Act provides tax-free bonds
Published 12:00 am Wednesday, February 22, 2006
Prospective businesses or those who are looking to expand will have a chance to take a closer look at how the Gulf Opportunity Zone Act can help them next Monday and Tuesday.
A representative of Morgan Keegan will be in Demopolis these two days to assist prospective business owners in the application process for GOZA bonds, which normally takes about 20 minutes.
GOZA was signed by President George W. Bush last December to provide 11 Alabama counties, including Marengo, Sumter, Hale and Greene, counties provides $2.1 billion to issue additional private activity bonds above the current volume limits imposed under the Internal Revenue Code.
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Demopolis Industrial Development Board Chairman Jay Shows said the benefits of GOZA are obvious.
“There are really two benefits,” Shows said. “There is the potential for a little less financing rates and the accelerated depreciation.”
Tax free bonds usually allow finance rates of one to two percent lower than traditional financial institutions. Accelerated depreciation schedule can also result in a lesser end-of-year tax liability.
Though Morgan Keegan will be in town Monday and Tuesday, there are several other financial services companies that are offering similar services. Shows said the Demopolis Industrial Development Board cannot recommend one over another, but were glad Morgan Keegan has shown a strong willingness to offer such assistance in the area.
Representatives from Morgan Keegan will inform applicants about general qualifiers that have to be met and rate whether or not they are good candidates to benefit from GOZA.
They also have a toll free number, 1-800-753-6619, and website, www.gozonebonds.com.
The Demopolis Area Chamber of Commerce office has printed material that people may pick up to review.
The $2.1 billion will be divided by Gov. Bob Riley, although there have been no indications of how he will do so.
No matter how the money is divided, Shows said, the first step is getting applicants.
“If you don’t have the public out there willing to buy it, it’s a moot point,” Shows said. “You have to have buyers of the bond.”
Financing provisions of GOZA are attractive, but the act is not free money. Borrowers will undergo a typical bank credit approval process, Shows said, so requests for funding will need to be financially feasible.
Appointments for Feb. 27 or 28 can be made by calling the Demopolis Industrial Board office at 334-289-0270.