Attorney Robert Gilpin informed the council at a work session Tuesday that he has not reached an agreement with Retail Specialists since they began working on a contract in January.
Gilpin said the Birmingham-based developer is unable to secure an incentive to give the city the first lien for the length of the project and also has some other minor concerns.
“I told them that, in my opinion, not having the lien was a substantial problem,” Gilpin said. “I was hired to protect the city. If you don’t have some security interest with respect to the money you’re putting into the project, you’re not protected.”
Having the first lien on the project means the developer would guarantee payments to the city in the event that the project does not generate the projected sales tax. Gilpin said the proposed lien covers the entire project, including outparcels, and should not be a disadvantage to the developer.
“The lien was reduced by every dollar of sales tax generated,” Gilpin said. “It’s about as favorable of a protection as I can see a way to give them.”
Gilpin said Retail Specialists initially gave no indication that the first lien was a condition it could not meet. After sending a proposed agreement in February, Gilpin said he received “what was essentially a new proposal from Retail Specialists” in April.
“I don’t think they have been unwilling to do it,” Gilpin said. “I just think they are unwilling to do it in a way that protects (the city).”
Gilpin advised the council that it should not put the city at risk of losing money.
“You don’t want to be in the position where you’re taking the risk of construction, where you take the risk of the center going dark and there is no sales tax revenue generated,” he said.
Councilman Doug Murphree said there are still too many unanswered questions for the city to continue the development.
“Most of the things they are telling us they’re going to move in are businesses that already exist, and if they’re going to treat that like new money, then we’re not gaining a lot,” Murphree said.
“I’m not willing to put this city out on a limb to take a chance on losing all of our
Councilman Ken Horn said the city is putting out too much money for the lack of progress.
“We’re putting $4 million into the infrastructure; we’re giving them $3 million-worth of land; we’re going to have a note that the $4 million is actually going to turn into $10 million when you figure in interest,” Horn said. “We’re putting basically $13 million in there. Either do something or we’ll forget it.”
Mayor Sam Wright said the council is “frustrated” with the project.
“We feel like we’ve been very outgoing trying to make the project work, and we’ve taken every step we could,” Wright said. “We would like to do something, but other people have responsibilities, and we’re not coming down on Retail Specialists. We’re just sorry we couldn’t reach an agreement. We felt like we needed to know something now and either move forward or not. If they were to come back later, I think the council would be receptive.”
The council decided to vote on the issue at its next meeting on June 6 at 9 a.m. It will vote on terminating the development project and terminating Retail Specialists as the listing agent for the 33-acre property.
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