The State of Alabama hopes to add two counties to the GO Zone
May 25, 2008
Hurricane recovery projects in two Alabama counties would gain eligibility for tax exempt bonds in a bill that passed the U.S. House this week, if passed this change would immediately benefit a manufacturing plant being built in Colbert County. The bill still needs to pass the Senate though.
One sentence in the 164-page tax bill that passed Wednesday would add Colbert and Dallas counties to the Gulf Opportunity Zone (GO Zone), a section of the country eligible for economic development assistance after Hurricane Katrina.
State officials for almost a year have been pushing to the issue to get Colbert County added to the GO Zone, a commitment they made as part of the incentive package given to National Alabama Corp. to build a 2 million-square-foot plant in the northwestern part of the state.
If the GO Zone addition is approved by the Senate and becomes law, the plant would be eligible for $300 million in tax-exempt bond financing, lowering the interest rate and reducing its overall cost of construction, according to the Alabama Department of Finance. Without it, Alabama would have to pay an additional $13 million to the company and another $2.5 million to the area’s governments to assist with land acquisition.
Alabama government officials last year gave the company a $109 million incentive package. The incentive package includes worker training and tax breaks. The counties of Colbert and Lauderdale in August started collecting a half cent sales tax to help pay for the local incentives.
Expansion of the GO Zone was a request of the entire Alabama delegation, but specifically Reps. Bud Cramer, D-Huntsville, whose district includes Colbert County, and Rep. Artur Davis, D-Birmingham, whose district includes Dallas County.
“This project with National Alabama will provide 1,800 jobs to an area that was negatively affected by Hurricane Katrina and the severe storms it produced, and also by the families who were displaced,” Cramer said in a prepared statement. “This county has also been adversely impacted by (the North American Free Trade Agreement) and has a higher unemployment rate than the rest of Alabama.”
In a letter to leaders of the House Ways and Means Committee that drafted the bill, all nine members of the state’s delegation said the GO Zone expansion would allow the bonds to be allocated under the state’s bonding authority and have no additional cost to the U.S. Treasury.
“(Both counties) have tremendous potential right now to attract large economic development projects that would benefit the entire Gulf region, especially West Alabama, much of which lies within the existing Go Zone, but lack the infrastructure typically needed to attract major investment,” they wrote, in a copy of the letter provided by Davis’ office.
The Joint Committee on Taxation estimated the two-county expansion would cost $3 million over two years.
Davis, a member of the Ways and Means Committee, said he supported Cramer’s request for Colbert but that he wanted to add a Black Belt county as well.
“If a county in north Alabama was going to be added, it made sense for a county even closer to the heartland of the Go Zone territory of Alabama to be added as well,” Davis said Friday. “Counties like Dallas need every edge they can get to compete for jobs.”
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