Sales tax figures for one of Starkville's newest shopping centers were released by the Mississippi Department of Revenue, a move that brings the project a step closer to a bond issuance as part of a tax increment financing district.
City officials approved a $4 million TIF bond in 2013 for the Cotton Mill Marketplace shopping center near Mill and Spring Streets.
Some shops in the center include: Salsarita's Fresh Cantina, Jimmy John's Gourmet Sandwiches, Insomnia Cookies, Hungry Howie's Pizza and Maroon & Co. clothing store.
The stores within the district have generated $95,128 in sales tax revenue as of November 30, 2015, according to MDR data.
The total from the study would be extrapolated to an annual figure—nearly $200,000— when calculated as part of the TIF bond, Mayor Parker Wiseman said.
The next step will initiate bond validation proceedings before being sent to market and bought by investors in relation to the interest rate, that could sit at around 4 percent, Wiseman estimated.
"The most significant variable you don't know on the front end of a project is the sales tax revenue," Wiseman said.
In the TIF agreement, city and county officials pledged 75 percent of all new property tax revenues—$24,363 for the county and $10,406 for the city—along with the city agreeing to include 75 percent of all new generate sales tax revenue in the district, or $142,692.
"The sales taxes have to be by far and away the largest amount of revenue," Wiseman said.
TIF funds—if approved by a municipality—provide basic infrastructure improvements in the designated district. Through TIF districts, developments are able to promote future economic growth in the area where funds were originally allocated after being listed on the tax registry.
A planned, 117-room Holiday Inn behind The Mill at Mississippi State University conference center is part of the TIF district, with retailers making up the rest of the development.
All retail space within the shopping center is full, according to Mark Nicholas, the project's developer.
"We had to redesign a few things on the hotel but we're hoping to start construction very soon," Nicholas said.
The hotel could break ground before the summer, he added.
Over the last 10 years, the city has used TIFs for multiple projects: Middleton Court, Cotton Mill Marketplace, The Mill at MSU and the in-progress Parker-McGill car dealership.
All four projects represent $13 million in pledges. Just over $500,000 was issued of the total, a portion for the Middleton Court shopping center district.
If all the TIF funds were issued the city would be obligated to pay $102,000 in property taxes and about $954,000 in sales taxes annually, according to a January presentation by Wiseman.
"It is less common for a TIF to max out," Wiseman said. "In order for the TIF to reach maximum value, then all the property and sales tax growth has to materialize on the project. Typically those projections are aggressive."
Officials could make payments on the bonds in the upcoming fiscal year.