A Mobile City Council committee on Tuesday afternoon recommended approval of a tax incentive deal between the city and the owner of The Shoppes at Bel Air that would help finish renovations to the decades-old shopping center.
The agreement, which was recommended for council approval by the Economic, Cultural and Civic Development/Cruise Committee, would allow Rouse Properties, LLC to recoup a maximum of $500,000 per year for a total of 15 years on sales tax revenues that exceed a 10 percent increase from the $7.5 million the mall brought in during 2015.
The benchmark sets the baseline for the agreement at about $8.1 million a year. Based on those numbers, the incentive could be worth as much as $7.5 million for Rouse over the life of the agreement.
In exchange, Rouse must spend at least $25 million on renovations at the mall and must guarantee at least 80 percent of the new tenants attracted to the space are either new to the Mobile market, or are a second location. The city will also have input on which anchor tenant takes over the 104,000-square-foot space left by Belk, which is moving to a larger location within the mall, Doug Anderson, an attorney for Rouse said.
Anderson, an assistant city attorney who also works as the Planning Commission attorney, said the arrangement doesn’t represent a conflict of interest because the council, not Mayor Sandy Stimpson’s administration, is making the final decision on the incentive package.
Britton Bonner, outside counsel from Adams and Reese, was handling the negotiations for the city. Bonner handles economic development deals for the city, Anderson said.
Opponents of the plan said the agreement would allow The Shoppes of Bel-Air to poach tenants from other locations because 20 percent of the new tenants would be allowed to move from a current location within the city to the newly renovated mall.
Steve McMahon, managing partner of Legacy Village, said losing current tenants to Bel-Air was a concern.
“The incentives give them the opportunity to pick tenants from other centers and bring them to the mall,” he said, following the meeting.
McMahon, who said he wasn’t against the incentives for Bel-Air, recommended allowing for a three-year non-compete clause within a 2-to-3-mile radius of the enclosed mall. That way other centers, like his and Springdale mall would be protected.
McMahon was not permitted to speak during the committee meeting because Councilman C.J. Small, the committee’s chairman, said it wasn’t a public hearing. The incentive package will be on the May 17 council agenda. The meeting will be held at 10:30 a.m. at Government Plaza.
This type of incentive is not new to Mobile. Most recently, the council approved a similar deal for the renovation of Westwood Plaza, at the intersection of Airport Boulevard and Schillinger Road.
“The administration wants to be consistent in how these arrangements are approached,” city spokesman George Talbot wrote in an email. “In this case, the Administration applied the same model adopted in the Westwood Plaza agreement. The goal is to stimulate significant capital investment and growth.”
In the Westwood Plaza agreement, Burton Properties would be allowed to recoup any sales tax revenue that exceeds a 40 percent increase from the $795,000 the city received in sales tax revenue from the center in 2013. In the case of Westwood Plaza, the benchmark was set at $1.1 million in sales tax revenue and the incentive could not exceed $450,000 a year in rebates, once Burton made back the $4.7 million it initially paid in capital expenses.
The Westwood Plaza agreement also stipulated that 80 percent of the new tenants at the center had to be either new to market, or second locations.
The city also reached a similar tax rebate incentive deal with the developers of McGowin Park in 2013. McGowin Park brought in new-to-market retailers, like Costco, but also “poached” tenants, like Best Buy, from other centers.
This might not be the last of these type of agreements either. During Tuesday’s meeting, Councilman Fred Richardson said he’d support the Bel-Air deal, but asked his fellow councilors to support a possible deal in the future with the developer of a shopping center, anchored by Publix, on Florida Street in his district.