Northport Council Approves Submitting Application For University Beach State Tax Rebates

NORTHPORT, AL — The Northport City Council on Monday voted 3-2 to approve sending an application for University Beach developers to obtain state tax rebates from the state of Alabama.

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District 4 Councilwoman Jamie Dykes and District 5's Anwar Aiken were consistent in their longstanding opposition to the project and once again voted against it.

City Attorney Ron Davis said the application would seek rebates under the Sweet Home Alabama Tourism Act and will be reviewed by the Alabama Tourism Advisory Board.

"Specifically in the resolution, there's a provision stating that this resolution does not add anything, any obligation on the City of Northport or to the developer, other than what was agreed to a year ago, last February ... under the project development agreement," Davis explained.

ALSO READ: Northport Lawmaker Airs Concerns About University Beach As Developers Seek State Tax Rebates

Texas developer Kent Donahue was then asked by District 3 Councilman Karl Wiggins about the goal of the application and what they hoped to gain from it.

"The grant is really an opportunity for any megaprojects over $75 million of private investment to recapture a portion of that through $1 million a year for a period of up to 10 years, with it capped at $5 million," Donahue responded. "So really it's going to go for infrastructure costs, primarily upgraded landscaping, boardwalks, etc., that are already planned in the project."

He also reiterated that these rebates would come from the state of Alabama, not from Northport, and only after the development is fully built. Donahue also said that over the term of the development agreement, the state is expected to make over $500 million in sales and lodging taxes.

Donahue then addressed some confusion regarding the budget for the project, with Dykes asking about an impact study that said the current budget was $192 million.

Donahue pointed out that this was the budget for the first phase and said a separate impact study would be conducted for the second phase of the massive project.

Following the vote on the application, the City Council also voted 3-2 on the final assessments of approximately 80 acres within the University Beach Improvement District.

Davis pointed out that the assessment on the property does not obligate the city to commit any additional funding, nor does it release the developers from any of the obligations set out in the original partnership agreement.

During the public hearing for the measure, Dykes asked Donahue who would be responsible for covering the construction costs of the phase one hotel.

As Patch previously reported, Marriott Autograph Collection was announced as the hotel partner for the project, with the contract awarded to Harrison Construction.

Donahue said the developers would cover the cost and then addressed certain parts of the project's budget, which would include a $5 million development fee for overseeing the construction of the project.

ALSO READ: COLUMN | More Red Flags At University Beach

Another budget item that spurred confusion during the meeting was a sum of $14 million, which Donahue speculated was likely for contingency costs, before acknowledging that developers typically run a 10% contingency on such projects.

Lastly, Donahue was again asked about the application submitted to the state for tax rebates, with Dykes wondering if he had applied for the total $350 million budget of the project or the $192 million budgeted for phase one.

Donahue explained that the total submitted for the application came in at $210 million due to adding new beach homes to the plans.

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