Orange Beach Resort may bring windfall to City in the form of Development Fees

Originally Published by the Mobile Press Register

Link: http://www.al.com/news/press-register/baldwin.ssf?/base/news/1247735786115190.xml&coll=3

Thursday, July 16, 2009
By RYAN DEZEMBER
Staff Reporter
ORANGE BEACH — Should the proposed Wyndham & Winfield Resort Hotel and Convention Center win approval from the City Council and financing from lenders, the impact fees its developers would pay could, at the least, double all of last year's collections, municipal officials said this week.

In fact, regardless of whether the fees for the Gulf-front resort are near city officials' low estimate of $1.2 million or closer to their high-end guess of $2 million, Orange Beach's take would exceed the $822,026.54 in impact fees assessed by Orange Beach since late 2006, when collections began.

In early 2006, state legislators approved a law allowing Baldwin County and its municipalities to collect fees of up to 1 percent of a project's fair market value on all new construction, provided the money is spent on pacing services — such as fire and police protection — with growth.


The law was passed, in part, as a reaction to the explosive growth taking place on Baldwin's beaches, and it enabled local governments to tax new development, be it a single-family home, shopping center or condo tower, in a formulaic and equitable manner. Prior to that, Orange Beach asked developers of projects that exceeded what was allowed by local zoning laws to provide "public benefits," which ranged from donated parkland to millions in cash.

A Baldwin County grand jury that indicted the city's then mayor, Steve Russo, and its city attorney, Larry Sutley, issued a report calling that "public benefits" system ripe for abuse and urged state lawmakers to approve an impact fee system.

While the amount the city can charge developments is now clearly defined, some projects, such at the Coral Reef condominium plans that the Wyndham & Winfield Resort would replace, carry obligations developers committed to years ago. In the case of Coral Reef, a 30-story tower that never came out of the ground, the "public benefits" package was $4 million that city officials had said would be used to bury power lines along Ala. 182.

During a City Council work session Tuesday, elected officials said they don't plan to hold the hotel's developers, led by Mobile businessman K.C. Chiang, to that $4 million commitment. Instead, the developers will be assessed an impact fee, said Mayor Tony Kennon.

"It's a totally new project, it's a lot better overall presentation and a better building," Kennon said. "The grand jury suggested we get away from public benefits and this is a great opportunity to do that."

Kennon said that Chiang, who was not among the Coral Reef developers, wasn't initially aware of the $4 million commitment and had he been, he could have simply filed a new zoning application, thus eliminating the

$4 million commitment, rather than asking to amend the standing plans.

Kit Alexander, director of the city environmental and engineering department, said 1 percent of the value of the twin-tower hotel resort Chiang has proposed will likely fall somewhere between $1.2 million and $2 million.

Even at the low end, that would be a windfall considering Orange Beach collected only $426,837.39 in impact fees all last year.

More than 85 percent of that total came from the developers of four projects, according to Finance Director Clara Myers. Those developments are:

The five-story Marriott Fairfield Inn & Suites on Loop Road. Developers of that 116-room hotel paid $129,930.

Columbia Southern University's new headquarters on the Foley Beach Express, which carried an impact fee of $91,295.72.

Perdido Dunes Tower. An impact fee of $85,600 was charged for the 10-story, 20-unit condominium tower.

A building on the western side of The Shoppes at Palm Pointe, for which a fee of $57,858.10 was assessed.

The remainder came from small projects, like single-family homes and duplexes.