REALITY CHECK: City not paying rent on Government Plaza
MOBILE, Ala. (WPMI) —
Mobile county and city leaders are at odds over whether the city owes the county hundreds of thousands of dollars in back rent for its use of Government Plaza.
The city hasn't paid rent since February.
At the center of it all, is a longstanding agreement in place between the city and county regarding tax collection and rent payments at the downtown building.
The city claims the county breached that contract years ago while the county says it was the city that breached the agreement when it stopped paying rent 7 months ago.
Government Plaza is owned by Mobile County, but it houses both county and city officials. And the city hasn't paid the $114,217.78 monthly rent payments since February.
County Commissioner Connie Hudson says by the end of the month, the city will owe nearly $800,000 in back rent.
"I am shocked. I have to say I think we're all in a state of it seems surreal," said Hudson.
But city officials claim they owe nothing and say they stopped the payments to get the county's attention and spark a discussion.
"It's basically just a simple contract dispute that we're working through with the county," said city spokesperson George Talbot.
It all goes back to an agreement the county and city entered together in 1991.
As part of the deal, the city collects some tax revenue for the county. In turn, the city gets a 5% commission for handling those collections and uses that money to pay its rent on Government Plaza.
But the city says that revenue went down drastically starting in 2014, when the county license commissioner encouraged businesses to use an alternate system to pay their taxes called ONE SPOT. Now the city claims it no longer brings in enough money in tax collection fees to cover the rent payments. According to Talbot, nearly 80% of the sales taxes the county receives are now paid through ONESPOT. He says the city received only $589,000 from the county last year, compared to $2.4 million in 2013.
"When the model was changed for how the taxes are collected, that's where we got off track with the agreement. So we needed to find some remedy for that," said Talbot.
"We understand that happened, but that didn't negate their obligation to pay rent! If the city has an issue with anything regarding the agreement then they have a way to address that by invoking the binding arbitration clause. They did not do that. They just simply without notice stopped paying rent," said Hudson.
Hudson also says the ordeal is making budget planning for the next fiscal year difficult.
"These are line items we're having issues with right now because we don't know what to forecast," said Hudson.
Lawyers and officials on both sides say they'll continue to meet until the issue is resolved and a new agreement is reached.