The Fort Smith Board of Directors approved a resolution at its regular meeting Tuesday (July 18) that would amend one passed in March to provide approximately $4.925 million in incentives to a large retail company in hopes of bringing it to Fort Smith.
The board voted March 21 to give an incentive allowing roughly $5 million in sales tax abatement to bring a retail company to Fort Smith, even though it was advised the city cannot legally issue incentives to retail companies under Arkansas law. That item gave incentives in the form of abatement of sales tax and ad valorem tax paid by the business for 10 years. The incentive will mean an estimated $4.925 million in sales tax reimbursements will be paid to Project X if the company brought its retail business to the city.
Fort Smith businessman Bennie Westphal is the owner of the property at 6201 Rogers Ave. that fronts Interstate 540 where the former Best Buy Building and a former insurance office building are located. Westphal said the insurance office would be demolished while the former Best Buy building would be used. Project X would also build an expansion on the property. (Westphal is an owner of Talk Business & Politics.)
Westphal said Project X would expand the former Best Buy building, which has sat vacant for more than five years, to approximately 50,000 square feet of retail and warehouse space.
Estimated annual sales for the business are $28 million, generating sales tax for the city, county and state, Westphal said. Project X expects to hire 93 employees with an average salary of $53,000, he said.
“The market area for Project X will be larger than most retail facilities and will be similar to Costco, Trader Joes and Bass Pro Shop. These retail facilities are in high demand because of what they bring to a community,” Westphal said, noting that they usually receive lucrative economic incentives to locate in most cities.
Under the Arkansas Constitution, the city cannot legally issue incentives to a retail industry in the matter originally approved in March. However, the Arkansas Constitution does allow certain economic incentives that can apply to retail facilities. Cities can allocate money for economic development services including job training facilities and warehouse facilities. Westphal noted that 10% of the property would be allocated as warehouse. Also, cities can allocate money for economic development services defined as job recruitment, job development, job retention and job expansion to the project.
The new resolution says the city will allow up to $400,000 a year for 12 years to be used as the Constitution allows. If Project X does not use $400,000 in approved expenditures in a year, that money is not carried over to the next year but returns to the city. The resolution also states that the city’s obligation be reduced by any incentive funds by federal or state government. The agreement also terminates if for any reason during the agreement time, Project X closes.
Westphal said the incentives would allow the project to move forward “almost immediately.”
The board also passed a resolution requesting the donation of property owned by and formerly utilized by ACME Brick Co. of Fort Smith to the city. City administration has been discussing the idea of the public benefit uses of the three parcels of land that made up the former ACME Brick site, a memo regarding the donation said.
The parcel of land on the west side of Old Greenwood Road could be developed into a mountain bike and multi-purpose trail park. The parcel of land immediately adjacent to the east of Old Greenwood Road, which was also the site of the former brick plant, plus part of the third parcel of land adjacent and to the east of the second parcel has the potential to become a detention pond to reduce flooding in May Branch Creek. The remaining area of the third parcel could be used for mixed-use development.
“Having the land to benefit Fort Smith and its residents in ways that could transform the lives of many of our residents is why we are requesting ACME Brick to donate the three parcels to the City of Fort Smith,” the memo said.
In a letter to ACME Brick Co., city administration said that they “hope to continue to celebrate the legacy of the ACME Brick Company’s presence in Fort Smith through the ACME Brick Yard Park.”