Standing at the site of a future 650,000-square-foot shopping center near Hank Aaron Stadium, Mobile officials argued that the McGowin Park development would not repeat the financial struggles that dogged the Spanish Fort Town Center across the bay.
They pointed to a strong retail lineup, a location convenient to Interstates 65 and 10, and an economy on the mend. “None of us have a crystal ball, but Spanish Fort Center was unfortunately completed before the economy really declined,” Mayor Sandy Stimpson said. “They kind of took it on the chin with the declining economy.”
Different financing, different risk
Both projects relied on sales-tax incentives, but the structures differed in a crucial way. For McGowin Park, the city agreed to give 1.4 cents of its 5-cent sales tax on new sales generated within the center to developer The Hutton Co. for 20 years, and the county pledged three-tenths of a cent from its 1-cent tax. The center was projected to generate about $200 million in annual sales, which would return roughly $1.4 million to the developers under the agreement.
Critically, officials noted, there was no borrowing tied to the Mobile project. Spanish Fort’s Town Center, by contrast, had been pushed forward through a quasi-governmental cooperative district with the power to borrow for infrastructure. That district borrowed $30.5 million in 2007, and when a 1.5 percent fee on sales fell far short, the development could not cover the roughly $2.6 million in annual debt service on its bonds.
A cautionary tale across the bay
Anchored by Bass Pro Shops and opened as the recession set in, the Spanish Fort complex never met early projections. Developer Cypress Equities had once forecast first-year sales near $200 million; instead, the center’s sales totaled $54.8 million between March 2010 and February 2011. A lawsuit filed by Bank of America against Cypress was settled, clearing the way for renewed leasing.
Spanish Fort City Attorney David Conner said the center was positioned to recover, with Cypress “back on the development” and working to fill empty space alongside anchors Bass Pro, Kohl’s and JC Penney. “It has had some tough times,” Conner said, citing Hurricanes Ivan and Katrina and the downturn. “As population continues to increase and tourism traffic increases, I think you’ll see that center take off in the next few years.”
Betting on Mobile’s advantages
Mobile officials declined to blame Spanish Fort’s cooperative arrangement, agreeing that outside forces set the project back. They argued McGowin Park held distinct advantages. County Commissioner Jerry Carl said Eastern Shore congestion frustrated shoppers. “I have a hard time getting to that center,” he said. “It’s kind of stuck in a hole.” He predicted summer traffic on I-10 would steer shoppers toward Mobile once the new center opened the following summer.
Councilman Fred Richardson said McGowin Park would draw from a larger population base. “There are 33,000 people who live in District 1,” he said. “There is no city in Baldwin County with that many people.”
Officials also touted a deeper anchor mix, with plans to include Costco, Hobby Lobby, Dick’s Sporting Goods, Petco, Ashley Furniture, Regal Cinemas and the first Southeastern-based Field & Stream store. When finished, McGowin Park would be larger than both the Town Center and the more successful Eastern Shore Centre. “That should give everyone a high level of confidence,” one official said of the tax base the project was expected to produce.