The first public discussion of a proposed full-service grocery store to locate at the end cap of the old Sears property came Tuesday, when Gadsden Commercial Development Authority Director Lesa Osborn asked the City Council to authorize a public hearing April 19.
The proposed development would bring a Food City grocery store to the property. It will be a $14,440,000 investment; Food Stores Inc., of Virginia, is asking the council for a tax abatement of 2% of the city’s 5% sales tax proceeds for 15 years, or a total of $6,738,160, whichever comes first.
The proposed public hearing would be at 11 a.m. during the Gadsden City Council’s regular meeting on April 19. The council did not consider the resolution Tuesday; it would have to pass the resolution in time to advertise the public hearing next month.
Osborn said Food City would be the only full-service grocery store in Gadsden, offering a pharmacy, floral department and possibly a bank. With the grocery store, there will be a gas station, located behind the Longhorn Steakhouse property, she told council members.
The store will be comparable to a Publix or Winn-Dixie, Osborn explained.
The nearest Food City location — the only other one in Alabama, for that matter, according to the company’s website — is in Albertville, at the intersection of U.S. Highway 431 and Alabama Highway 75.
Food City stores also are located in Georgia, Kentucky, Tennessee and Virginia. There are a total of 132 in the chain, and according to Zoominfo the company has an average revenue of $2 billion.
While this is the first public disclosure about the project, it’s been in the works a while. Osborn said she’d been working on the deal for about 18 months. She said council member heard a proposal about what the store would offer Gadsden.
The almost $15 million investment would bring a 52,000-square-foot grocery store to the Gadsden Mall.
According to the proposed resolution, Food City is expected to employ “the equivalent of at least 145 employees” — 105 of them full time, 40 part time — and to maintain that level of employment for the term of the agreement.
Osborn said the company initially talked about leasing the property, but determined instead that it wanted to buy the building property and part of the parking lot property.
“That’s good,” she said. “They’ll be there 30 years.”
The proposed deal’s terms are allowed under Alabama’s Amendment 772, which was passed in 2004, and gives local governments greater flexibility as far as incentive packages to lure retail businesses to expand or locate in their areas.
According to alabamaretail.org, it gives municipalities “the power to use public funds to purchase, improve, develop or lease real property in favor of private businesses or to convey such property to private businesses and to lend credit or issue bonds to support economic development projects on behalf of private businesses.”
Rebating sales taxes to developers or retainers is a common move under the amendment, according to the website.
The amendment does, however, require “public notification of the project, a certain amount of time to lapse and a subsequent public hearing by the governmental authority explaining the parameters of the project and the economic incentives involved” before an agreement can be finalized.
Osborn said some cities just pay for a company’s investment up front; that’s not within Gadsden’s development policies. She said the city has lost potential developments because the companies involved asked too much.
“We’re in no way funding their $15 million investment,” she said.
Council member Jason Wilson asked Osborn to discuss the process for landing commercial developments: “You don’t go to them and say, ‘We want to give you $6 million,'” he prompted.
Osborn said the developers brought the plan to the city, requesting a tax abatement they knew could be granted under Amendment 772.
“I don’t tell people we do that,” she said. “They love doing business in Alabama because of Amendment 772.”
Osborn related that one commercial business that located in Gadsden in recent years asked after the fact why it did not get a tax abatement. “You didn’t ask,” she replied.
She noted the new businesses at the Gadsden Mall — The Alley, Tre Ragazzi’s and Martin’s. “Malls are changing. Some are dying, some are already dead,” she said.
“This is going to help save the mall,” Osborn said.
Food City has done studies, she explained, about the increase in foot traffic when their stores go into a mall setting.
She said the company has a reputation as a good corporate citizen — a company that gives back to the community.