Social Circle defers possible tax hike

SOCIAL CIRCLE - The City Council voted unanimously Tuesday to defer until next month making a decision about a possible tax increase.

Tuesday's meeting marked the third public hearing on a proposed 1 mill property tax increase. The Social Circle Development Authority asked the City Council to consider the tax hike in order to help purchase 242 acres of industrial-zoned property on Hightower Trail along the CSX railroad, between the Solo Cup distribution center and the new General Mills plant due to come on line in the next year.

If approved, the 1 mill increase is expected to generate about $154,000 a year in tax revenue.

Grady Lemonds, chairman of the Development Authority, presented the proposal to a crowd of residents gathered in the Social Circle Community Center. He said the SCDA is negotiating with two property owners to purchase two tracts of land - a 57-acre parcel and a 185-acre parcel. The two property owners have agreed to finance the purchase, he said.

Lemonds said the public obligation per year for the purchase at a 3.5 percent interest rate for three years, would be about $165,000.

He said the SCDA believes it has negotiated a good deal with the property owners and that time is of the essence to move forward on the purchase.

"What the Development Authority and the City Council wishes not to happen is the owners get gas and water on the property and they then raise the price to $50,000 or $60,000 per acre," Lemonds said.

He said that by not purchasing the land now at about half this price, it would likely result in prospective businesses "looking down the road a bit" for more affordable property.

Lemonds went on to explain that the city, and more importantly the schools, rely on tax revenue generated by industrial businesses. According to a handout provided by the SCDA, existing commercial and industrial businesses in Social Circle pay 41.73 percent of city taxes and 44.86 percent of school taxes.

SCDA member Frank Sherill said it was the city's foresight that led to the purchase of the land where Solo Cup opened a 1.3-million-square-foot distribution center on East Hightower Road in 2006. This business pays about $150,000 a year - equal to about 1 mill - in taxes, he said. Sherill added that when the General Mills center comes online, it is expected to pay approximately $200,000 to $225,000 a year in taxes, or about 1.5 mills.

By purchasing this property, the city and the SCDA would be in a better position to negotiate with prospective businesses looking to locate in this area, SCDA members said.

"We have a somewhat unique opportunity," Sherill said. "In this economy, the prices are down, interest rates are down. Just like with the stock market, you want to buy low and sell high. We have the opportunity here to do that."

These explanations were apparently insufficient for most members of the public at Tuesday's meeting.

Some of the residents' comments and questions to SCDA members included:

"What happens if you're not able to sell the property for (several) years - is the city on the hook?"

"Maybe we don't need to be in the land speculation business, with the economy the way it is right now."

"If the city sells the land at a profit, how does this profit benefit us, the ones who have been paying for the land?"

"Essentially, we're betting on futures here. Is this something the government should be involved in?"

The answer to most of the questions was that the purchase of the land is an investment in the future that should pay off with lower taxes in the future.

Still unsatisfied, some members of the public asked why the residents of Social Circle should be on the hook for the entire purchase when Walton County will also benefit from the increased tax revenue if a new industry moved there.

Hal Dalley of the SCDA said he and Lemonds are scheduled to meet Aug. 31 with the Development Authority of Walton County at which time they will bring up the possibility of helping with the purchase.

But, Dalley added, "we've been waiting 20 years for someone to help us and now we're going to help ourselves."

Bob Standridge, president of Standridge Color Corporation in Social Circle, said $150,000 is a lot to ask of taxpayers, but not necessarily a burden on some of the larger industries. He then pledged $50,000 if the city could get General Mills and Solo Cup to each offer $50,000 toward the purchase of the land.

"The offer is good for the next 30 minutes," he quipped.

His offer was well-received by the residents who eagerly encouraged SCDA members to pursue that avenue.

Mayor Jim Burgess then stood and said that in light of the residents' concerns expressed at all three public hearings, the City Council would defer voting on a millage rate increase until after the Aug. 31 meeting. Burgess said a vote would be taken the next City Council meeting, which was moved to Sept. 8, a week earlier than originally scheduled.

As the crowd was dispersing at the end of the public hearing, the City Council continued through the items on the agenda for its regular meeting, including passing the 2009-10 budget.

The budget, Burgess said later, does not include any change in the millage rate, which will be determined in September.

SideBar: At a glance

The Social Circle Development Authority provided the following as points for residents to consider regarding a proposed tax increase that would help finance the purchase of 242 acres on East Hightower Trail:

· It would help bring jobs to Social Circle and increase the nonresidential tax digest;

· Funds spent on economic development are an investment in future jobs and the tax base;

· Existing commercial and industrial businesses in Social Circle pay 41.73 percent of city taxes and 44.86 percent of school taxes;

· With the purchase, Social Circle would own more than 300 acres of land with industrial development potential;

· The resulting total land value of the entire city-owned tract would be 20 percent less than General Mills paid for the current industrial land;

· The annual investment by the city would be interest-only at an rate less than what is currently available by banks;

· The amount of school taxes paid in 2008 by Solo Cup was equal to 1 mill of taxes;

· General Mills' school tax bill is estimated to be 150 percent of Solo Cup's, or equal to 1.5 mills.