Waynesville courts mystery tourism business

April 01--An unnamed business in the hospitality industry has set its sights on Waynesville.

A developer is planning a $9 million project in the hospitality sector on a vacant tract of land somewhere in Waynesville. But exactly what it will be, who the developer is and where it will go remains a mystery for now. An educated guess suggests it could be a hotel, but there's no confirmation of that, on or off the record.

If the project comes to fruition, it will have a positive impact on Waynesville's economy -- enough so that Waynesville leaders are offering up incentives to help seal the deal.

Waynesville Town Manager Rob Hites has been quietly negotiating with the developer for some time to craft an incentive deal. Hites presented the final incentive proposal to the Waynesville town board last week, and it went over with flying colors.

Waynesville leaders agreed to give the developer a property tax rebate of around $35,000 a year for six years -- the equivalent of an 80 percent discount on their property tax bill for a capital investment of up to $9.1 million.

"The way I look at it, it isn't really costing us anything out of pocket," Alderman Leroy Roberson said.

The sacrifice by the town -- namely giving up a chunk of the property taxes for six years -- is a worthwhile trade-off, aldermen decided.

"If you don't do anything, you may not get anything, and then not have that tax base anyway," Roberson said.

What we know and don't know

Hites doesn't know many specifics about the project himself. Developers of major projects, particularly if they involve a national or corporate brand, don't want word to leak out about a site they're considering until they're ready to announce -- usually for competitive reasons.

"This is very normal that the client wishes to remain anonymous," Hites said.

Hites' own knowledge of the project is on a need-to-know basis at this point.

But Hites does know a couple of things that he's not allowed to reveal.

Hites obviously knows who the developer is, because they have spoken several times. However, he doesn't know what the specific business is, because the property developer constructing the project is a third-party representative.

Hites also knows what tract of land it would be built on, but can't say.

There are a few clues about the tract, however. The site is currently vacant. It is inside Waynesville's town limits. And it has the right zoning for the proposed use.

But the most revealing tidbit about the site is this: it shares a private entrance road currently used by two other businesses.

That last clue came out during the incentive discussion at the town board meeting last week. The developer has asked the town to take over maintenance of the private entrance drive as a public street should the project come to fruition.

Hites told the town board there are two other business that use the entrance road. If a third one was added, it would meet the threshold to be incorporated into the town's public street system anyway.

"So their request would follow your normal policy. That wouldn't necessarily be an incentive. They have a right to ask for that," Hites said.

How the incentive will work

The developer estimates the project will come in between $7.8 million and $9.1 million, Hites said. It would employ 15 people.

The biggest merit of the project, however, is the ripple effect it will have for the local economy -- what Hites called a "balloon effect on other businesses."

The incentive is a make-or-break factor for the developer, according to Hites' assessment of the deal. The project would get a grant each year for six years equivalent to 80 percent of its property taxes, based on a property value of up to $9.1 million. At the current tax rate, the rebate would worth around $35,000 a year.

The land itself can't be counted as part of the $9.1 million that's eligible for a rebate -- so the developer would pay the full-freight of property taxes on the land value, plus 20 percent of the property taxes on the new capital investment.

"We would still be realizing revenue for the entire term but just less than what we would have realized without the incentive," Alderman Jon Feichter said.

So what's the town getting in exchange? The project will result in 15 jobs with an average salary of $21 an hour. If the project doesn't deliver on the number of jobs with the promised average wage, the deal is off.

"We call it a 'claw back' contract, where they have to meet the guidelines you have set and if they don't we can 'claw back' the incentives you've granted," Hites said.

That begged the question: how would the town know the number of employees and their average salary?

"How do we analyze their employment promise?" Waynesville Mayor Gavin Brown asked.

"The town has the right to review their books," Hites replied.

As a side note, while the average wage of $21 an hour looks good on paper, it's potentially skewed by top management salaries in the mix. The lowest paid employees will get $12 an hour, Hite said.

The Waynesville town board held a public hearing on the economic development incentives at its meeting last week, prior to voting on the deal. No one from the public spoke, however.

Hites said there are criteria that must be met when a local government grants a private incentive deal.

"Does the increase of $9.1 million significantly help your tax base? Is the increase in full-time jobs and the average wage helpful to your economy? Does the spill over into the other sectors from the hospitality industry benefit the local economy? Is the incentive necessary to attract a business that is looking at several inter-state locations?" Hites said. "If you find that is the case, you may entertain granting these incentives."

The town board vote was unanimous.

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