Siler City, NC – Chatham County will receive public comments at its August 15, 2016 session on one-time incentives for a proposed 100-room hotel in Pittsboro (story here). Hotel officials have stated that incentives are needed to make this a viable project, due in part to being the first hotel in an untested market. The proposed “recommended incentive level would refund the hotel the following percentages of annual property taxes over the first five years before ending in Year 6:”
Year 1 – 90%
Year 2 – 80%
Year 3 – 75%
Year 4 – 75%
Year 5 – 60
Year 6 – 0%
I would suggest that the order of percentage change be reversed. Or at least that the rebate only begin with the opening of the hotel.
If starting with 0% that would require that the hotelier have adequate capital and be rewarded later for successful operation. Sure, it’s a new market, but venture capital takes a risk for promised reward, and the county will reward the capital risk if they stick it out long enough to be successful.
Understand that with the proposed 90% rebate the first year the hotelier is asking the taxpayer to take more of the risk with them. May be worth it to all of us.
This uncertainty is what risk is. “The hotel would be part of the Russet Run development, a phase of Chatham Park developed by the Eco Group.” “include the hotel as well as a brewery, senior living center, movie theater and grocery store.” How bound together is all this, and does the property tax incentive include the property taxes of any or all of the other entities?
Are Russet Run and Eco Group created so either may avoid the tax liability or abandon the debts of the other?
The concern is if the hotelier is doing this with “Other People’s Money” it is a lot easier to abandon the project and take ‘other people’s money’ and move on to another project. If they have more skin in the game, they will be more likely to stick it out rather than leave us with a white elephant.