One of the most effective tools the city has employed so far in its effort to revitalize and redevelop Opelika Road is its performance-based tax rebate program.
Passed by the City Council in 2011, the Commercial Development Incentive Program allows the city to share some of the revenue generated by sales tax with a business that makes an investment in a key corridor.
"One of the most important things about the program is the private sector makes an investment, and when that investment produces income for the city in the form of sales taxes, then we might be willing to share some of those sales taxes that it is producing back to the business for the investment they’ve made," said Assistant City Manager Megan Crouch. "One of the challenges is that this is a sales-tax rebate, so if a business doesn’t generate sales taxes or enough sales taxes, then already they’re not eligible."
The tax rebate is done through a formula — the city levies a 4 percent sales tax, with 1.25 percent generally earmarked for Auburn City Schools, leaving 2.75 percent eligible to share. The city is only willing to share half of that, though, or 1.375 percent, in order to protect some of its existing or future revenue.
"In a formula, you can’t get more than that. But it doesn’t mean of the 1.375 percent left over that we’re willing to share 100 percent of that with you," said Crouch.
The city caps the rebates in total and annually, and if a business does not generate enough sales taxes they won't be rebated the full amount of the deal.
"We’re not exposed," said Crouch. "If they undersell, then they get less of a rebate."
The program has made a major impact along Opelika Road, facilitating the renovations of multiple businesses, like Niffer's, Auburn Furniture, the old Chevrolet dealership, Wholesale Mattress, Flint's Crossing, Market Square Shopping Center, and multiple improvements to the Auburn Mall, among other projects.
In total, 15 businesses, with one now inactive, along Opelika Road have taken advantage of the tax rebate program as of 2018. The businesses have made private investments totaling more than $51 million, with the city collecting about $7.43 million in sales taxes and rebating about $1.67 million, according to numbers provided by the city.
"The hook in that is they have to do a little better with their façade and landscaping, or they have to take a site, a dilapidated building or they have some major infrastructure issue — Not only do you have to make an investment, but it has to be enhanced," Crouch said.