TUSCALOOSA, Ala. (AP) - Officials with the city of Northport are sparring with representatives of the Tuscaloosa County Industrial Development Authority over a 2009 “gentleman’s agreement” that would have the city give $1.5 million to Mercedes-Benz U.S. International over 10 years.
The money in question, subject of a meeting held Tuesday, is part of a contract signed eight years ago by then-Gov. Bob Riley, the county authority and the car company. Nicknamed the Project Crimson Agreement, the plan is a $100 million incentive package designed to encourage Mercedes to vastly expand its plant in Vance to begin production of its C-Class sedan there.
It is unclear what will happen if Northport decides not to pay its share, although people attending the meeting discounted that possibility.
Carl Jamison, who was chairman of the development board when the agreement was signed, said all parties involved worried that if they couldn’t bring the C-Class to Tuscaloosa, the plant, which then produced only sport utility and crossover vehicles, would wither and die.
“We were sitting in the midst of the Great Recession and SUVs were disappearing and gasoline was $4 a gallon,” Jamison said. “We thought the plant that we had invested a ton of money and a ton of political capital in was going to evaporate.”
And so Riley, Jamison and former MBUSI president Ola Kaellenius signed the Project Crimson Agreement and Mercedes began a $670 million expansion that brought 1,000 new jobs to the Vance plant, which opened in 1997. C-Class production began in 2014.
Part of that 2009 agreement stipulated that three local governing entities — the city of Tuscaloosa, Tuscaloosa County and Northport — would work together to give Mercedes $1 million a year for 10 years as long as the auto manufacturer met certain employment goals. Tuscaloosa and the county both agreed to provide $425,000 each year, and leaders in Northport said they’d furnish the remaining $150,000.
Development Authority Executive Director Dara Longgrear said none of the local entities put the matter to a vote or signed a contract, though.
“I don’t recall anyone saying we shouldn’t do this, everybody knew we needed to do something to show our support,” Longgrear said. “But unfortunately at that time, every government body, every party to that agreement chose not to take official action at that moment for whatever reason.”
Instead, Longgrear said, there was a “gentleman’s agreement,” and the authority signed the contract on behalf of the local entities in lieu of a series of resolutions and votes that could have slowed down the incentives package.
“It was not an uncommon way of doing business back then, but it’s not the way we’d do it now,” Longgrear said.
Those annual $1 million payments to Mercedes were scheduled to begin in late 2012, but Longgrear said Mercedes did not submit requests for them until early last year. Rather than trying to collect four years of back-pay from the local entities at once, Mercedes and the authority have drafted an amendment to the original agreement that would simply start the 10-year payment schedule this October and continue it annually until 2027.
The Tuscaloosa City Council and the County Commission have both voted to accept the amended agreement, but officials in Northport are reluctant.
Northport City Council member Rodney Sullivan said during the meeting that the agreement hurts Northport financially for little payoff. He said the Mercedes plant has meant residential growth there, but most retail development has cropped up across the river in Tuscaloosa, leaving sales tax revenue to stagnate in Northport.
“You think about the benefits we get out of this and it’s really not much at all,” Sullivan said. “Tuscaloosa and the county will reap most of those.”
Sullivan said the city hasn’t budgeted to give MBUSI $150,000 each year and will have to figure out from where to draw those funds if the council agrees to the new contract.
Northport Mayor Donna Aaron said she suspects the city will eventually decide to make the payments, but she asked the authority for data that clearly outlines the benefits the plant brings so that when constituents ask why the city is spending the $1.5 million, elected officials have a good answer for them.
“We have to make sure that whatever explanation is given satisfies the public,” Aaron said. “I was around when we brought Mercedes here, and I remember the million dollars we committed then. You would have thought we’d given the city away for the next 500 years.
“But we didn’t blink, we paid it, and about two years after that plant was built, you couldn’t find a soul who was not on board with it. You have to know where you’re going with it. Explain that to the public and they’ll get it, sooner or later.”
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Information from: The Tuscaloosa News, https://www.tuscaloosanews.com
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