The developers of a proposed waterfront apartment and retail complex downtown cleared a hurdle Tuesday when the Mobile City Council approved tax incentive financing for the project.

The unanimous vote means a portion of the $46.5 million project on Water Street will be paid for from tax increment financing (TIF) funds, which consist of property tax revenue set aside for a variety of purposes, including the elimination of blight and enhancement of public infrastructure, Executive Director of Finance Paul Wesch said.

The plans for the development, known as Meridian at The Port, call for the demolition of the old Delchamps warehouse between the International Trade Building and the GM&O terminal building to make way for a five-story building consisting of parking on the first floor and apartments on the top four floors, developer Mike Rogers, co-owner of Rogers & Willard Construction, said.

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The plans also include about 2,000 square feet of retail space with some design elements featuring shipping containers, developer Stewart Speed of Leaf River Group said.

“Mike started recruiting me for this several years ago and I became bullish of the direction Mobile was heading,” Speed said. “I was excited about the future.”

The development of what Speed described as high-end apartments would attract people of all ages, including millennials, empty nesters and those who’ve retired. Speed added many of Mobile’s major employers, such as Airbus and Austal, expect development like this for their employees.

“It’s a good housing option for employers,” Speed said. “We expect to attract a number of Airbus folks. The timing is right for Mobile.”

The TIF district, in which this project will reside, was created “23 or 24 years ago” through state and local laws, Wesch said. The district caps property tax at the millage rates enforced at the time the laws were enacted and any additional tax assessed from an increase in property value from that point goes into the TIF fund. For this project, TIF funds will pay for the demolition of the existing buildings on the site, sidewalks, gutters and some facade enhancements, Wesch said.

The developers will actually pay back the fund through an allocation of “enhanced property taxes” on the completed project, Wesch said. The point of TIF is to “spur the right kind of development” and help eliminate blight, he added.

Many of the councilors, including Levon Manzie, who will represent the residents of the future complex, and Mayor Sandy Stimpson lauded the project as something that would help stimulate more growth downtown.

“This will be the most significant groundbreaking we’ve had since I’ve been mayor,” Stimpson said. “This aligns with the Map for Mobile plan and will become a gateway for those traveling on [Interstate] 165.”

Stimpson called it “tangible evidence that Mobile is a city on the rise” and said the project was a “pump primer” for reinvestment and growth downtown.

Manzie said the area now generates roughly $10,000 in tax revenue, but the proposed development would bring the city $450,000 in revenue.

Before a groundbreaking can take place, Rogers said the development would need the proper permits and rezoning approval from the Planning Commission to take the property down from industrial, or I-2 zoning, to residential, or R-1.