(Times-Journal)- At Fort Payne City Council meeting, a memorandum of understanding with Marathon Realty was abandoned due to a technicality, but efforts to attract a Food City grocery store to Fort Payne will continue, starting fresh.
The Fort Payne City Council voted 3-2 in February to approve the original memorandum. Council members John Smith and Johnny Eberhart continue to oppose the project as both voted against dismissing that document and starting over.
Amendment 772 enables municipalities to offer economic incentives to recruit businesses, but it provides strict guidelines that include, according to the Alabama Retail Association, “public notification of a project, a certain amount of time to lapse and a subsequent public hearing by the governmental authority explaining the parameters of the project and the economic incentives involved. Once the hearing is complete, the city and/or county can then enter into the appropriate development agreement to allow for the incentives.”
What this means is that the council must hold another public hearing to allow for comments from citizens speaking in favor of or opposition to the deal, which involves spending $3.1 million to help Food City offset the costs of constructing a grocery store at 1015 Gault Avenue South, an area commonly referred to as the "South Y". Developing the land, which is owned by Drinkard Development, will require moving sewer lines that now extend across it and elevating the compacted soil so it rises above the flood plain. The southern side of the property is bordered by a creek that swells during flash flooding.
An Amendment 772 validation hearing was scheduled for August 23 at the DeKalb County Courthouse, but starting over will push that timetable back. The public notice must be run in the newspaper to make the public aware of the hearing.
City officials plan to argue to the judicial oversight that the project is in the best interest of Fort Payne’s citizens. Competitors of the proposed store disagree.
The vote in February to approve the original memorandum followed a tense gathering with numerous citizens addressing the council to express strong opposition to Amendment 772 incentives. The standing-room-only crowd included supporters of two existing businesses, Bruce’s Foodland and Twin City Auto Sales. Foodland would be Food City’s direct competitor, while the property owner has told Twin City it will need to relocate once construction is ready to get underway.
Those speaking against the incentives agreed the city should not spend that much tax money on private development for an out-of-state retailer that may divert revenue from long-time local business owners.
Supporters of the Amendment 772 incentives claim a popular brand like Food City will attract more shoppers to the city and increase revenues to fund public services. City Attorney Rocky Watson also alleged, in a response to a class action complaint seeking injunctive relief to stop the deal, that opponents of the Food City store sought to keep employee wages low and avoid competitive pressure to lower their prices, which would benefit local shoppers.
Since the original memorandum of understanding is no longer in process, the class action complaint seeking to stop it becomes irrelevant, according to Watson. It is unknown whether the parties opposing the development will file another legal complaint in response to the process starting over.
Watson said rebooting the effort will give them a "clean" memorandum without the error that was discovered in the language of the original legal advertisement. He expressed hope they can "repass it in a manner that is non-provocative."
The $3.1 million investment by the city represents 20.4% of the projected project cost, which Marathon Realty indicated in February will be returned within about 290 days with 140 jobs providing a weekly payroll of $55,000 or $2,860,000 annually. Marathon would be required to return the money to the city, along with 2.5% interest, if it failed to complete and open the store within a designated period.
Watson said the public will get to share their opinion at the August 30 hearing. Each speaker will have two minutes to make their point. He'd earlier encouraged anyone in favor of the project to speak at the validation hearing, but he explained during Tuesday's meeting that this did not mean anyone opposing it would be prevented from saying anything, as some angrily speculated on Facebook after he was directly quoted. He said he simply encouraged those in favor to speak up because opponents had already very vocally expressed themselves in February.
Shan Bruce, the founder of Bruce's Foodland, equated the deal to the city giving a competitor "a $3 million head start" against him and encouraged Food City to cover 100% of the costs if it wants to build a store here.
With popular retailers having many communities recruiting them because they can generate large amounts of sales tax revenue, they have the ability to ask for favorable terms. Incentives may be one of several factors that can determine where new stores get added.
Mayors and city councils hear from citizens wanting more retail options closer to home. On some occasions, cities agree to share part of the taxes raised over a limited period of time with the retailer to offset their initial construction costs. Industries frequently get tax abatements excusing them from non-education related ad valorem tax for a few years to reduce their overhead when expanding and creating more jobs in a community.
Chik-Fil-A is one recent example of a popular company that reached an arrangement to expand into Fort Payne. The Highway 55 Burgers & Fries coming to Fort Payne is another, with site work now underway to elevate that flood-prone property.
Elsewhere in North Alabama, Scottsboro worked with a different developer to attract a Publix grocery store and there are plans to add a TJ Maxx store there as well. Food City opened a store in Albertville, anchoring development along Highway 431 that has attracted other retailers like Hibbett Sports, Hobby Lobby, PetSmart, and TJ Maxx.