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Despite unprecedented growth, more than $1 billion leaves state annually

Mission: keeping retail sales, tax dollars in North Mississippi

SOUTHAVEN — With more than $1 billion in retail sales escaping over the state line every year, business leaders in North Mississippi have been huddling to discuss ways to keep the money at home.

“We’re beginning to stop that traffic and retain those sales on this side of the line,” said Southaven Mayor Greg Davis. “Our sales tax has increased 14% over the last year, compared to the rest of the state, at 3%, so we’re headed in the right direction.”

Dr. Phil Pepper, state economist, recently unveiled a study at the DeSoto Times Northwest Mississippi Economic Symposium showing that about 25% of retail sales seep into other areas, even though DeSoto County’s retail sales activity has increased more than 440% from 1986 to 2001. A similar study was conducted in 1986, which revealed that $425 million in retail sales was leaking over the state line annually.

“We calculated $1.139 billion was being lost from North Mississippi, based on an average ratio of retail sales to personal income in the state,” said Bob Neal, an economist for the Mississippi Institutions of Higher Learning Center of Policies, Research and Analysis. “There’s no way to actually determine where they’re going, but intuitively, the closer you get to Memphis, the more escapes into that market.”

There is one disparity between the studies. The 1986 study included 23 North Mississippi counties. The recent report included only 12 counties.

“That’s something we debated in the office quite a bit,” said Neal. “Dr. Pepper, who did the 1986 study, and I are not in complete agreement about which counties are still losing a significant amount of retail sales to Memphis. He thinks there’s more. I think there’s fewer. Unfortunately, neither one of us could come up with really good data to convince the other. To me, the data suggests that most of the eastern counties included in the original 1986 study, those east of Tupelo and adjacent to Lee County, are no longer bleeding a lot of retail sales dollars into the Memphis market.”

Changes in economic activity in Tunica County also skewed the report, Neal said.

“In 1986, there wasn’t a lot of economic activity in Tunica County,” he said. “When you include it now, you get a real skewed view in a couple of categories, like food and beverage and consumer-type services, so we dropped Tunica County from the primary county group to make the observation about what was really happening in the northwest corner.”

According to Neal’s report, the primary county group — DeSoto, Tate and Marshall counties — lost an estimated $61.6 million in retail sales in 1999.

“I’d prefer not to paint it not so much in numbers, but to recognize a general trend of what’s happening,” he said. “In the final analysis, my take is that there’s been some improvement in the state’s ability to capture some of these retail sales dollars during this period, but there’s tremendous room for improvement.”

A buzz of retail activity has been ongoing for several years. DeSoto Commons, a 440-acre mixed-use development, primarily retail, located on the east side of Horn Lake and bordered by the interstate, is ready for tenants.

“Within two weeks, there should be a groundbreaking on medical facilities, then some big box and other retail shops going in,” said Don Wilkerson, executive director of the Horn Lake Chamber of Commerce. “On the west side, there will be a groundbreaking Aug. 16 for a $517-million project, the 808-acre Circle G Ranch & Resort, formerly the Elvis Presley Ranch. Construction will take place over a two-year period. For two years, the ranch will have 2,500 workers. Follow that with 3,000 to 4,000 employees. All of this will spur jobs and homes and retail sales.”

Even though national retailers have made an impact since opening stores in the area, a regional shopping mall with at least one major department store would significantly anchor retail sales. But talk of building one has been ongoing for years.

One dilemma: should the state provide incentives for retail businesses?

“In and of themselves, retail sales are not generators of economic activity,” said Neal. “They’re a reflection of it. The state is only really in this particular ballgame because it happens to be on the state line. They have an opportunity to capture sales taxes being collected in Tennessee. In the whole area of economic development, however, it makes sense.”

Another dilemma: would helping land a regional mall in DeSoto County bleed retail sales from existing local businesses?

“Using the argument that you’re merely trying to capture retail sales escaping the state, how far south do you go to qualify a candidate for that strategy? You have to be careful how you go about setting it all up so you’re not unduly harming one group of businessmen in favor of another,” said Neal.

The basis for the 1986 study was to research how a regional mall might capture retail dollars, Neal said.

“At that time, there was one really viable chunk of land to put it on,” he said. “A group that owned a couple of malls in Memphis bought it and sat on it so it couldn’t be used. Now that they’re well established, owning that chunk of land no longer means as much and it was OK to let it go. Last I heard, that plot of land is where the Super Wal-Mart now sits.”

Wilkerson added, “For a long time, nobody knew exactly where it was going. The mall location was jumping back and forth from Horn Lake to Southaven. Both cities were ready to do whatever it took to see it

built.”

The proposed site now is property south of Wal-Mart, on the east side of the interstate in Southaven, said Davis.

“For four years, CBL & Associates has had more than 100 acres under option,” he said. “In theory, they’re trying to locate a regional mall here. They just received FEMA approval on floodways and are working on wetland permits. Four years ago, the city, county and state made a commitment to do infrastructure for them, including an overpass on Nail Road over I-55, and I’ve heard it might come to fruition in a year and a half to two years.”

What are the leading retail sales categories slipping across the state line? Automobile sales, furniture and fixtures, and lumber and building materials.

“Automobile sales are way below the state average in the DeSoto County area —about half the typical sales for the amount of personal income earned,” Neal said. “It’s not a tax issue, because that has to be paid no matter where you buy the car. Typically, automobile sales cluster together and once they are clustered, it’s hard to fight against it by putting in a separate dealership. People like to go to one area and look at five different models. In the Memphis area, there may be three or four auto conglomerations convenient for shoppers so that they barely have to move their cars to check out four or five different lots.”

Calls to CBL & Associates were not returned by press time.

Contact MBJ contributing writer Lynne W. Jeter at (800) 993-3392 or lwjeter@yahoo.com</a.

About Lynne W. Jeter

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