DAPHNE, Ala. — Before the council meeting on Monday, the finance committee unanimously voted to recommend the council approve a memorandum of understanding outlining the terms between the city and New Horizon Retail Development.

Under the proposed terms, the developer would make improvements to the property and surrounding areas that would benefit the whole city, which would cost the developer $1.9 million. If the proposal is approved, the retailer will get its money back by keeping a certain percentage of the sales tax owed to the city for no longer than 15 years.

The motion out of the finance committee outlined the terms of a memorandum of understanding.

“The motion included the following stipulations: issue a limited liability tax warrant in the amount not to exceed $1.93 million with debt payments to be paid with one percent of the sales tax collections generated by Academy and other businesses within the development. Also, to set the interest rate not to exceed 7.5 percent, and establish a payback period not to exceed 15 years with no prepayment penalty and authorize our finance director to work with Preston Bolt to set forth the terms in an M.O.U. and bring such to the council for action,” Councilman Ron Scott said.

The developers proposed using the sales tax participation structure where .01 cent of a 2-and-½ percent sales tax generated by the retailers that will be housed on the property would fund the public improvements that will be made to the property.

The proposed public improvements included traffic signal modification at the intersection of U.S. Highway 90 and Infirmary Access Road, addition of an eastbound turn lane and westbound deceleration and a right-turn lane on U.S. Highway 90, a westbound deceleration lane with right in-right out access drive, a sanitary sewer lift station and force main, utility relocation along U.S. Highway 90 frontage, Interstate 10 right-of-way improvements, and a regional storm-water management area.

The issue was not on the agenda for the meeting Monday night, but Scott requested the matter be discussed anyway since the finance committee unanimously recommended the action. The matter was on an earlier draft of the agenda, but Council President Cathy Barnette pulled it off the agenda, citing the issue should be addressed in the form of an ordinance. She claimed the terms of the M.O.U. were already in place, but that they just weren’t in the legally binding form of an M.O.U.

Councilman August Palumbo expressed his hesitation of spending so much of the city’s money without input from residents.

“The entire council has not been privy to the discussions that the finance committee has with the developer on this except for a brief mention … this is public-hearing material. We start talking about basically giving away tax revenue to individual businesses. This is something the public should have the opportunity to speak out on and all corners be heard from,” Palumbo said.

He also asked the city attorney for clarification if an M.O.U. was a binding contract. City attorney Jay Ross said he believed it was intended to be a binding contract.

Palumbo said he thought the council would be rushing into things if the resolution was approved without a public hearing.

“It is just a rush to judgment, in my opinion, to authorize moving forward with a binding contract before all the ramifications of this are heard,” Palumbo said.

Scott said the M.O.U. would just create a framework for the terms and the council would still have plenty of time to get input before formally approving it.

“All we are asking them to do is create something they can bring to us to discuss it. I would disagree with Mr. Palumbo as far as giving away something. We don’t have anything up there. That is dirt. We are not receiving one penny of sales tax on that particular parcel … they will be creating their own money of which we will be repaying,” Scott said.

Councilman John Lake was in favor of a public hearing.

“Anytime we do something like this, it always doesn’t hurt to have public input…” Lake said. He brought up the concerns regarding storm-water management, which the developer plans to address through improvements.

Councilman Kelly Reese said he wanted to make sure the council didn’t give the developer the wrong idea.

“The developer presented a very aggressive timetable at the meeting last time. I don’t want the developer to get the impression that just because we would be moving forward with a M.O.U., I don’t want that to signal to the developer that just because we have done that, we are all on board with the timetable that was set up previously by the developer,” Reese said.

Scott said the city was poised to gain from the agreement.

“If we don’t want businesses to come to this city then we need to just go ahead and scream and yell it that we are anti-business, that we don’t want anybody else to come. We have got an opportunity. One of the big-box retailers, they project somewhere between $150,000 and $300,000 a year in sales tax and we are trying to figure out how we are going to pay our employees … we don’t even want to give the courtesy to a well-known, well-respected retailer that we are willing to look at an M.O.U. and to enter into a similar agreement that we have entered into three times previously in the city’s history,” Scott said.

Palumbo said the city council was not anti-business.

“The notion that somehow this is anti-business is ludicrous. We have a retailer that came in and saved the day, if you will, perhaps saved that shopping center, by picking up the aftermath that this particular business left when it pulled out of the agreement after we created a district specifically for it. Perhaps that business would want to weigh in … it seems like a backhanded slap to me and that doesn’t seem very business friendly,” Palumbo said.

The public hearing regarding the tax incentive agreement was set for July 5 by a vote of 7-0.

In other news, Monday, the council:

• Voted 4-3 to decline the appropriation of funds for improvements to Lott Park and Trione Sports Complex. The improvements were not included in the budget for this fiscal year. The improvements to Lott Park were to include improvements to the tennis and bocce courts. The improvements to Trione Sports Complex would have included shade pavilions for the dog park. The improvements to Lott Park would have cost the city $4,752 and the improvements to Trione would have cost the city $3,028.
• Voted 7-0 to authorize the purchase of emergency response equipment through a grant from the Mississippi Canyon 252 Incident. The purchase is pending approval from Gov. Robert Bentley. The funds will be used to purchase radio equipment, which the city will be required to purchase in the future. The purchase will include hand-held radios with GPS, hand-held radios without GPS, mobile radios with GPS, mobile radios without GPS and other miscellaneous items. The new radio system will bring the police department, fire department, parks department and public works department onto the new system. The total cost for all equipment will be $316,413.
• Voted 7-0 to approve an extension of the moratorium on outdoor stand-alone ice vending machines. The extension will last for six months, which will last until the new land use ordinance is approved and put in place. The current ordinance does not address the use of outdoor stand-alone ice vending machines. The moratorium passed will prohibit the placement of such machines until Dec. 31.
• Voted 6-1 to declare certain property as surplus and allow the mayor to sell the property. The property includes miscellaneous old vehicle and tractor repair parts for models ranging from years 1974 to 1993.
• Discussed changes of meeting dates and times. The Buildings and Property Committee will begin meeting at 5:30 p.m. in July and the Public Safety Committee and Code Enforcement/Ordinance Committee will change the meeting date for July to July 6.