Southaven developer receives city financing after campaign contribution
According to campaign finance records, Southaven mayor Darren Musselwhite received a contribution from the company that is behind a massive development that will receive tax increment financing (TIF) from the city.
Brian Hill's company, Lifestyle Homes, gave Musselwhite's campaign a $1,000 contribution on March 23, 2017.
The Southaven Board of Aldermen approved the TIF financing plan on May 15 and ground has already been broken on the site.
TIF financing is where a local government subsidizes a company by diverting some or all of their property tax to help finance the development. In a TIF district, there are two streams of property tax revenue.
The first is known as base stream which is split up among the municipality, county and local school district.
The second stream, known as the incremental revenues, is excess of the base revenues generated by the development. These revenues are given solely to the sponsoring government to help encourage development on the site.
According to a TIF plan given to the Southaven Board of Aldermen in April, Lifestyle's development, Silo Square, is a $200 million mixed-use development on 228 acres. Southaven will contribute $5 million in TIF bonds to pay for road construction, water lines, sewer lines and drainage improvements.
The documents filed with the city say that the project will add more than $692,000 annually in the form of property taxes and more than $619,000 in additional sales tax revenue once the project is completed. The plan also says the city will earn more than $87,000 annually in additional 1 percent tourism and convention tax revenue and more than $206,000 for the city's 1 percent restaurant tax.
DeSoto County will also see tax advantages if the project reaches its potential. The county could receive $587,000 annually to DeSoto County’s 2 percent tourist promotion tax and more than $734,000 annually in additional property tax revenue. DeSoto County Schools could add more than $847,000 additionally in property tax revenue.
Southaven isn't the only municipality in Mississippi using TIF financing.
Ridgeland also put up TIF bonds to convince two Jackson-based luxury car dealerships to relocate just a few miles up Interstate 55 from Jackson. The TIF bonds added up to $2.3 million to lure a Volkswagen/Audi/Jaguar/Land Rover dealership in 2017 and $3.3 million in 2016 for a Mercedes Benz dealership.
TIF financing isn't without its risks. Madison County ended up paying $2 million to make up property tax revenue shortfalls on the Galleria development. This happened because development on the private land didn't happen as planned and the developers weren't able to make the payments. A settlement was reached this year between the bond issuer and the county.