San Marcos Mercury | Local News from San Marcos and Hays County, Texas

January 21st, 2011
Nuse: No sales taxes rebated to StoneCreek

STAFF REPORT

San Marcos City Manager Jim Nuse said Thursday that the city has not rebated any money to the developers of StoneCreek Crossing from a $6 million incentive agreement reached in 2008.

Nuse indicated that the shopping center probably didn’t generate enough sales to be eligible for a city sales tax rebate under the Chapter 380 development agreement.

The shopping center has been listed for the February foreclosure sale at the Hays County Courthouse. County records show that StoneCreek Crossing, LP, executed a promissory note in 2007 that has matured. The promissory note is payable in the original principal amount of $38,642,443 to lender Amegy Bank National Association, which requested that all real property, fixtures, and personal property on the approximately 95 acres at StoneCreek be sold for cash to the highest bidder.

“The City of San Marcos has not made any payments on the $6 million incentive agreement to Stone Creek approved in 2008,” Nuse said in a statement issued by the city. “Under the agreement, the city receives the first $500,000 in sales tax revenues annually and Stone Creek would have to generate more than that to be eligible to start receiving the incentive. At this time, our staff is working on the calculations to see if they qualify for any refund.”

The agreement provided for the developer to be eligible for a refund of 80 of property tax revenues generated by the increased value of the property for up to five years.

Amy Madison, President and CEO of the Greater San Marcos Economic Development Corporation, said earlier in the week that she wasn’t sure if the stores at StoneCreek Crossing had generated enough revenue to trigger the rebates.

The amended Chapter 380 development agreement passed by the city council in October 2008 said the developer would receive the first $1 million in sales tax revenues it generates “less $500,000,” plus half of sales taxes generated above $1 million per year. The agreement was to run for five years or until StoneCreek was rebated $6 million.

City officials said the city staff is evaluating the legal status of the Chapter 380 agreement.

Amended Stone Creek agreement, October 2008.

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0 thoughts on “Nuse: No sales taxes rebated to StoneCreek

  1. Nuse indicated that the shopping center probably didn’t generate enough sales to be eligible for a city sales tax rebate under the Chapter 380 development agreement.

    At this time, our staff is working on the calculations to see if they qualify for any refund.”

    In nongovernmental language, ‘we don’t know yet’ When the fourth quarter numbers come in and Mr. Nuse can give a real answer, then there is a story; until then it’s just ‘we don’t know’

  2. The property tax abatement, not the sales tax abatement, is the crucial part of the City incentives – at least in my mind.

    The city portion of sales tax is just 1%, so to clear the $500K mark in collections, the development would have to do $50 million in sales. I found a statistic online that puts Target’s average per unit annual sales at about $12 million, and it’s the busiest place out there by far. My guess is that the place would have to be full to touch $50 million – or certainly more full than it is.

    On the other hand, all of that property is at least somewhat improved since its development, and we can only collect 20% of the tax value of those improvements…..sure to be a substantially larger discount than the sales tax deal.

  3. Is this why no money has been rebated yet? The date the sales tax rebates should begin as written in the Amended Stone Creek Agreement link above. At least that what it looks like. Rebates occur in February of each year for 5 years.

    “For purposes of determining the five year period provided in subsection ii
    this paraarpgh the first year of such term will be deemed to include the
    period beginning on the date Target JCPenney and Bealls are open for
    business through December 31 2010 Year One”

  4. Pingback: QUOTE CORNER - San Marcos Local News

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