City officials are now mulling a new tool to encourage business development or redevelopment in blighted areas of major highway corridors.
City Manager Kevin Cowper presented a plan for the Commercial Development Incentive Program to Dothan City Commissioners Tuesday. The plan offers rebates of sales tax collections to businesses who develop or redevelop some of the more downtrodden areas of certain corridors like Reeves Street, North and South Oates streets and Columbia Highway.
“If buildings are vacant, something is wrong,” Cowper said. “We need to examine the market and close the financing gap.”
In the program, applicants would present business plans and any suggested property improvements to the city. With the assistance of Grow Dothan, city leaders will determine the amount of sales tax rebates the project could be worth and make an offer.
If the parties reach an agreement, the applicant will sign a contract. Cowper said the program will offer up to half of the sales tax revenue the business generates for a period of time, many times 10 years.
The program requires businesses to invest in the properties first before the city issues the rebates. Also if the business fails to generate a certain amount of tax revenue, or shuts down, the city will reduce or cancel the rebates.
Since the program encourages new business, it generates more sales tax revenue sources – resulting in more money for the city, Cowper said.
“If you can bring a restaurant into a vacant building and generate sales tax revenue – even though you are rebating some of it – you are collecting new taxes, business license taxes, property taxes that you are not currently getting,” he said.
District 5 Commissioner Beth Kenward embraced that aspect of the initiative.
“It’s a win-win situation because the whole project is designed to stimulate redevelopment or development, and the incentive is tied to sales tax revenue,” she said. “We can’t lose in the sense that if they don’t produce sales tax revenue, they don’t get any kind of rebate.”
Kenward also noted the project allows the city to target very specific areas instead of relying on whole-scale improvements that can be time-consuming and costly.
“It allows us to focus on targeted areas that have been in a stagnant holding pattern for years,” she said. “It’s a way for us to take a look at why is that?”
The final piece
Cowper outlined the program as the last part of a four-pronged effort to improve the economic strength and appearance of Dothan. The first few steps involve creating a vision or plan, adjusting regulations in order to promote investment and an investment in public infrastructure like sidewalks and streetlights.
Cowper, a former longtime City of Auburn assistant city manager, said officials there offered a similar program on the Opelika Road corridor with great success
“We did the redevelopment plan first and then began with public infrastructure improvements,” he said. “Once things started going, the business community started saying, ‘We want to reinvest.’”
Cowper, entering his sixth month in Dothan, added local officials have already taken the first steps toward implementation of the Commercial Development Incentive Program when they created the Highway 84 Corridor study.
“It’s a great plan in place. The commission’s invested in that. The community wants it to happen,” he said.
City planners have also made adjustments – and are considering others – to zoning and other regulations in some of the blighted areas in an effort to spur development. Chief among them was a wide-scale rezoning of areas in and around the Newton-Burdeshaw-Cherry-Appletree-Range National Historic District in April.
“I love the piece about removing some of the regulatory barriers. In some areas of town, zoning could be a problem,” Kenward said. “Sometimes to govern the wisest move is to deregulate. We just don’t want to keep developing road blocks.”
Cowper said he and Dothan Area Chamber of Commerce President Matt Parker will present the idea to the business community for feedback soon. Should feedback be positive, the incentive program could appear in front of the city commission for final approval in about a month.