Council, EDC Look To Grow SK Businesses

Business advocates renegotiated the town's tax stabilization and exemption program in a special work session with the Town Council on Wednesday night, creating an opportunity for smaller expansion and relocation projects to capitalize on the incentive to grow business in South Kingstown.

A 2007 ordinance — designed in an economy with more commercial development and job security — was drafted to attract large-scale commercial and industrial development to the area. Although the ordinance provided a clause for small-scale projects beneficial to the town, a tax incentive was made available to development projects in excess of $5 million that demonstrated a proven benefit to South Kingstown — like job creation or added tangible and real estate values to the tax roll.

“I think that this program’s intent was to encourage business to grow and locate here,” said Larry Fish, chairman to the town’s Economic Development Committee (EDC). “As many businesses that could grow, could move here as long as they met those stipulations — whatever those stipulations are — and I would say that’s a broad brush.”

Fish and member from the EDC first approached the council last spring with a laundry list of changes that would revise the 2007 tax exemption and stabilization ordinance to reflect the current economic climate.

The EDC maintained that the program stipulations acted as a major deterrent for small-to-medium sized businesses applying for the exemption. Originally the benchmark for doling out the exemptions was a $5 million development project with a measurable benefit to the town, namely added jobs. If awarded, town staff would negotiate a tax stabilization program spread over as many at 10 years to help businesses offset the cost of their investment in South Kingstown’s business community.

“The general program focuses on major program expansions and new locations,” said James O’Neill during discussions. “I think it should be on new business and on expansion and new location.”

By the end of the three-hour joint work session, the council and EDC reached a consensus to lower the benchmark to a $2.5 million development investment.

“Out intent was that the little guy gets bite of the apple just like the big guy,” said Fish. “Maybe that’s the one thing that puts [a business] over the top to beautifying his property.”

“The way it is written now is that a lot of small businesses are going to look at this and say forget it,” Fish added. “Our community is focused on small and medium-sized businesses.”

According to Fish, total development for all commercial properties in the town did not exceed $2.2 million in 2010 or 2009. In 2008, South Kingstown saw $4 million in commercial investments. The year the ordinance went into effect in 2007, there was almost $12 million in commercial development townwide. The previous year, 2006, there was $8.2 million in business investments.

“We are trying to provide something here that provides flexibility and encouragement to people to invest in this community,” said William A. White, of the EDC. “If you continue to put restrictions on things such as employment, people are going to say this is all great, but for that one line. We need to be more flexible, particularly in these tough times that we are in.”

Town Manager Stephen Alfred worried if the ordinance was too simplified, businesses might choose to grow in South Kingstown based on the tax incentive rather than the business market, which could limit growth in the long run if a certain business was not conducive to the area.

“It almost sounds like you want everybody to be eligible all the time and take everybody off the tax rolls,” agreed Carol Hagan McEntee, council vice president. “That’s just not possible. Certainly we want to bring business in and add people to payroll and make the town more beautiful, but it’s not just for everybody who wants to spend a few bucks on their business. If we don’t have the right criteria to say yes or no then we are being arbitrary. So, we need a real set of rules to pan this out.”

In all, the council and EDC relaxed much of the ordinance’s language, provided opportunities for smaller businesses to capitalize on the incentive and agreed each application would be considered on a case-by-case basis.

The council will formerly accept the changes to the ordinance at a meeting by the end of March, said Alfred.