Retail Development

Cliff Williams / The Outlook The lot on the southwest corner of the intersection of U.S. Highway 280 and Highway 63 is the subject incentives for development at a Tuesday Alexander City City Council meeting.

Local shoppers may not have to travel as far to find goods they currently travel to purchase.

Tuesday night the Alexander City City Council approved incentives to help a developer with a project that will include a grocery store at the corner of U.S. Highway 280 and Highway 63. The proposed 100,000 square foot development will be anchored by a 47,000 square foot of grocery store. And it’s much to the delight of many but some area residents aren’t as optimistic.

Hugh Thompson was raised in Alexander City and his father was on the city council and mayor at one point in Alexander City’s history. Thompson spoke at Tuesday’s council meeting.

“This is the first development that has put a sparkle in my wife’s eyes,” Thompson said. “I have neighbors who once a week drive to the Publix in Auburn. I think this is a good thing.”

Neil Butler said Alexander City doesn’t currently offer enough solutions to his family’s shopping demands so they travel out of town for goods and services. And Butler doesn’t think his family is alone.

“We shop in Alex City now but do a lot of shopping in Auburn; we do a lot of shopping in Birmingham because there is where the services are that there is demand for here,” Butler said.

“There is significant demand for something of the level of Publix.”

A study Alexander City helped pay for in 2018 found there was $149 million from the area being lost to sales in other markets.

“So many people shop in Auburn,” Butler said, “They would like to shop in Alex City. They shop in Montgomery and would like to shop here but the services aren’t here. Something like a Publix is something a lot of people on the lake would like to have. One of the things is there is significant spending power on the lake and that significant spending power is going everywhere else.

“There certainly is a desire to spend it here as opposed to going somewhere else. I certainly would rather go 15 minutes rather than one hour.”

Baypine Road resident Joanna Banks was once in community economic development in Georgia.

“I’m a shopper in this community and I spend my money in this community,” Banks said. “I have had interest in this project simply because of my previous jobs. Old habits die hard. I have been watching this project and looking at the numbers and comments.”

Banks has been doing her own homework too.

“Economic development they say is hush hush but it's really not,” Banks said “I looked at Publix. Dr. Google has lots of information. For the year 2020, Publix had gross sales of $44.9 billion. They have 1,029 stores and divide it out and if every store is equal, that is somewhere around $36 million per store. That is not going to happen in Alexander City, but $14 million, $16, 18 million are reasonable and can grow as the city grows. It seems T.J. Maxx goes in these developments and other small towns too.”

Banks believes more than just revenue from taxes will contribute to the area’s economy.

“These are not fly by night entities,” Banks said. “There will be jobs. I believe I heard somewhere around 300 jobs. We are talking about a payroll of $7 to $9 million that we don’t have in this community.”

Banks said a low estimate will see 50% of the wages from the development spent in the community.

Russell Lands CEO Tom Lamberth loves the idea of the development and believes it will do well quickly.

“I’m very much in favor of the city pursuing retailers like Publix,” Lamberth said. “This is a study the city participated in 2018 and it indicated $150 million of leakage from the lake community. That’s everything, groceries would be a big part of that. I think that a Publix coming into this market would eat into that leakage for sure. That leakage is just 10 miles down the road.

“There are not many communities that can say they have that kind of demand at their doorstep. Usually you build something and hope to grow into it. It’s right there and going somewhere else.”

Without cash to buy property and without audits in place to borrow money, Alexander City offered Alex City Development a full share of the 2.75% sales collected from the development that otherwise would go to the city’s general fund. Hired city finance advisors were against the agreement saying a 50/50 split of that portion would avoid possible dips in the general fund and be more like incentives in other places.

Jim Wilson & Associates Evan Cander is behind Alex City Development and said the incentives other municipalities offer are front loaded with property and or cash to go with the 50/50 share.

Cander said Albertville gave a developer $5 million up front and a 50% share of sales tax for 10 years for development with T.J. Maxx and Hobby Lobby. Albertville gave a developer property it purchased for $5 million along with the proceeds from a $1 million bond to redevelop a K-Mart with Food City, Five Below and Ulta. And Albertville may have more development coming.

“There is another deal that is being contemplated in Albertville,” Cander said. “It is a big box outdoor retail outlet. The city is contemplating issuing bonds for $6.2 M to develop the store and site.”

Cander said in Sylacauga the city bought land for $1.8 million and sold it to the developer for $450,000 in addition to giving the developer 50% of the sales tax for 20 years. In Troy a developer received $1.5 million and 50% of sales taxes for 10 years for a development with Hobby Lobby and T.J. Maxx.

In Birmingham on Lakeshore a developer is getting $3.3 million up front. Hoover gave $3.4 million upfront and 50% for years and a similar deal is on the table in north Opelika.

Cander said the 100% share is needed by the city to compete.

It would be like purchasing a car without putting any money down, the payments will be higher. When municipalities are able to put money or other things into the incentive package, the percentage could come down.

In the case of this development, there is no abatement of sales tax on construction materials, there is no abatement of ad valorem taxes.

The deal between Alexander City and the developers could be paid off early. It also has a cap of$1.2 million a year. To reach the cap and sales tax revenue from the development enter the city’s general fund, the development would need to generate almost $44 million in sales for that year.

Like others, Lamberth is concerned about the city being able to afford the incentive package and believes planning is key to making it work.

“I’m also concerned about cannibalization,” Lamberth said. “I don't know what the finances are and this is a very complicated agreement, I’m not going to say yay or nay on that. I’m concerned about the cannibalization and that’s real, it’s going to happen. You are going to have to make up for that lost revenue somehow. If you don’t have a plan to do that, that is a problem. If you don’t have the reserves, if you don’t plan on debt or plan on raising taxes, cutting services is not an option.

“I’m conflicted on this. We need to pursue this kind of retailer but we need to figure out a way to stabilize that general fund too.”

Cliff Williams is a staff writer for Tallapoosa Publishers.