MANSFIELD — Infrastructure improvements needed to create a new Buc-ee’s Travel Center will ultimately be paid for by the thousands of visitors who buy the brisket sandwiches, Beaver nuggets and branded novelty items.
That’s because the planned development agreement between the city of Mansfield and Buc-ee’s calls for the use of a tool called a New Community Authority, which will levy a 2 percent tax on all non-fuel purchases when the sprawling travel center opens near the I-71/Ohio 39 interchange.
That means the vast majority of the work will be paid for by out-of-town visitors who stop at the travel center. It also means all property taxes will still go to local schools, income taxes will still come to the city and sales taxes will still come to the county.
City Council is scheduled to vote on the 47-page agreement Tuesday night during a meeting that will include officials from the popular Texas-based company planning to build a 75,000-square foot facility on 37.5 acres, employing 200 full-time employees.
Once the company has been repaid, 1.75 percent of the tax will go away. The remaining 0.25 percent will continue to be collected to help pay for city services, including police and fire.
(Below is a PDF showing the proposed development agreement between Buc-ee’s and the city of Mansfield.)
One of the Buc-ee’s officials expected at Tuesday’s meeting is Scott Ratcliff, director of engineering for the company based in Lake Jackson, Texas.
Mayor Jodie Perry said Friday morning Buc-ee’s will pay for the needed infrastructure up front — including all road improvements and extending water/sewer lines underneath I-71 to the new travel center.
Buc-ee’s will also reimburse the city the amount necessary for the city to design, construct and install a lift station and back-up generator. The city shall be responsible for all design, construction and installation of the lift station, which the company will reimburse up to $400,000, under the agreement.
There is no tax abatement in the development plan, she said.
The 2-percent tax will be collected under the NCA and will, over time, repay the company for the millions of dollars Buc-ee’s will spend on the improvements.
Perry said a portion of the funding will be maintained by the NCA to help cover the costs of city services for the new facility, including police and fire.
During a city Planning Commission meeting Tuesday, Buc-ee’s project coordinator Angela Janik said said 90 percent of Buc-ee’s customers come from 20 miles or farther away from the store and that 65 to 68 percent come from more than 100 miles away.
An NCA, created under Ohio law in 2013, is a public-private partnership authorized under Ohio Revised Code Chapter 349. It allows cities and developers to establish a specific geographic district and finance public infrastructure—such as roads, utilities, parks, and community facilities—using targeted “community development charges.”
What is a new community authority?
It’s an underutilized economic development tool, according to the Columbus law firm Bricker Graydon Wyatt.
“New community authorities are a powerful public finance and economic development tool for real estate projects. Real estate projects in Northeast Ohio face challenges due to macro-economic trends and market dynamics specific to the Cleveland area. Projects that could benefit from flexible public financing would do well to explore utilizing a new community authority,” the law firm said on its website.
Perry said the development agreement, using the NCA, is an agreement between the city and Buc-ee’s to say what each side is doing as part of the deal.
“It talks about what is considered public infrastructure, which is, specifically, the road upgrades, as well as the utility line extensions. It talks about how will that be paid back over a couple of decades,” the mayor said.
“It will be the first (NCA) here and it’s got to be a sizable entity in order to generate the kind of money needed,” Perry said.
Expected revenues at the travel center would easily cover the infrastructure improvements, roughly estimated to cost around $15 million, including three roundabouts on Ohio 39 and extending the utility lines under the interstate.
Janik said this week the company would be making a $50 million capital investment in creating the travel center.
How much revenue does a Buc-ee’s Travel Center generate?
As a privately-owned company, Buc-ee’s doesn’t release a great deal of financial information. It’s co-owned by its founders — Arch “Beaver” Aplin III and Don Wasek.
But according to MMCG Invest, a national feasibility study consultancy preparing bankable feasibility studies, Buc-ee’s generates an estimated $50 to $100 million per store annually, roughly 10 to 20 times the industry average, by inverting the traditional gas station business model.
“Instead of treating fuel as the revenue engine and snacks as an afterthought, Buc-ee’s uses cheap gasoline as a loss leader to draw families into 74,000-square-foot retail destinations where two-thirds of revenue comes from food, merchandise and an ever-expanding empire of beaver-branded products,” MMCG said on its website.
Perry said use of the NCA made sense in the planned development, rather than traditional tax abatements often found in community reinvestment area agreements.
“The Buc-ee’s deal, because of the size of it and the uniqueness of what they do, it gave us a newer tool to bear on this one.
“Essentially, what’s going to happen is visitors to Buc-ee’s will charge an extra fee (the 2 percent tax) and that is going to be used to pay back only the public infrastructure improvements,” she said.
She said the NCA be operated by a board, the majority of which will be appointed by City Council, with the authority to levy an additional tax within a defined jurisdiction. In this instance, it would only be levied on the Buc-ee’s property for non-fuel sales.
Perry said that revenue will flow to the NCA and a payback schedule will be developed to repay Buc-ee’s for the money it spends on the infrastructure improvements.
“We’re not fronting any money … none of that,” she said.
The mayor said Buc-ee’s officials told her they have had similar agreements in other states.
“The Ohio version of it is different, but they were not unfamiliar with it,” she said.
She said the Short North area in Columbus has utilized the NCA agreements.
“I believe in Delaware, they’re using them now pretty regularly. It’s a growing tool across the state,” the mayor said.
“The thing I do want people to understand is if you go to Buc-ee’s, you will pay it. But if you don’t go to Buc-ee’s, you’ll never pay it. Of course, what we heard from Angela on Tuesday is 90 percent of their business comes from more than 20 miles away,” Perry said.
“Buc-ee’s just gives us a really unique opportunity to do that. Normally you’re not drawing in that much traffic,” the mayor said.
Some unofficial estimates said Buc-ee’s had $1 million in sales on opening day alone when it launched its first Ohio travel center in Huber Heights in April.
‘It’s a very unique win-win-win’
“Most of the people won’t ever pay it locally, unless they go there and then they’re paying a very small percentage of it,” the mayor said.
“The schools get to keep all of their property tax. The city keeps all of the income tax and the county gets all the regular sales tax. It’s a very unique win, win, win,” Perry said.
Buc-ee’s will handle all of the infrastructure improvements, in conjunction with the city engineer’s office, according to Perry.
“They are actually going to do the work. Technically, it’s not public bidding (for the construction), but we need to know that (they’re) not overpaying for something. There’s a very close coordination between the city and them as they build it,” she said.
The mayor said council’s expected vote on Tuesday would be the last legislative hurdle for a project first made public in March. The company’s work with regulatory agencies like the Ohio EPA and the Ohio Dept. of Transportation is likely to continue.
So when will the shovels break ground?
Perry said she didn’t have a date for when construction could begin.
“I don’t know the answer to that, nor do they actually. I can tell you it’s not going to be in the next few months. That’s really not that big of a surprise, right? They’re not going to be spending millions of dollars getting prepped for a project that isn’t guaranteed to go through,” she said.
“When we get this across the finish line, obviously, they’ll close the land (purchase) and then they’ll start that. I have no idea how long that takes.
“It’s a substantial build. I think they said the build itself is like 18 months, which includes the public infrastructure,” Perry said.
“What I don’t know is how many months of planning will it take. They don’t have final designs or anything yet. That’s pretty par for the course (in such developments),” she said.
“I do know they want to get it open. When shovels go in the ground, though, I don’t know.”
The mayor said she has heard concerns expressed by some residents about the development, including traffic and potential environmental hazards.
“I do hear what the questions the residents are asking. I believe there’s answers to them. I don’t necessarily have all those answers, but I can tell you based on my experience with Buc-ee’s, they have looked at all of that. They’re very aware,” she said.
She said the company and the city are continuing to have discussions with residents in the area, including a farmer whose property is near the site and uses Ohio 39 on a regular basis.
“I certainly can empathize with their position and I can tell you I believe Buc-ee’s is being very genuine and wanting to work with him as much as possible. Is everyone going to get everything they want?
“I don’t know that that ever happens. But I can again tell you I’ve worked with a lot of developers and a lot of companies over the years. In my opinion, Buc-ee’s has gone above and beyond to be aware and listen and talk to them,” the mayor said.
“I’ve talked to other communities and I know what they’ve done and I think they’re a top-notch company in many ways. The economic impact (of the travel center) is just going to be huge in a way that we haven’t seen in a long time.
“It’s huge, and again, the fact that we’re able to do it without impact to the schools or to the county or to the city … that is so unusual. I’m just proud to have been part of the team at the end of the day.
“I believe in this community so strongly and I love when people from the outside affirm that.”
