In consecutive years, the Foley Community Development Department set records for issuing building permits for single-family and multi-family developments in the city. And, those numbers are continuing to spike five months into the new 2021-22 fiscal year.
“The Planning Commission has approved several site plans for multi-family but few of the new approvals have actually started construction,” Community Development Director Miriam Boone said. “We are in an Opportunity Zone which may be a driver of this use.”
Foley is on the traditional fiscal budget year of Oct. 1-Sept. 30 and counts statistics during that 12-month period. Because of the strong tourist economy in the coastal cities of Gulf Shores and Orange Beach, those cities use the normal calendar year of Jan. 1-Dec. 31 as their budget years.
In FY 2019-20, Foley issued 571 permits for single-family homes with a valuation of $106.6 million and 37 for multi-family complexes for a total valuation of $6 million and added 60 new units to the housing inventory. Foley issued 19 permits for new commercial construction in FY 2019-20 worth $19.5 million and among those were Buffalo Wild Wings and a Dollar General.
The largest single project permitted in FY 2019-20 was for the new indoor waterpark at OWA with a valuation of $11.6 million.
In FY 2020-21, Foley set the record again with 625 single-family permits with a valuation of $119.8 million and issued 40 for multi-family construction at a valuation of $18.8 million and added 200 units to the housing inventory. Only three new commercial permits were issued with a valuation of $3.3 million with the big one being the new Aldi grocery store valued at $2.6 million.
Opportunity Zones present a tax incentive program developed by IRS to stimulate growth in distressed areas by encouraging investors to back projects in these areas.
“It is designed to incentivize private investors to take capital gains and reinvest those capital gains to certain designated low-income places across the U.S.,” Alex Flachsbart, founder of the nonprofit Opportunity Alabama said. “Obviously, Mobile and Baldwin County have some of those designated places. It is designed to attract a new class of investor that is willing to invest in underrepresented markets and is patient with their capital.”
Investment with funds subject to the capital gains tax would allow the investor to avoid paying that tax until 2026 if it is used in an Opportunity Zone. Additionally, the investor would also get a 10 percent reduction in what that capital gains tax would be.
So far, this fiscal year, the high numbers continue. January had only 29 permits but several staffers in the building department tested positive for COVID and many missed work recovering. Permits rebounded in February with 87 for single-family homes.
OCTOBER 50 single family, $10.2 million, 2 multi-family at $282,000 four units, no new commercial
NOVEMBER, 26 single-family $4.8 million, no multi-family permits, no new commercial
DECEMBER, 32 single-family at $7.1 million, 16 multi-family with 88 units at $16.1 million, 2 commercial at $605,000.
JANUARY, 29 single-family at $5.9 million, no multi-family, 2 commercial at $420,000
FEBRUARY 87 single-family $21.6 million, no multi-family permits, 4 new commercial permits at $3.3 million.
TOTAL OCTOBER-FEBRUARY FY 2021-22
192 single family
4 new commercial