The Fort Payne City Council voted 3-2 Tuesday to approve a memorandum of understanding with Marathon Realty Corp to spend $3.1 million toward the cost of constructing a Food City grocery store at 1015 Gault Avenue South.
Voting in favor of the memorandum were Council President Walter Watson, Council Pro Tem Lynn Brewer and Council member Phillip Smith. Voting against were Council members John Smith and Johnny Eberhart. Mayor Brian Baine, a longtime employee of Bruce’s Foodland, said he opposed the deal but does not get a vote because of the way the Council operates.
The deal advances to the Circuit Court for review, which should be completed within 45-60 days. Foodland founder Shan Bruce said after the meeting that his family would not stop fighting the plan, which he feels is unfair by essentially giving Food City a “$3 million head start” against him.
Bruce said he would welcome a competitor if it came to Fort Payne entirely on its own dime, but there are many other needs better suited for tax dollars.
A standing room only crowd filled the Council Chambers and spilled over into the hallway. Several people spoke in opposition to the memorandum and in support of the Bruce family, which operates competitor Bruce’s Foodland, or Bobby Ledbetter, whose car dealership will be forced to relocate from the property, which is leased to him by Drinkard Development.
Among those speaking against the memorandum were Eric Bruce, Jerry Clifton, Melanie Miller, Jack Davidson, Lotha Kilgore, Craig Ford, Lowell Barron, Tommy Lee, Lee Buffington, Andy White, Tom Norquist, and Steve Eberhart.
Watson acknowledged that the Bruces and Ledbetter are great corporate citizens — donating to many community causes over the years — but he said the Council studied the proposed development for a couple of years and he supported it because he believes the deal will transform 10 acres of land that cannot be developed due to being in the flood plain into a retail anchor for economic development that will generate enough sales tax to help maintain the level of city services that citizens expect.
Watson also said the city doesn’t control who Drinkard leases that land to and the developer will press forward with something else requiring Ledbetter to re-locate, regardless of whether they vote for or against the memorandum.
Before voting, Brewer said she understood the position of critics because she had herself voted against her own self-interest on past economic development packages that brought in competition for her own restaurant/bar.
Eric Bruce told the Council the fact that Food City agreed to a $3 million deal after its $7 million package was rejected should “raise red flags” and he claimed that the store will not bring new shoppers to Fort Payne but merely dilute existing sales by Foodland, Wal-Mart, United Grocery outlet, Priceless IGA and Dollar General. He called Food City’s revenue projects “far fetched.” He said the failure of Winn-Dixie’s store in Rainsville showed that simply building a pretty new store is no guarantee of success and disputed the company’s projected payback period of 6.95 years.
Presenting the proposal was Stephen Spangler, vice president of real estate and site development for K-VA-T (Food City’s parent company). He gave an overview of the organization, headquartered in Abingdon, Va. that operates 129 stores throughout southeast Kentucky, southwest Virginia, east Tennessee, Chattanooga and north Georgia. He explained that Marathon Realty is a K-VA-T subsidiary.
He provided data from similar projects recently completed and said the Albertville store makes a good example of what to expect in a roughly 5,000-square-foot Fort Payne store and gas station. They will spend $400,000 on a flood study and likely raise the 52,000 square foot property by three feet.
Spangler presented figures projecting Food City will generate $313,040 in new sales taxes while $414,960 is expected to transfer from other grocery stores.
In year one, they project gross sales of $18.2 million, with 43% of that expected to come from people who are not presently shopping for groceries in Fort Payne. About 60% of business is expected to come from inside Fort Payne while 14% is expected form residents of Rainsville and Fyffe. They look for Collinsville residents to provide 7% of sales and 13% of business to come from customers living in Henagar, Valley Head and Mentone. Adamsburg residents are expected to make up 10% of the shoppers.
A Starbucks coffee kiosk is expected to generate $624,000 in sales and $24,960 in new taxes. The estimated total net new tax revenues are projected at $446,300, these figures discounted 25% from the average performance from their existing Alabama locations to provide conservative estimates.
Spangler said Fort Payne’s investment of $3.1 million represents 20.4% of the project cost, returned within about 290 days with 140 jobs providing a weekly payroll of $55,000 or $2,860,000 annually.
Under the memorandum, the City will pay $1.2 million upon the beginning of excavation. Another million will be paid if Food City opens its doors for operation of business to the public within 12 months. A final payment of $900,000 will be due upon the one-year anniversary of opening. Money would have to be returned to the City, with 2.5% interest, if the developer fails to live up to its end.
Chik-Fil-A is one recent example of a company that reached an arrangement to expand into Fort Payne. Elsewhere in North Alabama, Scottsboro worked with a different developer to attract a Publix grocery store and there are plans to add a TJ Maxx store there as well. Food City opened a store in Albertville, anchoring development along Highway 431 that has attracted other retailers like Hibbett Sports, Hobby Lobby, PetSmart, and TJ Maxx.
Look for more details shared in Saturday’s print edition of The Times-Journal.