Tanger Outlets Asked San Marcos City Council For $2.5 Million In Tax Rebates
This story originally published on Virtual Builders Exchange
The general manager for Tanger Outlets asked San Marcos City Council for $2.5 million in tax rebates to help cover the cost of an exterior remodel he insists is necessary to match new competition.
Tanger Outlets San Marcos General Manager John Larson, during a late Tuesday presentation to council, asked the councilmembers to give the shopping center a 10 year economic development grant in an amount equal to 75 percent of the sales tax increase and property tax increase, beginning in 2015. The grant would be capped at $2.5 million or 10 years, whichever came first.
Larson added that Tanger Outlets was willing to match the funds dollar for dollar. “We’ll spend $5 million up front and take the rebate from the city,” Larson said.
The item was not on the agenda for action, however, Larson obtained a favorable consensus of opinions.
Larson said Tanger Outlets needed to upgrade the center because it has an outdated design in its present configuration and there is new competition coming from the south. Dolphin Ventures is investing $90 million in an outlet center in Corpus Christi that is scheduled to open in September with 70 stores. Horizon Group, another developer, will open The Outlet Shoppes at Laredo later this year, with 75 to 90 shops.
These new outlets present a threat to Tanger Outlets because 40 to 50 percent of its trade comes from the Mexican national shopper, Larson said.
Tanger Outlets was opened in 1993 and for years has been the third largest tourist destination in Texas. However, the shopping center has a stark rectangular design. There is a vast centralized parking lot and patrons must traverse long distances that involve dodging traffic.
Larson proposed three meandering walkable crosswalks with speed bumps and pedestrian refuges where mothers with children, the elderly and others can sit on a bench in shade.
A councilman asked why it was that Tanger Properties L.P. was building four new outlets in the United States, but couldn’t fix its aging San Marcos location. Larson said the center is provided a maintenance budget that covers routine upkeep and spent $5 million in the last five years. But it doesn’t get the remodeling funds it needs to respond to this new competition.
In addition, Tanger is spending $6 million to provide a 24,000 squarefoot home for its newest tenant, an H&M fashion store that Larson described as a major catch? the H&M is projected to generate $10 million in sales over its first 12 months in business.
Improving walkability is the primary upgrade, but Tanger also proposes adding charging stations for electric cars, improving restroom facilities, adding multilanguage digital screen directories, and a public social media site where visitors could browse and charge their cell phones, tablets and other devices. Another amenity would be a VIP lounge with bus checkin, as well as a duty and taxfree shop.
Larson claimed that studies show foreign shoppers turn around and spend 67 percent of their savings from tax credits where they shopped. If the service isn’t provided, these visitors would simply take their receipts to the duty shop at San Antonio International Airport, then spend the money there.
Councilwoman Jane Hughson clarified that the city would receive the same sales tax it gets today, and Tanger was asking for 75 percent of the excess above the 2014 tax revenues. Larson agreed, adding that the 10 year commitment was conservative and the outlets would likely realize the $2.5 million within the first six years or less.
Nevertheless, Hughson said she could not agree with 10 years or $2.5 million. However, the majority of the council indicated they could accept the proposal.
Councilwoman Lisa Prewitt said she normally is opposed to tax breaks for private sector capital improvements. But she recognized that Tanger Outlets has been a “cash cow” from which the city has long benefited, adding, “I think this is a good investment.”
