Act will provide life for business

Published 12:00 am Friday, January 27, 2006

The passage of President George W. Bush’s Gulf Opportunity Zone Act last December raised a lot of eyebrows and questions for potential business owners in the Black Belt.

In two weeks, they will have the opportunity to get answers to those questions. Thursday, Feb. 9 the city of Demopolis will host an informative meeting at the Civic Center with representatives of Morgan Keegan&Company and Maynard Cooper&Gale PC at 5:15 p.m. to learn how businesses and municipalities around the Black Belt can put the new act to use.

Williamson said the act, and meeting was open to public or private companies or corporations who need help to finance the cost of acquiring, constructing and renovating nonresidential projects.

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“It is open to bankers, real estate developers, CPA’s and any business that wants to expand and needs funding or any business that wants to renovate or any new business that wants to start,” Williamson said. “This money is available for four years so they have four years to put it to use.”

Money will be distributed by Governor, but don’t know how it will be distributed yet.

The zone covered by the act includes Marengo, Hale, Greene and Sumter Counties. Tuscaloosa, Pickens, Choctaw, Clarke, Washington, Mobile and Baldwin Counties are also covered.

Will Davenport, a representative of Morgan Keegan, said this is a wonderful opportunity for counties in “the zone.”

“Alabama has really been blessed in that these funds are available for the 11 county area,” Davenport said. “The area runs all the way from Pickens and Tuscaloosa County to Mobile and Baldwin. It is really a great opportunity.”

The bonds must be approved and issued by Alabama Gov. Bob Riley, but Williamson said, there has been no indication of how they will be issued.

“We don’t know if it will be x-amount of dollars per county, by need or by how many people live in the county,” Williamson said. “We might know that by the time there is a meeting. We hope to know.”

Williamson said they have invited all the mayors, county commissions and industrial development boards for the surrounding counties. Anyone they could get the information out.

The act can be especially beneficial to civic leaders, Davenport said, because it gives them a starting point to spring economic growth.

“These funds give municipalities a little more flexibility to restore and hopefully rebuild,” Davenport said. “Hopefully, in that process it will create an economic spark and new growth.”

Their first priority, Davenport said, was to make people aware of the act. From there, they hope to attract potential businesses.

“At this point, we just want to make sure that people are aware of this legislation,” Davenport said. “This could create some very attractive offers if people know this is out there. It would be a crime for people who are looking to build a business or expand a business in Alabama didn’t know it existed.”

The Gulf Opportunity Zone Act was signed into law on Dec. 21, 2005. The act establishes tax incentives and bond provisions to rebuild the local and regional economies devastated by hurricanes.

The act will provide businesses and corporations in Alabama with the opportunity to finance construction and reconstruction of projects through the issuance of tax-exempt bonds.

The program will describe how to take advantage of tax-exempt borrowing to rebuild, acquire, construct, reconstruct or renovate non-residential real property, qualified residential projects and public utility property located in the areas affected by 2005’s hurricanes.

They will also outline how to benefit from advance refunding opportunities for municipal debts and capture depreciation benefits for assets placed in service.

Approximately $2.1 billion is provided through the act. The bonds are particularly attractive to investors because they are not subject to alternative minimum tax.

Items not covered by the act include private or commercial golf courses, country clubs, massage parlors, hot tub facilities, suntan facilities, racetracks or other facilities used for gambling or any store where the principal purpose is the sale of alcoholic beverages for consumption off premises.

Bond proceeds also can’t be used to finance movable fixtures and equipment.