Foley, Ala. – A new project that will bring four new businesses including a Mugshots Grill and Bar on the west side of State Route 59 near Tanger Outlets will utilize an economic development tool commonly used in Foley for new retail projects. Streamline Development Foley is the developer.
“They’re developing a property on highway 59 which sits between the Moyer Ford dealership and the Honey Baked Ham store,” Mayor Ralph Hellmich said. “It’s probably 10 acres. They’re developing four businesses there. I believe they have two of the four of them sold and one of is going to be a Mugshots and they are similar to Groovy Goat and Buffalo Wild Wings type of restaurant. They have another restaurant that they haven’t announced yet but it’s a national chain and they have two others that are tentative.”
On Feb. 7, the city council approved what’s called an economic development grant for SDP Foley where the businesses in the completed complex will be allowed to collect an extra one percent above the regular sales tax and it will be used to help defray costs of infrastructure. City money doesn’t actually go to the businesses and, in fact, the city also gets a percentage of the collected fees.
Terms of the agreement vary from project to project, Hellmich said, and Foley and the developer agree on how the fee will be split on a case-by-case basis. Projects in Foley currently using the fee include the Academy Sports Shopping Center, OWA Park and Resort, Tanger Outlets and the Publix shopping center, among others.
“The city will pass the fee through to the developer for so many years and it’s based on the payout for the development of the infrastructure,” Hellmich said.
Foley is experiencing growth in residential housing all over town but it has also developed major retail on State Route 59 both north and south of Tanger and is a popular shopping hub for South Baldwin County. Restaurants and stores are continuing to sprout and the parcel SDP Foley is developing is one of few vacant lots. The sales tax revenue is crucial to the city providing amenities to citizens, Hellmich said.
“These types of projects are important because sales tax is so important for cities,” Hellmich said. “It is 50 percent of our revenues and it’s utilized to provide the services for the citizens. Foley’s done quite a few of these over the years and in the past 15 years it’s basically a standard economic development tool allowed by the state constitution.”
Once the agreement is approved, it helps developers standing when the start looking for financing, Hellmich said.
“They use it in financing to help banks approve financing and to help with the development of the infrastructure, the turn-out lanes and the lighting and all that sort of stuff. It helps make project economic and the numbers balanced,” he said. “It’s an economic development project that allows the company to utilize some of the tax dollars that’s put on top of sales. In other words, you can’t use sales taxes so this is actually a fee – it’s not a tax it’s a fee – placed on top of the sales.”
To fund the administration cost of collecting and processing the fee, Foley receives one 10th of the extra one percent of every agreement.