Hoover council OKs up to $3.5 million in tax rebates for grocery store developer

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Hoover City Council 7-1-19

Photo by Jon Anderson

Hoover City Council 7-1-19

Hoover Councilman Mike Shaw, at right, discusses a proposed tax rebate agreement for the developer of a grocery store site during a council meeting on Monday, July 1, 2019. Former Hoover Councilman David Bradley, at left, opposed the tax rebate.

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Hoover City Council 7-1-19 (3)

Photo by Jon Anderson

Hoover City Council 7-1-19 (3)

David Bradley, a former member of the Hoover City Council in Hoover, Alabama, expresses opposition to a tax rebate agreement with the developer of a grocery store site during a council meeting on Monday, July 1, 2019.

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Hoover City Council 7-1-19 (2)

Photo by Jon Anderson

Hoover City Council 7-1-19 (2)

David Naefe, a resident of the Riverchase community in Hoover, Alabama, expresses opposition to a tax rebate agreement with the developer of a grocery store site during a Hoover City Council meeting on Monday, July 1, 2019.

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Hoover City Council 7-1-19

Photo by Jon Anderson

Hoover City Council 7-1-19

Hoover Councilman Derrick Murphy asks a question about traffic improvements planned at the intersection of South Shades Crest Road and Morgan Road during a council meeting on Monday, July 1, 2019.

The Hoover City Council on Monday night approved up to $3.5 million in sales tax rebates for a new grocery store development planned at the corner of South Shades Crest and Morgan roads despite some opposition.

A South Carolina-based company called AL Hoover Crest LLC plans to build a 48,000-square-foot grocery store and pharmacy, a 4,000-square-foot separate retail building and two outparcels on 15 acres on the southeast corner of the intersection.

The developer has not released the name of the grocery, but Jefferson County Commission President Jimmie Stephens previously said it is planned to be a Publix.

The developer expects to spend at least $13.8 million developing the site, including road, water and sewer improvements, and asked for the sales tax rebate to help with development costs.

The agreement approved by the council will give the company a 50 percent rebate of new sales tax revenues brought to the city for 10 years, up to $3.5 million.

Greg Knighton, the city’s economic developer, said the nearest Hoover grocery stores to that site are the Target and Sprouts about five miles away at the intersection of Interstate 459 and John Hawkins Parkway. Because of the distance, he does not expect those grocery stores to lose much business to the new one, he said.

There also is a Winn-Dixie in Bessemer about 2.5 miles away and a Publix in Helena about 5 miles away, Knighton said.

Knighton said he developed a 10-year financial forecast for the new grocery store based on a three-year financial forecast provided by the developer and determined that, after a $3.5 million rebate is taken into account, the city would still gain $10 million in sales tax revenue it otherwise would not have.

However, Knighton emphasized that the $3.5 million rebate is not guaranteed. It hinges completely on the ability of the grocery store to meet its financial projections, and the risk is being taken by the developer, he said.

The new development also will increase property values in that area, which will lead to increased property taxes, benefiting the Hoover school system, Knighton said.

OPPOSITION

Riverchase resident David Naefe told the council he objects to the city giving $3.5 million to an out-of-state development company to put a grocery store on the fringe of the city limits. That amounts to 25 percent of the anticipated development costs, he said.

Former Hoover Councilman David Bradley, also a resident of Riverchase, said he doesn’t see a need for grocery store in that area and doesn’t think the city should contribute to the development cost.

“This $3.5 million comes at the expense of every citizen in Hoover,” Bradley said. “If Hoover can’t compete on a straight-up basis with our neighboring cities, I think we’ve got bigger problems than $3.5 million will solve.”

He knows that city leaders have set a precedent by giving tax incentives to other developments, but “somewhere this has to stop,” he said.

If the council said no to the tax rebates, the project possibly could proceed without the incentives because the developer gets other benefits by being in a city with a Class 1 fire insurance rating, Bradley said. Or if the developer can’t come up with the down payment to proceed without the incentives, the dirt could simply remain idle, he said.

Hoover Council President Gene Smith asked Bradley if he ever voted in favor of tax incentives to bring new business to the city. Bradley said the council on which he served put in a turn lane for the Lowe’s on Valleydale Road, but for the most part, developers paid for their own road improvements.

Councilman Mike Shaw said he appreciates the concerns by Naefe and Bradley but noted that the tax rebates will come from money the city otherwise would not have.

It may seem like this development is in the middle of nowhere now, but much more residential development is coming in that part of town, and “we’ve got to start planning for that,” Shaw said.

Part of the tax incentive agreement includes the annexation of about 5.5 acres of the grocery store property, and it’s good for Hoover to get its foothold of commercial property that will generate revenue in that that corridor, Shaw said.

Councilman Curt Posey said this store will be the closest grocery store for the current and future residents of the Blackridge development, as well as the 2,000 residential units planned on the south side of Morgan Road.

Councilman John Lyda said only a small percentage of the businesses seeking tax incentives get their proposal submitted to the council for consideration. “Every grocer that comes knocking on the door of the city of Hoover does not get an incentive,” Lyda said.

The economic development office, in conjunction with the mayor and city manager, carefully review the requests to figure out which ones are worthy to be considered, he said.

TRAFFIC IMPROVEMENTS

Knighton said it’s also worth noting that the developer is making road and sewer improvements that otherwise would not happen.

Traffic engineers from Skipper Consulting hired by the developer said the developer is adding a new southbound left-turn lane leading from South Shades Crest Road to Morgan Road and making adjustments to the traffic light that should cut the southbound wait time at that intersection in half.

The developer also is realigning South Shades Crest Road a little to make it a smoother intersection, adding right- and left-turn lanes on Morgan Road and installing a sewer pump station in the area. Those road improvements likely will be done before Jefferson County widens Morgan Road in that area, engineer Scott Skipper said.

Councilman John Greene was the only councilman to vote against the tax rebate. Greene said he understands that tax incentives sometimes are a good idea to stimulate economic activity, but he doesn’t think this is one of those times.

He’s concerned the grocery store might make traffic problems in that area of town worse and concerned about the city’s ability to reach that area with police and fire protection.

Fire Battalion Chief Mark Thornton said it takes the Fire Department about eight minutes to get to that area from the nearest Hoover fire station. Hoover has an automatic aid agreement with the Helena Fire Department, which will respond to a call in that area if available, Thornton said. Helena’s nearest fire station is three to four minutes away, he said.

Councilman Casey Middlebrooks was absent from the meeting but said he would have voted against the tax rebate because he believes more infrastructure improvements should be completed in that area before more development takes place. He previously voted against pre-zoning the property for the grocery store use.

In other business Monday, the Hoover City Council:

  • Withdrew a proposed ordinance to allow and regulate short-term rental properties in residential areas, such as the rental of homes on websites such as airbnb.com. Posey said he wants to survey residents to get a better feel of whether the community supports the idea.
  • Agreed to lease city-owned property at Hoover Sports Park Central that now contains a cell tower so a new company can either use the existing 80-foot tower or build a taller one, not to exceed 120 feet.
  • Declared property at 1209 Kingston Drive to be a nuisance due to high grass and/or weeds and agreed to cut high weeds and/or grass at 905 Shady Brook Circle, 3555 Atdoann Drive and 1858 Burning Tree Circle and bill the owners for the service.
  • Announced the potential annexation of properties at 4273 South Shades Crest Road, 3461 Ridgecrest Drive, 2869 Georgetown Drive and 1856 Buttercup Drive, with votes to be taken on July 15.
  • Set public hearings for July 15 to create two new zoning classifications: 1) a planned development district to be used as a placeholder for land expected to be developed as a planned urban development but for which no specific plans have been drawn, and 2)a special use district for institutional, recreational and cultural uses.
  • Set a public hearing for July 15 to consider an amendment to allow people with swimming pools to put their pool mechanical equipment with other mechanical equipment.
  • Set a public hearing for July 15 to consider an amendment to sign regulations to allow businesses to put signs on the sides or back of buildings as long as the signs don’t face residential zones and to split up allotted sign space among more than one sign.

This article was updated at 3:52 p.m. with information that Councilman Casey Middlebrooks was absent from the meeting but said he would have voted against the tax rebate had he been there.