Carvana, West Memphis agree to PILOT
City’s incentive to new industry final piece of agreement
The West Memphis City Council offered one final inducement to cinch the deal landing the giant internet used car selling company Carvana in the Mid-America Industrial Park. During its last meeting in September city council offered a payment in lieu of taxes incentive to Carvana. The incentive triggered an overnight final response for the Phoenix based used car retailer which announced its intentions to make West Memphis home for its giant inspection and distribution center the next morning.
City Economic Development Director Phillip Sorrell asked the council to add the PILOT to its agenda and presented the details of the plan to city council.
“A PILOT is a reduction in property tax,” said Sorrell. “We can abate property taxes up to 65 percent. This property now is on the books under the facility board so it does not produce any taxes. The county and school districts are collecting nothing right now. So, when the 35 percent goes on the books the $40-$50 million construction number will mean a substantial assessment going to the school district and other components of the millage.”
Sorrell urged the council to affirm the final incentives for Carvana.
“The council needs to be on record for supporting an industrial revenue bond and doing the PILOT,” said Sorrell, “It relates to a $40 million investment.
This project is targeted for the Mid-America Industrial Park and would be one of the biggest project we’ve landed here in many years.”
Councilman Wayne Croom gave favorable voice to the proposal but wanted details about the mechanics of the industrial bond.
What are the advantages of this?
“There is no liability for the city in this,” said Sorrell. “What you are doing is agreeing to abate the property tax under the PILOT agreement. The company is agreeing to make a lease payment back to the city and that is what is necessary to make the debt service on the bond. It matches up identically for the debt service. It costs us nothing even the prepa- ration and selling of the bonds is all on the buyer.” Councilman and Budget Chairman Tracy Catt did some calculations to illustrate the impact of the substantial assessment Sorrell had pointed out.
“If we were to abate 65 percent like we’ve been talking about and the assessor picked up the $40 million on the project value, it would mean another $175,000 annually.
Exactly; it’s a win-win all the way around,” said Sorrell.