BRISTOL, Va. — A divided City Council approved a pair of incentives totaling $700,000 Tuesday to attract two Pizza Hut locations to the city, including one near The Falls.
The council voted 4-1, with Councilman Kevin Mumpower sharply criticizing the deal, to share tax revenues with GC Pizza Hut, the developer planning to construct locations along Lee Highway — just across from The Falls retail center — and at 170 Gate City Highway, near the intersection of Gate City Highway and West State Street. The latter is the same project that started last year but was then put on hold.
Plans call for two matching 1,535-square-foot buildings that will include some seating but primarily focus on carryout business. The applicant and tenant will pledge to invest at least $1 million in each facility, according to the agreements.
In exchange, the city agrees to issue quarterly payments to GC Pizza Hut for each facility equal to 70% of total reported meals tax receipts per quarter for the next three fiscal years, 50% of meal tax receipts in fiscal 2023 and 25% for the remaining four fiscal years, not to exceed $350,000 per location.
Mumpower said the deal didn’t “make any sense.”
“If a business needs that kind of help, there is something fundamentally wrong with that business,” Mumpower said. “Either their execution is wrong, their business model is wrong — there is something fundamentally wrong.”
He also questioned why the city provides incentives to some businesses but not all.
“We’re picking and choosing winners and losers. Who do we give the money to and who do we not?” Mumpower said.
The city previously provided incentives to a multirestaurant development on Euclid Avenue, but neighboring restaurants Krystal and Taco John’s — which received no incentives — recently closed.
Councilman Kevin Wingard also expressed reservations about the city’s process but ultimately voted to approve the incentive.
“We’re deep into this and the process. I’m not happy with it. It’s not going to devastate the city. The city will make money, the city will do good, but we can do better than this,” Wingard said.
Both men said future grants should be restricted to restaurants or businesses not already located in the Tri-Cities, to help attract visitors to the city. That was the original concept for The Falls, which was termed a “development of regional impact” and was to feature businesses unique to the region.
Vice Mayor Bill Hartley said he favored the timing of the deal, giving more funds to the developer on the front end and the city retaining more later, since it aligns with due dates for additional city debt payments.
“I do think we need to address this going forward,” Mayor Neal Osborne said. “I think we need a more standardized thing. … In this case, we’re taking business from another locality with a new building in Bristol, Virginia. And that same business is going to go into the DRI [development of regional impact] zone at The Falls, which will give us additional state tax revenue.”
While the building is to be located across Lee Highway from the half-empty commercial center, that side of the street is considered part of the center’s long-range plan, City Manager Randy Eads said.
“That is technically part of the The Falls development in the big scheme of things from years ago,” Eads said. “[Pizza Hut’s] model is different from what you see in restaurants at The Falls. They’ve gone to a smaller-size store with 15 to 20 seats and mainly will be a carryout.”
The city approved the Gate City Highway site last spring, and work had already begun when further construction was suspended pending approval of the incentive package. Plans are to close the Pizza Hut at 2871 W. State St. in Bristol, Tennessee, to shift to the new sites.
“There were factors outside the control of the city for the developer that slowed things down,” Eads said.