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City Will Offer Tax Break For Business Improvements

By David Howell


WATER VALLEY – The City of Water Valley will join a growing list of Mississippi municipalities that will offer a tax break for improvements made to existing or new businesses after aldermen voted unanimously to adopt a Historic Preservation District Tax Abatement during their April 3 meeting. The program is an incentive to boost economic development in Water Valley and will delay the impact of tax increases for new investments. 

The program allows the portion of city taxes assessed for renovations and improvements, or for new structures, to be deferred over a five-year period. The abatement will be staggered, with 100 percent of the new investment exempt in year one, 80 percent exempt in year two, 60 percent in year three, 40 percent in year four and 20 percent in year five. 

Ward One Alderman Kagan Coughlin first pitched the idea last month and aldermen voiced favor for adopting an ordinance for the tax abatement. City Attorney Daniel Martin drafted the ordinance that was adopted at the April 3 meeting after final details were again discussed.

“Every town in Mississippi is allowed to set up a program to encourage new development and job creation,” Coughlin explained. “It will slow down the rate that their tax bill goes up. They can build a new business or they can improve a business that exists. Every city is allowed to forgive the increase in their tax bill for up to seven years,” he explained.

Aldermen elected to use a five-year period for the abatement and set the threshold for a minimum project investment of $25,000. According to the ordinance, any person, firm or corporation seeking the tax abatement must submit a written application to the city’s planning commission for initial approval. The application will then be submitted to aldermen for final approval.

The tax abatement program is established within the area of the city designated as the Water Valley Historic District on the National Register of Historic Places. This area is defined as the commercial core of Water Valley along Main Street, roughly from Young Street on the South to Market Street on the north. The historic district also covers the east and west side of Main Street, along with the streets surrounding the county courthouse. 

Property outside the district may also be eligible for the program, including property designated as a state or national historic landmark. 

Speaking in the April 3 meeting, Water Valley Main Street Association Director Mickey Howley noted the importance of the incentive. 

“A lot of Main Street Towns in Mississippi have already done it. It is one of these small, but critical incentives that you can offer existing and incoming businesses,” Howley noted.

Howley listed several other towns the size of Water Valley that have already implemented the program including Baldwyn, New Albany and Corinth.

“If you are a small-town economic developer like I am, there is not a whole lot of incentive that you can give, either to an existing business or an incoming new business that wants to be in your downtown district,” Howley added.

Howley also said the incentive works well because you have to make a substantial improvement and improvements must be done before the abatement is granted. He also said the improvements are made to business structures, and will always stay in town and won’t leave, even if a business closes.

Mayor Donald Gray also explained that the program does not affect the existing assessed value of a building and only the investment for improvements receive the tax break. 

Expanding the Program

Also discussed was expanding the tax abatement program to include industrial areas in the city.

“Y’all have the discretion to move it out to the industrial areas as well,” Martin advised aldermen.

“I would like to discuss that,” Ward 3 Alderman Cinnamon Foster said.

Citing state code, Martin said the area could also include an area defined as a business improvement district, which could encompass industrial areas in Water Valley.  

“We could add language so this would apply,” Coughlin agreed, before motioning to adopt the ordinance and include amendments to add a business improvement district to also offer the opportunity to industries. 

“What I would like is for this to be a tool in Bob Tyler’s toolbox when he goes out to meet with businesses,” Coughlin added, referring to the county’s economic development director. Aldermen then voted unanimously in favor of Coughlin’s motion.

The city’s program will not include abatement for  county or school taxes although Coughlin made a similar pitch to supervisors last year. The full ordinance is published on page 12. 

Other business handled at the meeting included authorizing the city to apply for a Rural Business Development Grant from the United States Department of Agriculture (USDA). 

Coughlin explained the grant, if approved, will flow through the city and allow private businesses to purchase equipment. 

“The city can apply on their behalf as an economic development engine,” he explained. “There is a half-million dollars every year in the State of Mississippi that is given out as grants to private business owners. They can buy fork lifts, x-ray machines, all sorts of things,” he added.

Coughlin also explained that the state director of USDA, John Rounsaville, recommended that this is a good year to apply because Water Valley hasn’t applied in the past and the number of applications from other areas in the state is down. 

Coughlin also explained there is a tight window to prepare the grants, as the deadline for submission is April 30. 

Both Gray and Coughlin noted that Rounsaville made a trip to Water Valley last month to visit with city officials. 

North Central Planning and Development District representative Chris Pope, who attended the city meeting to discuss multiple items, also said he would prepare the
Rural Business Development Grant on behalf of the city.

“It has to be tied directly back to some type of job creation, retention or be able to show the potential to directly impact economic development in the City of Water Valley,” Pope explained.

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