The Athens City Council approved a tax abatement Monday night for Alabama Green Lubricants LLC, which plans to build an oil re-refinery in the northern part of the city.

The council approved non-educational property taxes in the amount of $1.039 million and non-educational sales taxes in the amount of $460,000. Both abatements are good for 10 years.

In turn, AGL will pay an estimated $850,561 in educational property taxes over 10 years and $321,0000 in education sales taxes during construction of the re-refinery. The total project is estimated at more than $32 million, which includes the cost of land, building and equipment and 25 to 27 employees. The refinery will be located on 23 acres near the intersection of Airport Road and Alabama 127.

John Redmond, president of AGL, said construction on the project could begin in the fourth quarter of this year and be operational by the first quarter of 2014.

The projected costs to build the re-refinery have escalated, he said, and the city’s abatement will help keep costs low. Part of the reason for the increase in costs, Redmond said, is due to the addition of more environmental buffers. The Athens Planning Commission gave a conditional use approval to the project, and one of the conditions was that the company install a device to suppress the smell of oil being loaded and unloaded at the site.

“The conditional use required us to do certain things to control emissions, but as we started working through the process, engineering and management took another step that would be beneficial and worth the extra expense,” he said.

The oil re-refinery will process used motor oil only. The used oil will then be distilled, a process that also creates byproducts.

For every 100 gallons of used oil, 5 percent, or 5 gallons, will be discarded as a wastewater product. Ten to 15 percent will produce a liquid that is comparable to gasoline, which will be incinerated or sold as fuel to other companies.

Seventy percent is turned into base oil, which is then sold to other companies for use in new motor oil or other lubricants. The remaining product is a heavy particulate matter that will be sold as asphalt.

“We’re working out the final details and have applied for air permits with (the Alabama Department of Environmental Management),” Redmond said. “We have a general permit for construction, and that should be issued any day.”

Elsewhere, the council approved a special events alcohol license for the upcoming Athens Grease Festival, to be held Sept. 29. Alcohol will be confined to the second floor of the Center for Lifelong Learning on Marion Street.

“It’s something to wash that grease down,” said Council President Jimmy Gill with a laugh, shortly after the council passed the measure.

In other business, the council:

• Held a public hearing on public nuisances at 600 First Street and 1301-1304 Henry Drive;

• Re-appointed Chris Anderson to the board of trustees of the Athens-Limestone Public Library;

• Passed an ordinance allowing the city and Limestone County Commission to solicit bids for joint Internet service;

• Approved a memorandum of understanding regarding backup data services between the city and county;

• Approved the purchase of a Bobcat track loader for the gas department in the amount of $81,009.74;

• Extended the term of appointed city employees/entities from Sept. 30 through Nov. 5 to coincide with the date elected officials will take office;

• Approved the purchase of concrete headwalls on Lindsay Lane South and Nuclear Plant Road for a cost of $18,000; and

• Approved a construction project in the amount of $99,943 for improvements to the entrance of Leak City.