Newspaper article The Tuscaloosa News

Tuscaloosa Mulls Tax Rebate Incentives Package

Newspaper article The Tuscaloosa News

Tuscaloosa Mulls Tax Rebate Incentives Package

Article excerpt

TUSCALOOSA | The City Council is leaning toward adopting a citywide economic incentive package to attract future retail developments, a move that members say is needed for Tuscaloosa to compete with other Alabama cities.

The council's Public Projects Committee voted unanimously Tuesday to have City Attorney Tim Nunnally draft a policy that would allow City Hall to engage in profit sharing with qualified developers who bring large-scale projects to the city.

"We're seeing other cities around the state that we're competing with for these retail developments having much more flexible policies," said Councilman Bob Lundell, who chairs the council's Public Projects Committee.

According to the city's latest economic incentives policy adopted in 2010, City Hall can offer some incentives up front, such as road improvements or infrastructure installation, but not much else.

Nunnally noted the policies of Hoover and Mountain Brook, both of which have used a sales tax rebate system to attract and retain millions of dollars in developments over the past decade.

In the early 2000s, the Alabama Legislature granted municipalities the size of Mountain Brook the ability to use economic incentives similar to those used by larger cities, while also relaxing rules on which kind of incentives cities can offer.

"Mountain Brook is heavily residential, and we're trying to lure more businesses to take the burden off our residents," said Mountain Brook City Manager Sam Gaston.

Since then, the incentives have been used to lure four developers, including two that invested in developing raw land. In exchange, the city would rebate a portion of sales tax revenues generated by the project for a set number of years.

On the first two projects, shopping centers anchored by Publix and Piggly Wiggly, respectively, the rebate cap was set at about $1 million.

For two more recent developments in Mountain Brook, Cahaba Village Center and the 27-acre renovation of Lane Parke, the rebates are considerably larger. Cahaba Village is anchored by Whole Foods Market, the only one in the state. Lane Parke includes Western Supermarket and Treadwell's Barber Shop.

For the Cahaba Village Center, Mountain Brook is refunding a total of $5 million in sales taxes generated by the project. Gaston said he expects the center to hit the cap in the next year or two, after which all of the $2 million or so in sales tax, business license and other revenues will go to the city.

The incentive deal for the $120 million Lane Parke mixed-use development, which was approved by the City Council last month, will receive about $4 million in city-funded infrastructure work and a maximum of $10 million in tax rebates over the next two decades.

Gaston said estimates are that the cap will be reached in nine to 12 years.

"We've been very pleased with all of these prior developments," he said. …

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