants from across town by using low-cost infrastructure, paid for by taxpayers, to undercut the other mall. There will not be net new jobs here, just the transfer of jobs from one location to another nearby. This is taxpayer-subsidized piracy.
This piracy would not only cost state taxpayers tens of millions of dollars, half of which would come straight out of classrooms, but also cost Beaufort County taxpayers an untold sum if Hilton Head Village closed because it could not compete with the taxpayer-funded mall in Jasper.
My office has also learned that the Tanger Outlet Centers has plans to invest up to $40 million in the refurbishment of one of its centers in Beaufort County. Tanger undoubtedly now sees the futility in investing its own money in competition with another company receiving taxpayer funds. If and when Tanger suffers the same fate as Hilton Head Village then Beaufort County taxpayers will take an even larger hit.
I also noted for the article that awarding tax incentives for a shopping mall simply because the developer hired expensive Columbia lobbyists only further violates my duty to taxpayers. I doubly oppose special tax breaks for those who simply can afford the high price of lobbyists.
The Columbia insiders who peddled this deal in the General Assembly moreover claimed that this mall would house only "high-end" retail outlets currently not located in South Carolina or anywhere nearby. They mentioned Neiman-Marcus and Ferragamo as two examples. They repeated the story to the media.
The Sembler site plan shows no evidence of "high-end" outlets. Even if the taxpayer funded mall did house such stores they too would undercut with their taxpayer subsidies retailers of such goods that already exist in Bluffton and Hilton Head - thereby destroying even more businesses with your tax money.
This is not a story about economic development and new jobs. It is a story about power politics, insider deals and economic piracy, all at taxpayer expense.
The sum of this tale is that a well-heeled developer hired well-connected lobbyists to secure tens of millions of taxpayer dollars in order to steal away customers from existing businesses. Lobbyists and those who can afford them stand to make out like bandits while the taxpayers pay the price. I object.
Senator Greg Ryberg represents Aiken County. He can be reached at SLC@scenate gov.