McGowin Park, one of the largest retail developments in Mobile in recent memory, will not be a liability to the city or county despite a corporate partnership that will return millions in sales tax to the developers over a 20 year period, according to its manager. It may be the first example of an “improvement district” in the county, which allows developers to issue bonds to finance public infrastructure, usually in exchange for tax incentives.

“In the olden days, [developers] may go to local governments and say, ‘I need $5 million for water and sewer to lure in new businesses,’ but now it’s so much better,” said Phil Hunt, McGowin Park’s manager and financier. “There is no liability (to municipalities) and that’s the beauty of it, it’s a great tool for the developer to fund infrastructure without the city or county being on the hook. [Developers may say] ‘you give me the tools I need and allow me to form my own district’ and they are the one’s paying for it.”

In the case of McGowin Park, which will include 600,000-square-feet of retail space anchored by a 140,000-square-foot club store, the city will return 1.4 cents of its five-cent sales tax collection and the county will return three-tenths cents of its one-cent sales tax collection on revenues that are projected to be as high as $200 million per year.

The Mobile County Commission and Mobile City Council approved the district last summer with constriction originally slated to begin in February. But dirt at the 90-acre property near Hank Aaron Stadium has yet to be turned, although the developer, Chattanooga, Tenn.-based The Hutton Co., is still projecting an opening date sometime in 2015.

Tenants have not been announced, but initially the site was rumored to possibly host a Costco.

Last week, the district’s board met to approve an engineering and assessment report.

Since they were approved by state law in 2000, improvement districts have been cropping up around the state. In Baldwin County, similar public-private partnerships were used to create the Eastern Shore Center in Malbis, The Wharf in Orange Beach, The Spanish Fort Town Center and Colonial Pinnacle at Craft Farms in Gulf Shores.

Local economist Semoon Chang, director of the Gulf Coast Center for Impact Studies, said improvement districts may allow developers to construct higher-end shopping centers and attract new retail outlets to the region, but sales projections have to be realistic. In 2011, the Spanish Fort Town Center, which was incorporated with the authority to charge an additional district fee on top of local sales tax, fell into receivership after defaulting on a $17 million loan. There, developers had hoped a district anchored by a Bass Pro Shop would thrive, but today several of its storefronts remain vacant.

“What happened at Spanish Fort Town Center was they made sales predictions at the time that were a little rosy and actual tax collection was about a third of what was projected, so that’s when they got into trouble,” Chang said. “It is a really beautiful place, but the Bass Pro Shop didn’t play the kind of anchor role they anticipated and it failed to attract customers to the remaining stores in the Town Center.”

Chang said the revenue projections at McGowin Park are a little misleading because 50-75 percent of those are “transfer sales,” meaning people who may have shopped somewhere else in the city will spend their money at the new development. Only about 25 percent can be credited as a net increase in sales, a number that can increase depending on the presence of unique retail providers that don’t already exist in the area.

“My opinion is shopping centers like Bel Air Mall will lose money, it’s just a matter of how much,” he said.

Yet Hunt said the tax increase in the city’s general fund will be noticeable.

“Tax is estimated to be $7.5 million,” per year he said. “For a financing vehicle that allows [us] to issue tax exempt municipal bonds to help fund public infrastructure in and around the development without a burden on taxpayers, it becomes a pretty good win-win.”