The Hollister Farms shopping center project was close to being shut down but the Hollister City Council came to the rescue by unanimously approving a resolution to use an economic development subsidy of $4.25 million that will keep it from going under.
City Manager Brett Miller announced during a city council meeting on Nov. 2 that construction would not be able to continue without any economic incentive from the City of Hollister.
“The purpose of the incentive is to help the group complete their inline box stores at the Hollister location,” he said.
The complex is a multi-layered agreement between the city and three Idaho-based companies: GRH California LLC, PMA Investments California LLC, and HC Hollister LLC, collectively called The Group, according to the agenda packet.
The Hollister Farms shopping center on Park Street brought in new businesses such as Smashburger, Hokulia Shave Ice, Aspen Dental, Verizon and Chipotle. A building for a healthcare company is still under construction directly across the street.
The incentives would keep hundreds of jobs and millions in sales tax revenue within the city, according to Hollister officials. The incentive will use the city’s Economic Reserve Fund of $525,000, along with $160,000 of stormwater in-lieu fees.
An estimated $195,000, which is 75 percent of the sales taxes, produced by businesses already open will be withheld from the city until construction is completed on the remaining businesses.
Miller said there’s also an interfund loan of $3.37 million at 1 percent interest between the general fund and the stormwater fund, which will be paid back using 75 percent of the sales tax generated by the existing businesses.
He added that the city will set aside sales tax revenue and reserve it for paying back the incentive. The estimated payback term of the loan is 5.75 years.
“Our concern is if the current developers are not able to have this incentive, it might be five to six years before those inline stores are built,” said Miller.
Miller mentioned that the incentive of the location is producing about $45 million in sales, which would bring in about $900,000 a year in sales tax. Plus, there will also be an estimated 300-350 full-time and part-time jobs created from the development.
If Hollister Farms doesn’t complete the project for retail, the city is concerned about residential projects, which they don’t want in that area.
“We want to keep it a commercial site,” Miller said.
Councilwoman Carol Lenoir said it’s an unfortunate situation but she supported the request because she knows it’s worth bringing in businesses that the city needs, along with the jobs.
“I figure 25 percent of sales tax is better than zero (percent) for no sales tax,” she said. “I know it’s a tough pill to swallow but I think it’s the right way to go. We will benefit from it greatly in the long run.”
Lenoir added that this sends a message to the rest of the commercial developers that the city is serious about bringing in new businesses in town.
“You build a new store and people come from out of town,” she said. “I can’t let this get away from this town, not on my watch.”
