The Lafayette City Council approved a special taxing district Tuesday to support the development of a Buc-ee's location along the Louisiana Avenue exit of Interstate 10.
The ordinance, which was introduced at the Oct. 1 council meeting, creates a subdistrict within an existing economic development district that can levy up to a 2% sales tax. That means that customers — primarily interstate travelers — would pay 10.45% sales tax on food, drinks and other goods purchased at Buc-ee's.
A related ordinance that allows Mayor-President Monique Boulet to execute agreements related to the Buc-ee's development was also approved Tuesday.
Both ordinances were approved in a 4-0 vote. Council member Thomas Hooks was absent from Tuesday's meeting.
When considering where to build, Buc-ee's looks for incentives, and the proposed taxing subdistrict would help to fund such incentives. The company will receive a 2% sales tax rebate incentive for 20 years sourced from the economic development district.
The company will also get a $3.5 million capital investment incentive to offset about $12.5 million of planned public infrastructure costs — the roads and sidewalks to accommodate the influx in vehicles and pedestrians. The capital incentive, to be paid out over two years, will also be funded through the economic development district.
"What is being proposed is not a citywide tax on our citizens," said Mandi Mitchell, president and CEO of the Lafayette Economic Development Authority. "It is not a parishwide tax on the citizens of Lafayette. It is essentially a tax increment confined to the geographic boundaries of the new subdistrict of the footprint of that store, which this store does not sell staples or essentials like eggs, milk, bread, diapers. The store is a convenience store that is an option for people who may choose to visit that facility."
The incentives could pay off in a big way for the community, according to projections by the Lafayette Economic Development Authority.
The 74,000-square-foot store planned for Lafayette is expected to generate at least 150 new full-time jobs with benefits and an entry wage of $17 per hour. The convenience store giant is expected to generate about $1.5 million in local sales tax collections and $500,000 in city and parish property taxes per year.
The proposed subdistrict, which only includes the property where Buc-ee's is planning to build, is within the existing Lafayette I-10 Corridor District at Mile Marker 103. The larger district, created in 2006 by the then-joint Lafayette City-Parish Council, levies a 1% sales tax at stores such as Target, Academy and Aldi to support commercial development along the Louisiana Avenue exit.
That sales tax has generated about $1.5 million each of the last three fiscal years, reccords show.
The 10.45% rate on Buc-ee's items would include the existing 1% economic development district sales tax and a new 1% sales tax to support the development of Buc-ee's in the subdistrict on top of the regular local and state sales taxes.
Nobody spoke against the Buc-ee's items during Tuesday's meeting. Two people signed in to support the tax district ordinance but did not wish to speak. A Buc-ee's representative also attended Tuesday's meeting but did not speak.
Council member Liz Hebert said constituents reached out to her asking if local residents could get a reduced tax rate when visiting Buc-ee's. Hebert said someone compared the idea to a waterpark facility operated by Sulphur Parks and Recreation, which charges a reduced rate for locals and a higher rate for visitors.
Mitchell said sales taxes cannot be reduced.
"There are certain laws, and those laws pertain to the free trade and cross state lines business interactions between residents of different states," Mitchell said. "This is something I inquired about to confirm my understanding that that would be frowned upon and potentially not legal to impose a sales tax at a venue on visitors and not on residents."
City council member Kenneth Boudreaux said he's excited to welcome Buc-ee's to north Lafayette.
"This is one of the greatest things to have happened to Lafayette in quite some time," Boudreaux said. "And I certainly hope that as an entire community, not a portion of the community, we can embrace this and move this forward."
The mayor-president challenged Buc-ee's to see how creative they can get with their breakfast sandwiches. Boudreaux suggested Buc-ee's boudin could become a thing.
"I think you guys are going to discover this is going to be a fun ride with Lafayette," Boulet said. "I think it's going to be good for the company, and it's certainly going to be good for Lafayette."