History in the making: Huntsville applies new funding method to Toyota-Mazda development

single-meta-cal February 13, 2018

History was made last Thursday at the Huntsville City Council meeting.

For the first time in Alabama, the Major 21st Century Manufacturing Zone Act was put into play as an economic development tool. The Council approved the use of the act as preparation for the Toyota-Mazda plant in Limestone County.

The act is a form of TIF (tax increment financing) that “helps finance the public portion of a project in a more sustainable, expeditious manner,” said Harrison Diamond, Business Relations Officer for the City of Huntsville.

It creates an incentives package that pays for itself.”

Because economic development can often hinge on rapid response to an incoming business, the Manufacturing Act enables a municipality to move much more quickly than traditional TIFs, which historically have a required a more complex and lengthy process. TIFs, and the specific Manufacturing Zone Act, permit a municipality to purchase bonds, and the tax revenues from the TIF district are earmarked toward that debt repayment.

“What this does, in a nutshell, is allow cities or counties to use the revenues off the manufacturing zone in the form of a TIF to make improvements to a site,” Diamond said. “Basically it creates an incentives package that pays for itself.”

Designed for ‘megaprojects’

The Major Manufacturing Zones are targeted to what Diamond called “megaprojects,” such as pharmaceutical, electronics, semi-conductor or automotive manufacturers that are making substantial investments in terms of construction and land use and which are obvious sources of significant tax revenue.

The act is applied to projects in which the company is investing at least $100 million and on a site that is larger than 250 contiguous acres.

It was appropriate that the Manufacturing Zone Act was implemented for a Huntsville project like the Toyota-Mazda joint manufacturing facility.

During development talks with another advanced manufacturing opportunity for the area, Huntsville Mayor Tommy Battle recognized five years ago the need for such a funding tool and led the creation of the act.

“He went to all parts of the state to champion this,” Diamond said. “He met with mayors, economic development partners and other leaders. It was a full-court press.”

Congressional leadership

Then, in what became what Battle called “total bipartisan support,” State Rep. Anthony Daniels, a Democrat who represents House District 53, became the major sponsor of the then bill HB311.

Signing on as co-sponsors were fellow Democrat Laura Hall and Republicans Howard Sanderford, Jim Patterson, Ritchie Whorton, Mike Ball, Phil Williams and Mac McCutcheon, the current Speaker of the House, who represent other Huntsville-area districts. It passed 98-0 in the House, then earned Senate approval with a 28-0 vote.

From that evolved what became Amendment 11 in the 2016 Alabama state election, which passed with 59 percent of the vote.

“When you work on these things that are years in the making, and you see them come to fruition like we have,” Battle said, “it’s a phenomenal feeling.”