Officials: GO Zone money may not go to railcar plant

MONTGOMERY - Colbert County may soon be eligible for hurricane recovery money, but officials are unsure if $30 million of the money can be used for the National Alabama Corp. railcar plant.

Bobby Irons, chairman of the Shoals Industrial Development Committee, said Thursday he hopes tax-free government bonds authorized for Gulf Opportunity Zone, or GO Zone, counties can be used by National Alabama. The company began construction in February on a $350 million railcar plant in Barton Industrial Park in Colbert County.

If National Alabama Corp. does not or cannot use the bonds, some of the sales tax that Shoals voters approved for industrial development will have to support $17 million in economic incentives for the plant in addition to $8 million in local incentives already promised National Alabama.

U.S. Rep. Bud Cramer, D-Huntsville, who is working to get GO Zone designation for Colbert County, said he's unsure whether pending federal legislation allows National Alabama access to cheaper bonds, since the Dec. 31 deadline to use them has passed.

Cramer said National Alabama extended its contract timing to wait on possible GO Zone authorization.

"I can't tell you that I understand totally the usage boundaries for GO Zone and what might be attractive to a company and what might not be attractive," Cramer said in an interview. "We're going to accomplish great things for Colbert County, and we can use GO Zone bonds for another company. It remains to be seen how the company responds and whether it has everything the company wanted."

He's not alone. Others also aren't certain whether National Alabama can use the GO Zone bonds or if the bonds will be freed for other Alabama counties designated GO Zone-eligible by Congress after the 2005 hurricanes.

One question is whether National Alabama is still a "new" economic development project and is eligible for the money.

"Until we have the final version of the legislation, we do not know how it will affect the project agreement," state Finance Director Jim Main said.

State and local governments committed $109 million to attract the National Alabama Corp. railcar plant. The appeal was that GO Zone financing would save National Alabama money and that local governments wouldn't have to kick in as much money.

If the Go Zone money is not used, state and local governments will have to come up with an additional $30 million as part of what would be a $139 million incentive package. The $30 million would cover the cost over time of National Alabama's higher loan costs.

State and local governments originally committed $109 million in incentives pending GO Zone approval for National Alabama.

The state committed $40 million in financing and is on the hook for an additional $13 million if GO Zone money isn't available. Local governments committed $8 million and an additional $17 million if GO Zone isn't used.

The addition of Colbert and Dallas counties to the list of Alabama counties eligible to receive hurricane recovery money is part of a U.S. House bill that may receive final passage in the U.S. Senate soon.

U.S. Rep. Artur Davis, D-Birmingham, said President Bush said he'll sign the bill.

"GO Zone is an important tool in economic development to attract industry," Davis said Thursday.

Cramer said National Alabama extended its contract timing to wait on possible GO Zone authorization and the company last September started site work. The plant is now 20 percent finished.

National Alabama spokesman Peter Earle said officials knew the timing on the GO Zone authorization might be close, but the company had to go ahead and start construction. He said he isn't sure whether the GO Zone designation will help the company.

"It got to the point we cannot use them if they were to be passed through because the time for application has passed, given the timing of our investment," Earle said. "Unfortunately things happen."

Riley withheld $300 million from the state's allotment of GO Zone authorization just in case Congress added Colbert County to the counties eligible for infrastructure funds.

If Colbert County cannot use the money, other existing GO Zone counties in southwest Alabama will be able to use the $300 million.

Riley and members of Alabama's congressional delegation including Cramer tried to beat the clock in 2007 in getting GO Zone designation while officials were courting National Industries of Canada to locate its railcar plant in northwest Alabama.

Dana Beyerle can be reached at (334) 264-6605 or dtb123@aol.com.