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Food City deal approved

Stephen Spangler, vice president of real Eestate and president of Marathon Realty, a real estate subsidiary of Food City’s parent company KVAT, addresses questions from Unicoi County Industrial Development Board members have in regards to the economic impact plan for the new Food City. (Erwin Record Staff Photo by Kendal Groner)

By Kendal Groner

After months of hopeful anticipation, it became official this week that Food City has in fact chosen the Town of Erwin as the location for one of the company’s new stores. The deal became official following Monday, July 23, meetings where the Unicoi County Industrial Development Board, (IDB) the Town of Erwin Board of Mayor and Alderman and the Unicoi County Commission approved a tax increment financing (TIF) plan of up to $600,000 to support the deal, which includes approximately $20 million in total projected sales annually.

For grocery sales alone, $13 million is projected, with an additional $1.9 million from fuel, another $3 million for pharmacy, and $2.75 million from the additional in-line stores.

According to Stephen Spangler, vice president of real estate for Food City and president of Marathon Realty, a real estate subsidiary of KVAT, Food City’s parent company, Food City is looking to invest $11.5 million over the next six months. The storefront will be 44,000 square feet, with an additional 7,500 square feet of in-line retail shops.

“We’ve looked at Erwin and Unicoi County for multiple years and we have a certain amount of capital expenditures we can allocate for projects from four different states,” Spangle said. “It’s been pushed off and pushed off and our leadership asked us to take a renewed look at the project.”

As Tyler Engle, director of the Unicoi County Joint Economic Development Board explained, under the tax increment financing plan, taxes would not be abated, but instead there would only be a commitment of the incremental increase in value to the project. The current base tax of the property as it currently is, which generates $22,151 to the Town of Erwin and $41,084 to Unicoi County will still be collected.

Once the new Food City store has been constructed on the 6.5-acre tract located behind Pal’s, Bojangles and Taco Bell on Jonesborough Road in Erwin, a total of 145 jobs will open up, with 40 being full-time and 105 being part-time. Another 35 jobs are projected within the 7,500 square feet of additional retail space that will open alongside the new supermarket. Gross projected revenues include a total of $210,487 for the Town of Erwin and another $210,487 for the Unicoi County School System.

“Our demographics and their needed workforce match up really well,” said Glenn Rosenoff, Town of Erwin city recorder. “The number of young folks and retirees still looking to work … it’s a pretty special combination and I know the payroll is anywhere from minimum wage to up to six  figures for those such as pharmacists.” 

During their meeting, the members of the Industrial Development Board passed two resolutions, the first of which approved the economic impact plan for the proposed development, which falls within the Erwin Gateway Development Area.

“We appreciate your consideration of this request of a TIF. This is a tight project for us … we absolutely need this participation in order to justify the project,” Spangler told the board.

Prior to the city and county meetings, the IDB was required by Tennessee law to open the floor to citizen’s comments on the proposed economic impact plan. Robert Kagely, IDB chairman, opened the floor to any citizens who wished to speak on the matter.

“I understand the investment and great addition this will add to our community,” said Lee Brown, manager at Erwin Utilities and chairman of the Joint Economic Development Board of Unicoi County. “I certainly will voice my approval for this project and TIF.”

Ted Hopson, IDB member, made a motion to approve the resolution; his motion was seconded by IDB member Jerry Ramsey before unanimously passing.

The second resolution authorized the execution of any documents pertaining to a tax increment financing to assist with eligible public improvement costs relating to the development.

“The plan approves sort of the outline of a loan, and that loan is secured by a pledge of incremental tax revenues,” said Jordana Nelson, senior public financial attorney with Bass Berry & Simms, the law firm representing the IDB. “In connection with that loan, in order to document it, the board will have to issue a promissory note to the lender, which in this case is also the developer, and then also a pledge of the tax increment revenue and a short document explaining how those revenues will be paid.”

Spangler shared that the proposed interest rate would be five percent, with a maturity of 15 years. He added that plans are to break ground in September and to move quickly with construction.

“April is kind of the target date to open, but obviously weather factors may impact that one way or another,” he said.

IDB Vice President Garland Evely made a motion to approve the second resolution, and his motion was seconded by board member Paul Monk before it unanimously passed.

• • •

The members of Town of Erwin Board of Mayor and Alderman swiftly and unanimously passed a resolution in support of the economic impact plan for Food City before attending the Unicoi County Commission meeting to further voice their support of the plan.

During the Unicoi County Commission meeting, commissioners Gene Wilson and Kenneth Garland expressed their concerns that the addition of Food City could detract from other local businesses.

“My opinion, I don’t think we need another grocery store,” Wilson said.

Wilson said he had heard citizen concerns that once Food City opened, the local Food Lion would be forced to close due to lack of business.

“They also said Walmart would shut down Food Lion, but it hasn’t,” said Unicoi County Commissioner Todd Wilcox.

Spangler also reported in the Unicoi County Commission meeting that property taxes were “significant” and they were looking to spend approximately $4.5 million of qualified personal property tax revenues.

Of the 145 new jobs, Unicoi County Commissioner John Mosley asked Spangler what percentage he anticipated to be from Unicoi County or the Town of Erwin.

“I would hope a majority of them,” Spangler replied.

Spangler said the $600,000 tax increment financing would be utilized for improvements such as engineering testing, site grading, site storm drainage, extension of the public water services, expansion of the public power and communications, site surfacing for the access drives in connection with the infrastructure.

“Those exceed $600,000, and again this $600,000 is a significant commitment and we appreciate that, but it’s paid over 15 years with no net loss for the county,” Spangler stated.

Aside from the public improvements made by Food City, the Town of Erwin is working towards installing a traffic light at the intersection of North Industrial Drive and Jonesborough Road.

Town of Erwin Mayor Doris Hensley addressed the commissioners and pleaded with them to not pass up the opportunity.

“This is an improvement to our city and our county,” she said. “The school system is the one that’s really going to benefit from this. I beg you, please don’t let this fall by the wayside.”

In speaking with Spangler, Hensley said efforts are being made to move sales tax generators such as restaurants or a package store into the additional 7,500 square feet of retail space.

Unicoi County Commissioner Loren Thomas also pointed out that with the new Food City, retail leakage from citizens shopping outside of the county can be decreased.

“I’ve heard a lot of our citizens drive to the Food City in Johnson City, so it’s good to keep those tax dollars here,” said Thomas.

Thomas made a motion to approved the resolution in support of the tax increment financing plan; his motion was seconded by Wilcox before it passed. Out of the five commissioners present, Wilcox, Bridget Peters, Wilson, Thomas, and Mosley voted in favor. Garland voted in opposition.