Upscale Mall Deal Gets Judge's Consent
Tuesday, November 22, 2005
By RYAN DEZEMBER Staff Reporter
FOLEY -- Baldwin County Circuit Judge Robert Wilters approved a deal Monday between Gulf Shores and Colonial Properties Trust in which the Birmingham-based development firm will build an upscale mall on 42 acres that it will sell to the city, then lease back.
With Wilters' consent, a $10 million agreement two years in the making is finalized and money can begin changing hands. Meanwhile, construction of the 270,000-square-foot mall, called Colonial Pinnacle at Craft Farms, continues along Alabama 59 just north of the highways intersection with Baldwin County 4.
A 14-screen Cobb Theatre opened there this summer and construction has begun on a Target store at the northern edge of the property. Paul Glascock, who's heading the project for Colonial, said Monday following the judges ruling that the Target should open in July and the mall is expected to be finished in October.
The judge's decision came at the conclusion of a 45-minute bond validation hearing, in which Gulf Shores tested the legality of its pact with Colonial Properties Trust by suing itself. State law requires such a review before public-private partnerships are finalized in order to make certain constitutional guidelines are met, public funds are secure and to ensure solid legal footing so deals can't later be disrupted through court challenges.
Under oath, Mayor G.W. Billy Duke III said the development of Colonial Pinnacle will bring Gulf Shores numerous benefits, including a retail base away from the beach which will give residents a place to shop soon after storms and a tax revenue stream to the city when Gulf-front businesses are shuttered or storm-damaged.
This is something the city's very interested in having, Duke said. It will provide a year-round tax base for the city of Gulf Shores, which the city currently struggles with.
The mayor also said the upscale mall, which will serve as a northern gateway into the community, will add jobs and have the potential to spur more commercial and residential development north of the Intracoastal Waterway.
According to the deal:
Gulf Shores, using $10 million raised in a bond issue, will buy 42 acres of 66 the developer bought in 2004, initially paying half and giving the remainder once the land reaches an appraised value of $40 million.
In two years, or once the mall is completed, Gulf Shores will lease the property back to the firm for 30 years. Rent the first eight years will be the difference between the sales and use taxes generated by the retail center and the city's annual bond debt, which climbs from $1.2 million the first year to about $1.7 million the final year.
Once the city's debt is repaid, the land will be leased to Colonial for $10,000 a year. The lease may be extended by the firm for up to 60 years.
Colonial may buy the property back from Gulf Shores for $400,000 plus whatever debt remains from the bond issue.
The firm will make payments to Gulf Shores equal to whatever the mall's property tax bill would have been had the public not owned the land.
During the hearing, Baldwin County District Attorney David Whetstone asked Duke whether taxpayers would benefit in the deal without being vulnerable to financial loss.
Do you see any risk that the city taxpayers may have on this? Whetstone asked.
No, sir, Duke replied.
Whetstone said his office received no complaints from Gulf Shores residents prior to the hearing and none answered Wilters' call for citizen comments during the hearing. Before ruling, Wilters asked only about the land's current value.
Mike Quillen, the city's attorney, said that while the $10 million equals the amount the real estate trust paid when it bought all 66 acres from City Councilman Robert Craft -- who was not yet in office at the time of the sale -- the movie theater, which cost $6 million to build, sits on the 42 acres. And since Gulf Shores will pay only $5 million until the lands value reaches $40 million, the city will never pay more than the property is worth, Quillen said
By RYAN DEZEMBER Staff Reporter
FOLEY -- Baldwin County Circuit Judge Robert Wilters approved a deal Monday between Gulf Shores and Colonial Properties Trust in which the Birmingham-based development firm will build an upscale mall on 42 acres that it will sell to the city, then lease back.
With Wilters' consent, a $10 million agreement two years in the making is finalized and money can begin changing hands. Meanwhile, construction of the 270,000-square-foot mall, called Colonial Pinnacle at Craft Farms, continues along Alabama 59 just north of the highways intersection with Baldwin County 4.
A 14-screen Cobb Theatre opened there this summer and construction has begun on a Target store at the northern edge of the property. Paul Glascock, who's heading the project for Colonial, said Monday following the judges ruling that the Target should open in July and the mall is expected to be finished in October.
The judge's decision came at the conclusion of a 45-minute bond validation hearing, in which Gulf Shores tested the legality of its pact with Colonial Properties Trust by suing itself. State law requires such a review before public-private partnerships are finalized in order to make certain constitutional guidelines are met, public funds are secure and to ensure solid legal footing so deals can't later be disrupted through court challenges.
Under oath, Mayor G.W. Billy Duke III said the development of Colonial Pinnacle will bring Gulf Shores numerous benefits, including a retail base away from the beach which will give residents a place to shop soon after storms and a tax revenue stream to the city when Gulf-front businesses are shuttered or storm-damaged.
This is something the city's very interested in having, Duke said. It will provide a year-round tax base for the city of Gulf Shores, which the city currently struggles with.
The mayor also said the upscale mall, which will serve as a northern gateway into the community, will add jobs and have the potential to spur more commercial and residential development north of the Intracoastal Waterway.
According to the deal:
Gulf Shores, using $10 million raised in a bond issue, will buy 42 acres of 66 the developer bought in 2004, initially paying half and giving the remainder once the land reaches an appraised value of $40 million.
In two years, or once the mall is completed, Gulf Shores will lease the property back to the firm for 30 years. Rent the first eight years will be the difference between the sales and use taxes generated by the retail center and the city's annual bond debt, which climbs from $1.2 million the first year to about $1.7 million the final year.
Once the city's debt is repaid, the land will be leased to Colonial for $10,000 a year. The lease may be extended by the firm for up to 60 years.
Colonial may buy the property back from Gulf Shores for $400,000 plus whatever debt remains from the bond issue.
The firm will make payments to Gulf Shores equal to whatever the mall's property tax bill would have been had the public not owned the land.
During the hearing, Baldwin County District Attorney David Whetstone asked Duke whether taxpayers would benefit in the deal without being vulnerable to financial loss.
Do you see any risk that the city taxpayers may have on this? Whetstone asked.
No, sir, Duke replied.
Whetstone said his office received no complaints from Gulf Shores residents prior to the hearing and none answered Wilters' call for citizen comments during the hearing. Before ruling, Wilters asked only about the land's current value.
Mike Quillen, the city's attorney, said that while the $10 million equals the amount the real estate trust paid when it bought all 66 acres from City Councilman Robert Craft -- who was not yet in office at the time of the sale -- the movie theater, which cost $6 million to build, sits on the 42 acres. And since Gulf Shores will pay only $5 million until the lands value reaches $40 million, the city will never pay more than the property is worth, Quillen said
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