JWA Ventures has proposed a grocer anchored development on approximately 30 acres at the intersection of U.S. Highway 280 and Highway 63. City council president Buffy Colvin and Alexander City Mayor Woody Baird agree the developer proposal will see $7.5 million plus 5% interest going to the developer over 10 years as part of a sales tax rebate. But the two leaders disagree on whether it's a good deal. Colvin has said it’s a great opportunity for Alexander City. Baird said the deal will burden the city and put possible future infrastructure projects in jeopardy.

Baird’s contention is the city shouldn’t be involved in a 5% loan structured agreement.

“The finance people are telling me it’s a bad deal,” Baird said. “When we go to the bond market for infrastructure, it will be viewed as bad debt.”

Baird said the loan would be through a local bank and would be a 10-year note. Baird said JWA Ventures currently only has one tenant lined up.

“The proposed tax revenue generated by the one tenant will be around $550,000 per year,” Baird said. “If six other retailers are opened on this site the potential tax revenue would be $940,000. These numbers come directly from JWA Ventures. (Under the current deal), the developer has no requirement to open more than one retailer. If only one retailer is opened the city will be required to make up the shortfall from $550,000 to $971,000 coming from our general fund (to cover the debt service.)”

The proposed agreement could also put further strain on the general fund through cannibalization. Baird said the total loss to the general fund through the difference in sales tax collected through the grocer and the cannibalization could cost the general fund between $700,000 and $800,000 per year during the term of the loan.

“No amount of business we acquire in the future during the debt period will make up the short fall to the general fund,” Baird said. “Our general fund cannot survive with this amount of loss.”

JWA Ventures’ Evan Conder could not be reached Friday for comment on the deal proposed by JWA Ventures.

Baird said the city could do up to a 50% share of the general fund sales tax collected at the development over a set period of time but without a loan putting the city at risk.

“The only counter presented to JWA Ventures was rejected outright because it did not give them the $7.5 million,” Baird said.

If Alexander City were caught up on its financial audits and went to the bond market it could expect to pay as little as 2% interest currently. Those audits are in process with hopes of completing by early fall. Those audits are crucial in financing infrastructure projects across the city including sewer.

The general fund has been supported the last few years with transfers from the utility funds putting the utilities in a cash strapped position needed work.

Auburn currently has two grocer/retail centers in operation with Publix as an anchor.

The first was opened on Ogletree Road. According to City of Auburn commercial development director Kevin Howard, no incentive package was given to developers to bring the first Publix to Auburn.

Publix at Hamilton Place is now surrounded by several other retailers, restaurants and a gas station. The area has seen growth and new development is underway next door.

The Publix development at Cary Creek at the intersection of College Street and East University Drive opened about 2014.

“The area has seen significant growth since, especially in housing,” Howard said.

The Cary Creek development has a bank, gas station, Wendy’s and other store fronts. The developer was given incentives under Auburn’s Commercial Development Incentive Program (CDIP) and were similar to incentives for a Publix project in downtown Auburn that is under way. The Auburn City Council approved upto $6 million in sales and use tax rebates and the downtown project has a total capital investment of $20.6 million for a 29,000 square foot development.

Howard said the incentive was slightly out of line with what incentives are for a similar sized project.

“We viewed it a little bit differently because it was wanted downtown,” Howard said. “We still treated it within our program.”

Howard said the CDIP helps insure incentives stay reasonably the same.

“We have a cap on how much sales tax to rebate, terms and length of agreement,” Howard said. “The packages are still negotiated to a point and ultimately approved by the city council.”

Baird said many of the financial advisors that have been in the executive session discussions on this project will be at Tuesday’s council meeting including new Alexander City finance director Romy Stamps to provide information to the council and to the public before the council votes.

“This council appointed our new finance director who strongly opposes this deal,” Baird said