Two members of the Sterlington Town Council and a group of business people interested in the town’s future met earlier this week to discuss alternatives to raising the town’s sales tax but could not settle on a definite option.
Nearly 20 people met at Town Council member Brian McCarthy’s office in Monroe to discuss a list of 13 possible “revenue projects” that could be pursued in lieu of levying a two-percent sales tax within the town’s proposed economic development district, or EDD.
McCarthy, who prepared the list of EDD alternatives, said he would not vote in favor of levying a sales tax.
When asked whether it was true Sterlington only had enough revenues to keep the town afloat for another 60 days, McCarthy said, “I think so.”
“Max,” added Town Council member Zack Howse.
Sterlington is expected to be assigned a fiscal administrator who can sort out the town’s financial ruin and ensure the repayment of some $20 million in bonded indebtedness. Town officials have claimed the state delayed the appointment of a fiscal administrator so Mayor Caesar Velasquez and the Town Council could try to salvage the town’s finances on their own.
Sterlington officials’ plan to raise new revenues rested mostly on the creation of an economic development district, which would be authorized to levy a two-percent sales tax, a hotel occupancy tax and/or a property tax.
The Town Council is scheduled to take a final vote on creating the economic development district and levying a two-percent sales tax at its regular meeting Tuesday, May 28.
‘made up’ figures
In recent weeks, business owners in Sterlington have vented their concerns about having to remit an even higher sales tax, up to 12 percent on each transaction. Some business owners have called for the town’s unincorporation or are considering legal options for returning their business’ domain to unincorporated Ouachita Parish.
“Nobody likes it when I compare Sterlington and Richwood, even though their populations are similar,” said Monroe businessman Nick Farrar, a frequent visitor to Town Council meetings. “And Richwood is growing.”
Some people asked McCarthy and Howse what would happen when Sterlington failed to make its debt service payment on June 1 or ran out of money to pay all its bills.
“That’s probably when the fiscal administrator comes in with a heavy hand,” McCarthy said.
McCarthy portrayed the list of “EDD alternatives” as something “concrete” that could be used as leverage in negotiations with banks — in effect, to further delay a fiscal administrator in spite of more missed debt service payments.
It was doubtful whether any of the 13 “revenue projects” were attainable in 60 days, or even in less than two weeks, as the town’s next debt service payment deadline on June 1 approaches.
For example, the proposed revenue projects deemed 70 percent to 90 percent attainable included selling naming rights to not only the Sterlington Sports Complex but also to the two pods as well as the 11 fields. Altogether, the plan was estimated to bring in some $160,000 to $200,000 a year, assuming Sterlington found people or companies interested in paying $5,000 or $25,000 or $100,000 to place a name alongside 12 other names.
“We really made up these numbers,” McCarthy said.
In response to McCarthy’s list of “EDD alternatives,” Howse pointed out that levying a new two-percent sales tax would likely prove more substantial during negotiations with banks. Levying a two-percent sales tax for only six months — as proposed by some people on Monday — would not be enough to convince financial institutions of Sterlington’s financial stability, according to Howse.
“It don’t work that way,” said Monroe developer Larry Culp, whose developments in Sterlington have benefited from the town paying to extend water or sewer services to his developments.
“If they do pass the tax, you’ll see all hell break loose,” Culp added.
Devin Jones, a Monroe attorney who serves as Sterlington’s legal counsel, said he attended the gathering at McCarthy’s request to provide answers to legal questions.
“We can throw beer cans at the two-percent tax,” Jones said. “It’s awful. But here’s how it works: June 1. You miss your payment. By $80,000.”
The Ouachita Citizen reached out to Velasquez, but the mayor did not respond to the newspaper’s inquiries by press time Tuesday night. Many people at Monday’s gathering claimed Velasquez was away on a luxury cruise.
When asked whether he attended the gathering as a representative of Velasquez’s administration, Jones said, “I was there as the town counsel to keep them between the mustard and the mayonnaise.”
The group spent most of the evening discussing marketing strategies for Sterlington such as launching a mobile phone app, selling advertising at the sports complex, resisting the urge to spread negative news about Sterlington on Facebook or debating the best way to attract new residents through a “spirit of unity.”
Andrew Yarbrough Jr., a financial advisor and Facebook video blogger, promoted Monroe Mayor Jamie Mayo’s slogan, “Monroe Proud,” as the ideal marketing plan for Sterlington, though his remarks drew some guffaws and much eye-rolling from across the room.
Referring to Mayo’s slogan, Yarbrough said, “It brought a lot of pride back into town.”
“That’s what this is,” said Yarbrough, holding up a copy of McCarthy’s proposed revenue projects. “I am a marketing guru. I promise you.”
The town’s dire financial shape and future loomed large over the evening though.
When Yarbrough asked what Sterlington was best known for, several people said, “Sales taxes.”
“Sales tax champion of the world,” someone called out.
Raising the town’s sewer rates or selling the Sterlington Sports Complex were not welcomed as options.
Howse said the town received three offers to buy the Sterlington Sports Complex.
The highest offer was $3 million, though the town still owed some $8.65 million on the complex, according to Howse.
“At the beginning of the year, we were behind $600,000,” Howse said. “Our sewer still doesn’t pay for itself. We’d have to raise sewer rates by $10 to $14 for each person in order to pay for sewer.”
Asking ULM students
to develop mobile app
When describing the possible development of a mobile app for the Sterlington Sports Complex, McCarthy and others spoke in “ifs” and “maybes.”
For example, because Sterlington does not have the money to develop a mobile app, the town could ask the University of Louisiana-Monroe’s computer science students to develop the app as part of their normal coursework, McCarthy suggested.
“I really like that,” Yarbrough said.
Another proposed revenue project entailed advertising certain local hotels on the proposed mobile app in exchange for a monthly fee. Under the plan, a certain hotel could pay $7 each day to receive “preferred” listing within the proposed mobile app and thus generate some $45,000 to $56,000 for Sterlington.
The plan also required telling hotels that Sterlington would not develop a hotel within the town’s corporate limits for three years.
“Let me tell you another reason why I like this,” Yarbrough said. “You guys have been struggling to get a hotel, right?”
“Yes,” McCarthy said.
“If you say you won’t build a hotel for three years, that creates a desire,” Yarbrough said.
No hotels had committed to paying a nightly fee to Sterlington for advertising on a sports complex mobile app, though.
“Has anyone actually talked to any hotels?” said Monroe businessman Eddie Hakim.
“No,” McCarthy said.
Hakim previously entered into a cooperative endeavor agreement with Sterlington to develop property in the town in exchange for taxpayer-funded utilities.
Asking the state
to forego tax collection
The largest proposed revenue project entailed asking the state to “lower the state component of sales tax to attract shoppers and more business development.”
McCarthy explained that the state could forego collection of the state sales tax levied in Sterlington and thus bring in some $300,000 to $1.5 million. The reduction in sales tax would be accomplished by maintaining or raising Sterlington’s sales tax rate, while asking the state to forego its revenue, under McCarthy’s plan.
“Why wouldn’t they let us lower state (sales tax rate) and keep our municipal bit and effectively lower our taxes?” McCarthy said.
Howse responded to McCarthy’s plan by conveying the Louisiana Municipal Association’s opinion that such a move would never happen.
Other proposed revenue projects included a hot air balloon festival similar to one held in Plano, Texas where McCarthy moved from some three years ago, or building a stage or venue to host music acts and other entertainers.
According to McCarthy, the model for the some $150,000-generating music venue was the now-defunct Rabb’s Steakhouse in Ruston.