Decatur's new home inventory will get a boost if the City Council approves extending sewer to a proposed Old River Road development under an agreement that requires the builder to meet a timeline or face a financial penalty.

The proposed agreement between the city, Morris Holdings and the Morris family was presented at Monday’s council work session for consideration at the council's July 15 meeting. The agreement would also require construction bids for the sewer extension to fall within budget.

The required annexation of the property likely won't happen until at least August after the sewer construction bids are opened.

If construction of the controversial residential development in southern Decatur proceeds, it would please those who say the city needs residential growth but anger some neighbors opposing the development.

Mayor Tab Bowling said he believes the Morris development could serve as a catalyst to growth. This would be the biggest subdivision in terms of number of homes in the city since before the 2008 recession.

“We need something to kick it off,” Bowling said. “And, once the spec home developers see how quickly these homes sell themselves, they will want to come in and be a part of the growth.”

Councilman Chuck Ard said the city has only three areas where it could grow, and this plan starts it in a key area that’s only minutes from I-65. The other areas are near the new Austin High in Southwest Decatur and in the city’s annexed portion of Limestone County.

“We’ve got to do something to grow,” Ard said. “We’re running sewer into these areas. We’re working on a bridge (into Limestone County), and we got a grant for an overpass over Alabama 20 that will spur retail growth.”

As part of the proposed agreement on extending sewer, the Morris family, which consists of Howard Morris, his brother Jack, son Dennis Morris, and Jack’s son, Jim, would commit to annexing 19.4 acres off Old River Road and building 40 homes, priced at between $180,000 and $250,000, over a five-year period. The subdivision plan is to eventually have 55 homes.

The City Council would agree to run sewer and water to the property if the sewer construction bids don’t come in too far over budget. The Morris family would pay to run sewer into the subdivision.

Wally Terry, city director of development, said the sewer plan opens this area up to more than one development. Charles Morris, as part of Morris Holdings, owns more than 100 acres surrounding the Morris family development, and there’s more property to the northwest that could be developed, Terry said.

“We talking about the possibility of 250 to 300 more homes,” Terry said.

Pugh, Wright, McAnally Engineering Services has almost finished with the $75,000 engineering on a 3,800-foot sewer extension from the west side of Alabama 67 to the Morris family property. The extension is expected to cost about $950,000, but bids must be sought for the project.

As part of the deal, the Morris family will have to supply a letter of credit that guarantees it will reimburse the city 10% of the cost of sewer if the development doesn’t reach the 40-home goal within five years.

The required amount of credit will be reduced to 5% “once the streets and subdivision (of the property) are complete and accepted by the city, with a maintenance bond in place, on the condition that construction begins within 18 months of the accepted date.”

“If Morris fails to build the homes or goes bankrupt, the city could call in the letter of credit,” Terry said.

But Terry believes the subdivision will be a success.

“Everybody wants him to finish his subdivision and build houses. They’re out there to try to make something happen,” Terry said.

Council President Paige Bibbee said that she likes that the developer “is having to put some skin in the game” with the line of credit.

“In the past, we’ve had some developers tell us they’re going to do some things and then they didn’t,” Bibbee said.

Howard Morris presented the preliminary site plan of 55 homes at the June 18 Planning Commission meeting.

He said at the Planning Commission meeting he will adjust to whatever the market wants, but the plan is to build 1,700- to 3,000-square-foot, single-family homes on 10,000-square-foot lots.

Terry compared the proposed homes and subdivision to Dunbarton subdivision in Southwest Decatur.

While city and chamber officials believe the development is needed for growth, residents in the Old River, Upper River and Indian Hills roads on the east side of Alabama 67 have said they don’t want development.

The vocal residents turned in petitions and spoke out against the development at the Planning Commission meeting.

Councilman Charles Kirby said many of the neighboring residents opposing the development don’t live in the city so he’s not concerned about their opinions.

“We live in a city and that’s what we do — we grow,” Kirby said.

Ard said he believes the new development will actually help the neighbors’ property values.

bayne.hughes@decaturdaily.com or 256-340-2432. Twitter @DD_BayneHughes.

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