Much at stake with Mall of Louisiana annexation

In the battle between Baton Rouge and the proposed city of St. George, the Mall of Louisiana is key.

Critics of the new city effort note that if St. George successfully incorporates, it takes with it the sales taxes generated within its borders — most notably from retail giants like the Mall of Louisiana and Perkins Rowe. In the process, it creates a $53 million budget deficit from the diverted sales taxes. St. George organizers say the deficit would be closer to $14 million.

Last week, Metro Councilman Ryan Heck said he’s learned that officials are close to securing a petition from the Mall of Louisiana to be annexed into the city of Baton Rouge, which would ensure its sales taxes remain within the city-parish coffers.

But some council members say annexing the mall into the city would hurt the St. George Fire Department, because it would lose revenue generated by the sprawling retailer.

Tony Stephens, general manager of the mall, said he does not want to comment on potential annexation or the incorporation effort.

William Daniel, chief administrative officer to Mayor-President Kip Holden, said he couldn’t confirm whether there are plans to annex the mall.

“The mayor wants to keep the parish together and is committed to doing whatever it takes to keep the parish whole and vibrant,” he said.

The city-parish general fund is reliant on a 2 percent sales tax that funds vital governmental functions. The Mall of Louisiana generated about $9.2 million last year in those sales taxes, according to city-parish finance documents.

That means the mall property generated more than 5 percent of the total sales taxes collected for the parish budget. It was 3 percent of the total general fund.

Conversely, the proposed city of St. George budget expects to collect $80.8 million in revenues, which includes $67.7 million from sales tax collections. The budget projection assumes the Mall of Louisiana would be included.

So, if the city were to annex the Mall of Louisiana, it could mean a 14 percent decrease in total sales tax revenue to the proposed city of St. George or a hit of 11 percent to its overall revenues.

However, that number is the most ambitious annexation scenario because it includes about 200 stores and restaurants both within the mall and surrounding the perimeter, including Best Buy and J. Alexander’s.

It’s unclear what a mall annexation would include. It could leave out the stores on the perimeter of the mall campus, which would change the sales tax numbers.

Jim Richardson, an economist who led a study of what financial impact St. George would have on the parish, said the 2012 sales tax dollars generated from the mall were $7 million. His number is based on sales taxes drawn from 70836, because the mall has its own ZIP code. That number would exclude some of the perimeter stores.

Lionel Rainey, a St. George spokesman, said the loss of mall revenue would not severely impact the proposed city budget.

“Malls gain popularity and lose popularity; we’ve seen that as a trend,” he said. “The budget of the city of St. George isn’t based on one retail area’s revenue.”

He said St. George officials could adjust expenditures accordingly, adding that the proposed budget already includes a $20.5 million surplus.

Richardson agreed that the loss of the mall revenue wouldn’t significantly hurt the St. George budget.

“Certainly, it has some negative impact, but it wouldn’t be the end of the line for them,” he said. “It’s not the kind of thing for them that’s impossible.”

But he noted that the mall is an easier target for the city-parish for annexation because it’s a lucrative and well-defined property that’s not connected to residential areas. The 70809 ZIP code, which includes the shopping center with the Siegen Lane Super Target, is the region with the most sales taxes generated in the area, Richardson said. The ZIP code includes some of the city of Baton Rouge and parts of the proposed city of St. George. It generates about $28 million in sales taxes, $5.5 million of which are already within the city of Baton Rouge.

“That’s a much more lucrative market to go after, but it’s much more complicated because there are residents that live there, so they’d have to vote (to be annexed),” Richardson said.

The Mall of Louisiana does not directly abut the city line, so the other properties would have to be annexed to make that connection between the city of Baton Rouge to the mall. Only adjacent properties can be annexed.

Several council members have said if there were a vote on annexing the mall, they would have to consider the potential impact it would have on the St. George Fire Protection District, which is the second largest fire department in the parish and covers the majority of the proposed city of St. George.

The fire department has a budget of about $17.1 million, of which about $15.1 million comes from property taxes.

The Mall of Louisiana and the stores on the outer perimeter of the mall pay about $417,000 in property taxes to the St. George Fire Department. That number drops to $347,000 for just the mall alone.

“My prime concern is the public safety aspect,” said Councilman Buddy Amoroso, whose district includes parts of the proposed new city. “I’m concerned they will not be able to keep their fire rating if they lost that revenue.”

Mayor Pro Tem Chandler Loupe also said last week that he wouldn’t support a mall annexation because of the impacts to St. George.

Councilman Heck said his concern was primarily about public safety and not the creation of the city of St. George.

“The city of St. George doesn’t exist, so as long as it doesn’t exist, I’m not worried about the financial impact about something that doesn’t exist,” he said. “I am concerned about the impact to St. George Fire Department.”

Councilman John Delgado said the mall property taxes are a “negligible” part of St. George Fire Department’s overall budget. He suggested that some of his colleagues are using the argument as an excuse to vote against something that could hurt the proposed city.

In the event that it’s annexed into the city of Baton Rouge, Delgado said, the problem can easily be solved by creating an agreement to allow the mall to remain in the St. George Fire District.

St. George Fire Chief Gerry Tarleton said every time the city encroaches into the fire district, it has an impact on the budget.

“If the city takes the mall, then we still have to cover everything that’s left in that area,” he said. “So it’s less revenue to cover virtually the same area.”

Similarly, the union of the Baton Rouge Fire Department said in December that the creation of the city of St. George would cut public safety funding in the city of Baton Rouge.

St. George leaders are trying to collect 18,000 signatures on a petition to put the city proposal to a vote. The organizers have declined to disclose their signature counts; however, they say they anticipate meeting their goal for a November election.