The Foley City Council expects the Forward City to continue to grow as in the past with its decision Monday, Dec. 19, to increase a temporary, additional one percent sales and use tax on certain transactions and activities in the city.

The council would like to increase the sales tax in certain categories for a specified period of time for the purpose of re-funding reserves used over the past few years on projects and infrastructure in the city.

Those projects and infrastructure improvements are drawing private development to the city that create jobs and will increase city revenues over time.

Foley has made a several large investments through road infrastructure enhancement, construction of new city facilities or in direct economic incentives intended to spur economic activities in the city in several different industries, including aeronautic, food, sports tourism, retail, entertainment and lodging.

“So, although we are seeing the beginnings of some of the revenue increases to the city from our investments, it has been somewhat delayed due to the change of ownership in the large entertainment facility currently being constructed in Foley,” said Foley’s City Administrator Mike Thompson. “This temporary tax is put in place to re-fund city reserves and to bridge that delay in revenue growth until many of the private developments initiate and complete construction and become operational.”

The state identifies five categories of sales tax that municipalities can individually determine municipal tax rates for.

The categories and rates in Foley are automobiles, 0.5 percent; farming, 0.5 percent; manufacturing machinery, 0.5 percent; general retail, 2 percent; and vending, 2 percent. Anything not under automobiles, farm, manufacturing machinery or vending, falls into the “general retail” category.

The council is changing the “general” and “vending” categories from a two percent tax to three percent.

“Unlike farm, auto and manufacturing machinery, that is mainly paid by locals, these two categories (general and vending) are the categories that millions of tourists also pay while visiting the city,” said Thompson.

This increase will also position the city financially should any additional infrastructure opportunities arise from any policies that the new presidential administration might put in place that the city could take advantage of.

One important feature is that this ordinance has a “sunset,” meaning this one additional penny tax will be placed on those two categories for a specific period of time, three and a half years, before it self terminates. The tax is scheduled to begin March 2017 and end Sept. 1, 2020. The tax would then go back to two percent.

Any changes the council has can be made before the second reading in January.

“With this additional one penny, the city council plans to build back up city reserves, but they also recognize the growth pressures on the city in general due to the continued fast population growth of the city and county,” said Thompson. “Although the ordinance does not strictly specify use of the one additional penny, I believe the council intends the majority (75 or 80 percent range) to be used for the purpose of building a separate reserve account and then 20 to 25 percent to go into general operations of the city to help with the growth pressures of the city until some of the above anticipated new revenue streams build up, as many of the private businesses currently being built and/or planned in the city become operational.”

“We’re going to have to have matching money in our accounts to where we can do things like apply for grants and things like the pedestrian bridge, hiking trails …,” said Councilman Ralph Hellmich at the Foley work session. “We don’t know what’s coming down the road. How many more UTC-type projects are going to come out of the clear blue, and we’ve got to help with them infrastructure? We’ve got to make sure we have savings to the level where the bond people are happy with that and we can continue to do these things.”

Hellmich said people aren’t going to like this, but it is temporary.

“When these hotels and everything come up, it’s going to make a drastic difference, and I think it’s something for us, as leaders of the community, we need to do,” he explained. “Foley wants to keep moving forward; I know that’s overused hype, but people keep coming up and saying they like the growth and they’re proud of where we are in the city. I, for one, believe it’s necessary.”

Council President Wayne Trawick said the city plans to steadily get the revenue back over time.

“In three years we’ll have OWA up and running, we’ll have hotels, and have growth,” he said. “We expected the growth to come a little bit sooner, but this will get us back on track and have everything ready for anything that may come our way.”

Hellmich said there is a large amount of tourism this increase will affect.

“At Tanger, 95 percent of every dollar comes from outside the city of Foley,” he said. “In a way, it’s getting people who are outside our community to help pay for the infrastructure that they utilize. It’s not something we like to do, but that’s the way I look at it.”

Councilman Charlie Ebert asked for documentation showing what surrounding area’s percentages were. Thompson responded that Gulf Shores and Orange Beach are also at three percent, and Spanish Fort’s percentages vary throughout the city.

“Daphne, if I remember correctly, is at 2.5 percent,” Thompson said. “Cities in the southern end of the county are at three percent.”

Ebert said he was not aware of any of the other municipalities having a “sunset” on their taxes, either.

“This will help up with the gap from OWA getting up and running, the hotels being built and up and running and business improving in general,” Trawick said.

Thomson said regardless of the number of years the council sets this tax at, as a council, they can end it at any point in time, if they feel they have replenished the reserves at a level they are shooting for.

Trawick responded, “The reality is, it will take us about three years to get us back up and where we’re comfortable.”