The Williamsburg Economic Development Authority unanimously approved a no-net-loss tax incentive to Peninsula Ace Hardware at a meeting Tuesday after discussing the matter in closed session.
The store, located in the Williamsburg Shopping Center on Richmond Road, will move across the street to the Monticello Shopping Center. Peninsula Ace Hardware president Terry Deaver expects to start moving inventory and new fixtures over to the new store by the beginning of next month, and said the new store should open to the public by Nov. 1.
Economic Development Director Michele Mixner DeWitt said the no-net-loss tax incentive will return a portion of the taxes that Ace Hardware pays for a period of five years or up to $50,000, whichever comes first. She said the taxes involved in the agreement are the 1 percent local portion of the sales tax and the store’s business license fees.
In the first and second year of the agreement, the city will return 100 percent of the local sales taxes and business licensing fees to the business. In year three, the city will return 95 percent of tax revenue to Peninsula Ace Hardware, and that return will drop by 5 percent for the remainder of the five-year contract.
“They project that their sales are going to increase enough to lead to new tax revenue for the city of over $50,000,” DeWitt said. “We get $50,000 but this is only on the new revenue. The revenue that the city currently collects from Ace based on their current sales is held harmless, and this is sharing (tax revenue) if they increase sales after the move.”
DeWitt said the EDA approved the tax incentive on the basis of the increased sales and resulting tax revenue that Ace Hardware is expected to generate by moving to a more visible storefront in the recently redeveloped shopping center. As an existing city business, Ace also falls under one of the targeted industries that the city outlines in its incentive targets and guidelines, DeWitt said. Other targeted business sectors include distilling/brewing, destination retail and tourist attractions.
The new hardware store will be around 17,000 square feet, Deaver said, and will be next door to the new Earth Fare organic grocery store, and just a few storefronts away from the upcoming 9Round kickboxing gym.
Deaver said he approached the EDA about the tax incentive two months ago, with the idea that the move will lead to higher visibility for the store, which should translate to more sales.
“The move is going to create more sales, at least I hope so. I would anticipate as much as 20 percent (increase),” he said. “In the short term it’s very painful and very expensive, but in the long run it’ll be beneficial not only to me, but also to the city, and it’ll bring in more taxes and more sales.”
The tax incentive follows City Council’s approval of a similar incentive for Precarious Beer Company, a microbrewery and entertainment venue coming to Merchants Square in 2019. Although the Precarious tax incentive required Council’s approval, DeWitt said that, because the Ace Hardware incentive is below $100,000, it only required EDA approval.
Arriaza can be reached at 757-790-9313 or on Twitter @rodrigoarriaza0.