LAFAYETTE — A planned 58-acre retail center anchored by Costco received the OK on Tuesday for an estimated $11.5 million in tax incentives for roads, traffic signals, utilities and other infrastructure needed for the project.
Work is scheduled to begin in November on Ambassador Town Center, which is to take shape at the high-traffic intersection of Ambassador Caffery Parkway and Kaliste Saloom Road.
Lead developer Stirling Properties has not confirmed what other stores are planned for the site, only to say that it could be the first Louisiana location for some of the tenants.
The Lafayette Industrial Development Board on Tuesday approved an agreement allowing developers to use money that would have been paid in property taxes to instead be used to repay the cost of infrastructure in and around the retail center, including new roads, intersection upgrades and drainage improvements.
Much of the infrastructure is required by state and local government to keep the new development from worsening traffic and drainage problems in one the fastest growing areas of Lafayette.
The Industrial Development Board approved the deal with little discussion, but the meeting attracted a vocal contingent of opponents who questioned using tax dollars to pave the way for a private development.
Lafayette Parish Assessor Conrad Comeaux characterized the tax deal as a major policy shift for local government, one that will open the door for other developers to seek similar help.
“How do you make this deal for this one and not the next developer that comes?” Comeaux said.
Lafayette resident Carol Ross labeled the deal as “cronyism.”
“This a special break for a developer and landowner,” she said.
City-Parish Councilman William Theriot questioned why any incentive should be offered in an area of the city, just down the road from River Ranch, that will surely develop anyway.
“Ambassador Caffery is the hottest piece of merchandise in Lafayette Parish,” he said.
City-Parish President Joey Durel said he generally finds using public dollars to aid private projects distasteful but believes an incentive is needed to lure what he believes is a unique development for Lafayette that will generate million of dollars a year for local government in sales taxes, which, unlike the property taxes, will be collected from day 1.
As for whether the retail center would be built without the incentive, Durel said he has not received a definite answer.
“We may never know that,” Durel said.
According to figures from Ryan Pecot, a commercial broker with Stirling Properties, the retail development is estimated to have about $224 million in annual sales, generating about $18 million in sales taxes, half of which would go to the state. The other half would stay in Lafayette, split between city-parish government and the Lafayette Parish School Board.
“We are talking about some large numbers added to the coffers,” Pecot said.
Lafayette Economic Development Authority President and CEO Gregg Gothreaux said the developers have until 2026 to use property tax revenue to pay off the estimated $11.5 million in infrastructure costs.
After that, the property taxes would begin flowing back to the School Board, city-parish government and other local taxing entities, he said.
The developer is responsible for the infrastructure debt should plans for the retail center unravel, Gothreaux said.
The planned retail center would be the site of the third Costco location in Louisiana.
The big-box bulk retailer opened its first Louisiana store in New Orleans in 2013 and a second store earlier this year in Baton Rouge.
New Orleans offered roughly $6 million in incentives to attract the retailer, and Baton Rouge gave Costco a $7 million package, including road improvements and money to help tear down an old Coca-Cola plant at the site where the store was built.
Pecot said Costco’s decision on the Lafayette store was based in part on the ZIP codes of customers traveling to Baton Rouge to shop.
“They know that they have folks driving from Lafayette to Baton Rouge,” Pecot said.
Another plus is demographics.
The 2,647 households within one mile of the planned Lafayette location have an average household income of $109,933, according to figures from Stirling.
The shopping center, which will have about 450,000 square feet of retail space, is set to open in October 2015.
The City-Parish Council voted 6-3 last month to endorse the tax deal, though the vote was more show of support because council approval was not required.