Conference center, hotel proposed in Gulf Shores

Originally Published by the Mobile Press Register

Developers ask city for tax concessions to help finance project

Wednesday, August 06, 2008

By RYAN DEZEMBERStaff Reporter

GULF SHORES — Developers want to build a hotel and conference center on Alabama 59 and they're asking the City Council for help.

A company called IDC Development LLC has proposed a partnership with the city that could lead to the construction of an 87-unit MainStay Suites hotel with 14,000 square feet of meeting space and nearly 30,000 square feet of retail area near the northern edge of Gulf Shores.
To help finance the project, the developers want the city to share with them half of the 3 percent municipal sales and lodgings taxes generated by the project for 20 years. IDC has also asked for the ability to levy an extra 3 percent sales tax and 5 percent lodgings tax on its property, according to a proposal the council is considering.

That money would be used to repay up to $15 million in bonds that the developers would issue to pay for the conference center and basic improvements to their property like roads, lights and sewers, said Jimmy Grantham, a local Realtor who represents IDC.
IDC Development LLC was registered in early 2005 to Grantham and a Birmingham man named Richard Benson, Alabama Secretary of State records show.

The rest of the project, including the MainStay Suites and the retail space, would be built using the developers' private money, Grantham told city officials Monday.
Grantham said that in addition to seeking special tax status from the city, the developers are negotiating with the state finance department to secure financing through the federal Gulf Opportunity Zone Act, or GO Zone, which would make the bonds tax exempt.

The development is proposed for an 8-acre site on the east side of Alabama 59, between Baldwin County highways 6 and 8, which was formerly occupied by a funeral home. The Academy of Arts and Sciences sits to the north and the Island Enclosures showroom is to the south.
Plans show the four-story hotel at the rear of the property, with the road leading off Alabama 59 flanked by four single-story retail buildings.
Any revenue-sharing agreement would have to first be approved by the council and then cleared by a Circuit Court judge.

"It's quite a long process and we're wanting to get it under construction as soon as possible so we can make the next meeting season," Grantham said. "The conference season starts in the fall generally and we'd like to be ready next fall for the meetings."

As such, the Realtor asked the council to endorse the basic terms of the agreement so that Gulf Shores lawyers can start drafting the official documents in the deal. The council will consider such a resolution at its Monday meeting.

Mayor G.W. "Billy" Duke III, who said he considers even a reduced tax haul new money, said there's no harm in letting the lawyers look at the pact.

"I think everyone here knows the importance of meeting facilities and the hotels that go with it," Duke said. "There's absolutely no risk involved in this decision."
As part of the deal the developers are required to put $15 million in escrow to ensure the bonds are paid off if the project goes belly up.

Grantham said the developers tried to simply buy a letter of credit in that amount, but "in today's banking climate that just don't work." Instead, the developers have deposited $15 million with the bank that will vouch for their credit.