Analysis

Anniston's City Council has seen what it looks like across the bridge in Oxford.

Retail continues to grow, though it has been slowed by a bad economy.

The Oxford Exchange, an outdoor mall loaded with big-name retailers, is a giant cash register filling the city's bank account with tax money.

One of the keys to the city's development has been its Commercial Development Authority board, a tool the city uses to lure developers by offering up taxpayer money and assets as incentives.

At its regular meeting Oct. 27, Anniston's council decided to emulate that success, voting 3-2 in favor of creating a CDA board of its own. In addition, the council decided to help fund it by setting aside any new money earned from changing the city's business license fees. Council members say it could be up and running by this summer.

It is not the first time the city has offered incentives to developers. It is an open question whether the city wants a board that operates the way Oxford's does, even if city leaders want the same results.

Council members who voted in favor of a CDA said they will create a board that operates transparently. While the success of Oxford's CDA is undeniable, its members don't give media interviews. There are multiple connections between the board, its actions and Oxford Mayor Leon Smith.

Under state law, a CDA can give out contracts to the companies it chooses without giving other companies the opportunity to bid for board-sponsored work.

Before changes in state law, cities had to use CDAs because a public body giving a private entity anything of value was considered unconstitutional. But cities no longer need to use CDAs; there is a constitutional amendment giving city governments powers that mimic this kind of board. They would, however, have to have follow Alabama's competitive bid law, according to Alabama League of Municipalities assistant general counsel Tracy Roberts.

Anniston should know. As recently as October, the city considered what officials called a "special project development agreement" to pay for improvements to the Greenbrier Shopping Center as a lure for business. The council approved the agreement in November, and it will be reviewed in Calhoun County Circuit Court on Dec. 29 to give residents an opportunity to voice any concerns, according to Finance Director Danny McCullars. Under the agreement, the city would refund the development costs for the project to the developer from new sales taxes generated by the project.

In 2007, the City Council voted unanimously to approve a similar incentives package meant to spur development at the vacant Food World site on South Quintard Avenue. A company owned by developer Stan Pate would receive all sales tax revenues at the site up to $2.5 million.

The store remains empty, but the city's ability to offer incentives without a CDA is clear.

Across the bridge

Oxford's success didn't come cheaply. Since 1994, the board has awarded nearly $9 million in no-bid contracts for development incentives —some of which was provided by the city's taxpayers.

The result? The Oxford Exchange and the Wal-Mart Supercenter, projects whose annual revenue easily dwarfs what the city put into the project, Oxford City Finance Director Alton Craft has said.

That means more money for schools, roads and other basic city services. The five-member CDA board is appointed by the City Council. Three of them have political ties to Mayor Smith, they or their employers having contributed to his campaigns.

Attempts by The Star to interview Oxford CDA board members have been unsuccessful. A no-bid CDA contract went to a contributor and personal friend of Smith, Tommy Taylor. Taylor received the $2.6 million contract to develop property for a new Sam's Club near the Oxford Exchange.

Attempts to reach Taylor also have been unsuccessful. Smith has said he sees nothing wrong with these connections. Officials with the Alabama Ethics Commission and the Alabama League of Municipalities said there is no overt conflict of interest in these arrangements. Hugh Evans, general counsel for the Alabama Ethics Commission, has said they could be ethics violations, but there would have to be direct evidence of quid-pro-quo relationships.

Even so, they gave one Anniston councilman second thoughts when he was asked to approve the creation of the Anniston CDA.

"There's some things there that came into question," said Councilman Herbert Palmore, who voted against creating an Anniston CDA. "…We just have to be absolutely correct in what we do. So I had to pause on it."

Other deals

The other "no" vote, Councilman Ben Little, said he too had concerns about Oxford's board. He also said the city has spent considerable resources doing this type of thing without a CDA.

In 2007, for example, the city hired the Buxton Company for approximately $75,000 to do a retail assessment for the city. City Planner Toby Bennington, who is helping the city create the CDA, said he wants the council to hire the Economic and Community Development Institute at Auburn University.

Bennington said that would cost between $15,000 and $20,000. Mike Easterwood, senior research associate with the institute, said much of the work it would do for the CDA involves creating a commercial and retail development strategic plan.

"We paid $75,000 for the Buxton study," Little said, explaining why he voted against the idea. "To reinvent the wheel is totally a waste of time and money to me. We've already plowed the ground. Now we need to plant some seeds and watch it grow."

The Food World deal also involved a promise of taxpayer money for results, but they are nowhere to be found. Former Anniston Mayor Chip Howell was in office when the deal was approved. He said the developer behind that deal, Pate, tried to lure businesses to the old Food World site, but those businesses ultimately went to Oxford.

Howell noted another deal the city used to lure development that was successful. He said the city relocated Bill Robison Parkway for the development of the Wal-Mart Supercenter.

"The costs involved were guaranteed by increased sales at Wal-Mart," he said. "If the sales did not track to show increased tax income, then they would pay the difference."

When asked if a CDA would work for Anniston, Howell declined to comment.

Taking shape

Easterwood said the proposed Anniston CDA would take on whatever shape the City Council gives it. He said the Auburn study would make recommendations.

The three councilmen who supported it — John Spain, David Dawson and Mayor Gene Robinson —favor a board that will move in the open. But they are not all in agreement about whether the board would hand out no-bid contracts.

They declined to comment about whether the actions of the Oxford CDA concern them the same way they concern Little and Palmore, saying that's Oxford's business.

"I do believe part of the issues associated with the CDA in Oxford can certainly be avoided by Anniston and well we should," Spain said, without going into specifics.

Easterwood said no-bid contracts would be something the city would have to discuss and said it would inevitably be controversial.

Robinson said the CDA would absolutely not give out these kinds of contracts.

"I'm real firm on that," he said. "It's part of checks and balances … The mayor stands against that. We are going to bid out contracts. We are going to be above board at all times, for the city, for our citizens."

Dawson and Spain weren't so committed to a ban on no-bid contracts.

"I wouldn't want to say no to that because it certainly might be in our best business interest to be able to do that, but I would say that we should be as transparent as possible," Spain said. "I am big on transparency."

Dawson said he, too, envisions a CDA board with wiggle room.

"There are certain instances and they would have to fall in a very narrow range for no-bid contracts to be issued," he said. "Would I be upset if we didn't do no-bid contracts? No, I wouldn't be upset about it. If that became a sticking point, I would go with no no-bid contracts. I'm very afraid of that."

The council must decide on other details before it can move forward. For instance, who would serve on the board?

Easterwood said such boards are typically made up of business people. Spain, Dawson and Robinson see a board as a cross-section of the community representing different interests.

Would the CDA invest in property preparation costs like Oxford, or would it give businesses tax breaks like similar boards around the state?

Easterwood said that's up to the city. Spain said both. Robinson did not know. Dawson said it should start by giving tax breaks, but should consider site preparation for special projects.

Would the city promise to pay back the money borrowed by its CDA? Cities are not legally obligated to do this under state law, but Oxford has done it. The risk is putting the taxpayers on the hook for a project that falls through, as was the case with a planned CDA project in Oxford.

Easterwood said that's also a decision for the city. Robinson and Spain anticipate the city will follow Oxford's lead there as well. Dawson said that would have to be decided on a case-by-case basis.

Is it right for Anniston?

Why does Anniston need a CDA when the constitution gives it the ability to offer up business incentives on its own?

Easterwood said it would zero-in on the commercial development of Anniston.

"Cities have a very broad list of things on their agenda," he said, "but an authority would let you have focus."

Spain said the city would have economic and legal advantages with a CDA. Dawson said it was one of Robinson's stated goals when he took office.

"I think having a CDA not controlled by the City Council — we control them by policy — I think that helps a bit; it takes some of the politics out of some development," Dawson said.

Bennington, the city planner, said Anniston's CDA would likely have a full-time staff person, a professional dedicated to bringing business to the city.

"A CDA will get more involved in detail in marketing and promotion for economic development," he said.

Robinson said he is confident a CDA will pep up Anniston's sagging commercial prospects.

"Anybody with any kind of mind or any kind of 20/20 eyesight knows our city has to have development in retail and industry, and by golly we're going to do it," he said, adding later, "In my mind, a CDA … is going to be exactly what the doctor ordered to get the city healthy again."