Firestone City Centre Public Improvement Fees

The Firestone City Centre development is being developed by THF Firestone Development L.L.C. and American Furniture Warehouse Co. A large retail development like Firestone City Centre generates millions of dollars in tax revenues to the Town of Firestone and other state and local governments, creates job growth, and is an important regional economic development catalyst. Its development requires an up front investment of millions of dollars to pay for public infrastructure and related public improvements that must be constructed before actual stores can be built, including public improvements such as streets, street lights, traffic signals, sidewalks, landscaping, water and sanitary lines, storm drainage facilities, utility extensions and similar public infrastructure improvements.

Many of these public improvements typically are constructed by government at taxpayer expense. However, consistent with the Town of Firestone's policy of promoting economic development through requiring that development pay its own way, the public improvements for Firestone City Centre are being constructed by two non-profit public improvement companies, or PICs. In addition to constructing the public improvements, the PICs will provide certain long-term services that benefit Firestone City Centre. Rather than utilizing general fund tax dollars to finance these public improvements or including them as a permanent capital cost reflected in the land cost, the PICs are constructing the public improvements with revenues generated through a privately imposed public improvement fee, or PIF, that is imposed on retail sales transactions at a maximum rate of 2.25%.

The PIF is not a tax, and unlike a tax is not permanent. As public improvements costs are paid down and the PICs' other functions are performed, the rate of the PIF will be reduced over time and ultimately may be terminated. However, the PIF itself is part of the taxable transaction and is subject to applicable state and local sales taxes. In order to offset some of the impact of the PIF to consumers, and consistent with its economic development policies, the Town of Firestone has enacted legislation that grants a 1.25% credit against the sales tax imposed by the Town of Firestone to the extent the PIF is paid. The practical effect of the sales tax credit is that each transaction within Firestone City Centre on which the PIF is imposed and is otherwise subject to the Town of Firestone's sales tax is taxed at a local rate of 0.75% rather than the normal rate of 2.00%. State and other applicable sales tax rates are not affected. After certain milestones have been reached, the sales tax credit automatically terminates and the PIF rate must be reduced by at least 1.25% from its then current rate. For example, if the PIF rate is 2.25% when the sales tax credit termination milestones are met, the PIF rate must be reduced to a maximum of 1%.