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How the HDA brought Oglethorpe Square home

POSTED: April 19, 2017 5:00 a.m.
Lawrence Dorsey/file/

Former Hinesville Mayor Jim Thomas at the grand opening of Oglethorpe Square in March.

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Liberty County residents used to have to leave town to go to Dick’s Sporting Goods or TJ Maxx.

Not anymore, thanks to the new Oglethorpe Square shopping center in Hinesville, which opened in March.

But the center didn’t get here overnight. And it didn’t show up without some help from local government.

Oglethorpe Square came together through a public-private partnership with the Hinesville Development Authority and Oglethorpe Square Hinesville LLC, which is comprised of Hutton Construction, Inc., and Knightswood Real Estate Development. 

Kenneth Howard, executive director of the Hinesville Development Authority, said HDA was created under the administration of former Hinesville Mayor Jim Thomas, who wanted to build a mall and civic center in Hinesville.

Thomas realized that in order to do that, there needed to be “another vehicle by which to facilitate those projects,” Howard said, because the Hinesville Downtown Development Authority is limited in jurisdiction to downtown.

Howard said HDA first studied building a conference center in the city in 2014 and “it didn’t work out.” However, the group learned then what a public-private partnership could bring.

The idea for Oglethorpe Square came about at a meeting with developers. At first the square would center on TJ Maxx with smaller retailers.

But during discussions that began in January 2015,  Knightswood brought Hutton “to the table and the project started to expand from there”, Howard said.

It took three to four months of negotiations to structure the deal and the roles each entity would play, he said.

The project was initiated in October 2015, and HDA and Oglethorpe Square Hinesville entered into an agreement that November.

Through this partnership, Hutton purchased the property of nearly 25 acres.

Howard said it was purchased for $100,000 to $125,000 an acre from a number of property owners, including the Morgan family, who owned around 14 acres, and those who owned smaller parcels, such as Mt. Zion Missionary Baptist Church and the Izzard family.

HDA financed the project through the issue of public bonds in the amount of $25 million for Oglethorpe Square Hinesville.

“There’s a paper transaction, it’s not actual cash,” Howard said. “It’s just that we were issuing credit to the private entity (Oglethorpe Square Hinesville) and they are the ones paying. There are certain credits that they get as far as the interest on these bond issuance, so they are reaping the benefits of going through a public entity.”

As part of the partnership, HDA owns the back portion of the shopping center that includes Great Clips, TJ Maxx and ULTA. HDA leased it back to the developers.

“They (the developers) sold the front parcels to Chick-Fil-A, LongHorn, Panda Express, Starbucks, all those up there,” Howard said, adding the developers “reap the benefit of selling that out. We lease the rest back to them and they pay us a proportionate amount of the lease payment.”

The stores pay rent to the developers, and HDA will receive a portion of that revenue, according to Howard.

“They pay us a certain amount of rent and administrative fees,” he said, and the back area “is not on the tax rolls because we own this piece of property in lieu of taxes in the agreement they have with us.”

Howard said over 20 years HDA will receive more than $2.1 million in revenue.

In addition, the front parcels belonging to businesses such as Chick-Fil-A and Panda Express are now on the the tax digest.

Before the square developed, taxes on the property were approximately $1,400 a year, Howard said, and “what they were getting before was a very miniscule amount. Now it’s a substantial increase.”

Howard said the shopping center is estimated to generate annually $55 million in retail sales, $307,000 in property tax revenue, which includes personal property and real property, $550,000 in various sales tax, and $17 million in payroll, which will circulate in the community.

Although the back portion of the shopping center is non-taxable, personal property such as sinks and other furnishings inside the stores are taxable.

As for what taxpayers are giving up for Oglethorpe Square, Howard said, “they brokered the deal which, in essence, is going to be more than what they were getting before and reducing the burden on the developer,” Howard said. “If the developer had to do everything then they would say, ‘We can’t do it, but in order for us to do it if you can make it feasible, we can develop the whole site and let you tax a portion.’”

He said Hinesville could not develop the shopping center on its own, so the partnership bridged the gap for them to do it.

Tax revenue generated from Oglethorpe will go toward other HDA projects, such as a family entertainment center in Hinesville.

Howard said he has met with several developers and looked at possible locations for the center.

 “Essentially it is a venue that would lend itself to entertaining family members,” he said.

It can be geared towards different age groups or be a family center for all ages. “What we have found is there is a list of activities you might find at any entertainment center wherever you go. But what developers are looking for is the missing ingredient as to what’s in your community and fill that gap,” Howard said.

Tax revenue from the shopping center will also go towards developing a small business incubator.

Howard’s staff is working on submitting applications for funding to the Community Development Block Grant program.

Howard said he was surprised at how much autonomy he was given over the shopping center project, especially since it was his first such undertaking.

“There wasn’t any backlash in terms or why and how,” Howard said. “That was rewarding to me, the confidence they had in my ability. It wasn’t easy and by the end of the day we were able to accomplish our goals.”

Jamey Flegal, director of real estate for Hutton Construction could not be reached for comment.

 

 

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