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Articles on the Local Economy - 2007 |
The Vanguard
This week, the University of South Alabama released an update of a 2001 study on the economic impact of USA football on the Mobile economy. The study was conducted by Dr. Semoon Chang, professor of economics and director of the center for business and economic research at the University of South Alabama.
The total expenditures impact of the USA football program on the local economy is expected to be $22,453,954 per year. The addition of a NCAA-sanctioned football program at the University is expected to create an additional 667 jobs. The football program is also expected to generate nearly half-a-million dollars in tax revenue for state and local governments, including $43,437 in revenues for the local school system.
Business 2.0
October 2007, Vol. 8, No. 9
By Paul Kaihla
Senior Writer
Mobile
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Projected Median Sales Prices for Single-Family Homes |
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Q1 2008: $134,580 |
If Memphis has the blues, Mobile is rocking out. A low-wage backwater at the beginning of the decade, the Alabama city is emerging as the South’s next boomtown and a magnet for megaprojects. The biggest is a $3.7 billion steel mill that German industrial giant ThyssenKrupp is building north of Mobile. It will create 2,700 jobs when it opens in 2010, generate almost twice as many spinoff jobs, and bring in 30,000 workers during the construction phase. Next up is a new container terminal that will catapult Mobile into the big leagues as a shipping port. It will be online at the end of the year and is expected to create several hundred new jobs. At the top of the food chain, aerospace contractor Eads just opened a facility on Mobile Bay where 150 high-earning engineers will design Airbus’s long-range jets. Another 1,000 or more jobs could be in the offing if Eads and Northrop Grumman beat out Boeing for a $40 billion Air Force contract to build 179 refueling tankers. Even without that win, “the local economy is about to explode,” says Semoon Chang, an economics professor at the University of South Alabama. “All of these projects are coming together at the same time.
Just how great is that for the housing market? Mobile has seen scant home construction during the past two decades, and a housing shortage means the real estate market is set to heat up. Already, a three-bedroom, 2,000-square-foot home that sold for $157,000 a year ago now goes for about $170,000. The trend has captured the notice of speculators from California, Colorado, and Florida.
Keller Williams real estate agent Cindy Duggar-Gaspelin advises investors to buy houses north of Mobile in Calvert, which is two miles from the new steel plant, and the exurb of Chickasaw, about halfway between that facility and Mobile. Other attractive opportunities include building a portfolio of rental properties by bidding on foreclosed condos in the resort area of Orange Beach and buying apartments in Mobile itself. “The folks coming to build the mill aren’t going to buy,” Duggar-Gaspelin says, “and they’re going to need rentals to live in while they’re here.
Mobile Register
Southwest Alabama cities and counties can expect about $3.7 million a year in extra tax revenue from the ThyssenKrupp steel mill in northern Mobile County, according to a new study.
Those figures include an estimated $1.5 million a year boost to Mobile County and a $1.35 million a year windfall for the city of Mobile, according to the study by University of South Alabama economics professor Semoon Chang.
City and county governments in Baldwin, Clarke, Escambia and Washington counties will receive about $850,000 combined in extra tax revenue, according to the study.
Most direct taxes on the company itself have been waived for the foreseeable future, so Chang looked at the impact on sales tax, gasoline tax, property tax and automobile tax on different areas.
By contrast, the Mobile County school system will get about $22.5 million a year from property taxes when the plant becomes operational in 2010 because education taxes were not abated.
In 20 years, when the property tax abatements expire, the county will receive about $15.2 million a year from ThyssenKrupp, Chang estimated.
Mobile County officials said they hope Chang's study demonstrates to other local governments that the steel plant will create extra funds for them, and they should in turn contribute to $13.5 million in local incentives owed to ThyssenKrupp.
The state of Alabama and several area governments in May put together an $811 million package of tax breaks and cash incentives to entice ThyssenKrupp AG to build its $3.7 billion steel plant here.
The city of Mobile agreed to pony up $33.5 million, and the Mobile County Commission agreed to spend up to $83.5 million. The commission promised that $70 million would come directly from its Pay-As-You-Go roadbuilding fund.
For the remaining $13.5 million, the county and state are trying to put together a regional economic development authority comprised of city and county governments in southwest Alabama.
Attorneys for the Mobile County Commission said they hope the other members of the prospective authority will cover the $13.5 million, but that the burden of the payment ultimately falls with the commission.
Attorney Mark Erwin said to repay a $13.5 million bond issue would take annual payments of $1 million for 20 years.
State and county officials have not decided how much to ask for from each city and county, but Erwin said he believes it should be based on the amount of benefit each agency would receive.
"You're going to benefit, your people are going to benefit," he said. "We're just looking for equitable contributions."
David Stokes, an Escambia County commissioner, said he's still open-minded about contributing toward the incentives, but neither he nor anyone else on his commission has heard much about the issue lately.
"It's just been pushed onto the back burner," he said. "It was all exciting. Then it happened. Then -- that's it."
Baldwin County Commissioner Wayne Gruenloh said his entire commission has not yet discussed the regional cooperative, but he believes it is necessary for future growth.
He said the first thing the cooperative should do is look at the merits of helping pay for the $13.5 million portion of the incentives.
"We as a county look at it in terms of an investment," he said. "Sometime in the future, we'll have a chance in Baldwin County. We'll need incentives, and we might need to call on our neighbors for help."
Chang's study is based on population figures, ThyssenKrupp's estimates of its own spending, the distance that different areas are from the plant and Chang's own formula for calculating indirect impacts of new jobs.
He said there are some unknown factors, such as where future development will
occur and where suppliers will locate, that could affect his estimates.
Mobile Register
Vote on incentives planned for Oct. 9
The Mobile County Commission on Monday officially set Oct. 9 as the date for a vote on spending about $150 million in road-building money over the next 30 years to pay off $70 million committed to recruit German steelmaker ThyssenKrupp AG.
The money will be part of an $811 million package of cash incentives and tax breaks that state and local officials put together to entice ThyssenKrupp to build a $3.7 billion plant in north Mobile County.
The plant will employ about 9,000 people a year over the next three years while construction is under way, and then about 2,710 people a year thereafter, according to estimates the company gave to the state.
"Jobs are the engine that drive our economy, and this is a jobs engine," Mobile County Commissioner Mike Dean said Monday. "Anytime we can create thousands of jobs, it's a great investment for our community."
Oct. 9 also will be the date for either the primary runoff or general election to fill the vacant District 1 seat on the three-member County Commission. The seat was vacated when federal judges ousted Juan Chastang after finding that his appointment violated the federal Voting Rights Act.
If the referendum passes Oct. 9, the county would pay back the $70 million in bonds in annual installments of about $5.23 million from 2008 to 2038, for a total repayment of $156.9 million, according to a commission resolution.
According to a study released Monday by University of South Alabama economics professor Semoon Chang, the county will receive about $1.48 million per year in added tax revenue from the influx of ThyssenKrupp workers. In addition, when a 20-year property tax abatement ends in 2030, the commission would get more than $15 million a year in property taxes from the company.
Given the estimates in Chang's study, the total return to the county by 2038 would be about $162 million in tax revenue -- more than the total of the bond repayment.
The bonds would be repaid out of the Pay-As-You-Go fund, which normally is spent on road work. State highway work will offset some of that loss, according to county officials.
Peter Albrecht, a county spokesman, said the Alabama Department of Transportation will spend about $30 million on improvements to U.S. 43, the road the plant is on. The state Department of Transportation and the county are also close to an agreement on the state speeding up the four-laning of Schillinger Road from Interstate 10 to U.S. 98, Albrecht said.
Matt McDonald, an attorney representing the commission for the bond sale, said the county would be paying a slightly higher interest rate on the bonds in order to get more money up front to cover the estimated $2 million in costs related to the bond sale. McDonald said that some of the $70 million also is likely to be placed in an interest-bearing account, which could also help defray the issuance costs.
The two members currently on the Mobile County Commission are expected to vote today to hire University of South Alabama economics professor Semoon Chang to study the county's economic impact on surrounding areas.
Specifically, the commissioners want to be able to use the study when they meet with other local governments in efforts to persuade them to help Mobile County pay its $83.5 million commitment to German steelmaker ThyssenKrupp.
The payment is part of an $811 million-plus incentives package that state and local governments offered the company to locate a $3.7 billion plant in northern Mobile County.
Before the company announced that it had chosen Mobile County, Commission President Stephen Nodine gathered leaders from other county and city governments to form the Lower Alabama Economic Development Cooperative.
Officials who joined the cooperative said they all made tentative agreements to contribute a combined $20 million for the steel mill incentives, which would lessen Mobile County's subsidy to $63.5 million.
But none of the other governments have officially agreed to any payment, and no one has decided how much each of them should pay.
Recently, a study conducted by Auburn University Montgomery professor Keivan Deravi showed that Mobile County would get the lion's share -- about 83 percent -- of the economic impact associated with the plant.
If Mobile County were to pay 83 percent of the $83.5 million going to ThyssenKrupp, that would come in at just under $70 million.
Nodine said Deravi's report does not show the total impact that Mobile County's economy has on surrounding counties because it is limited to ThyssenKrupp and includes no information about potential suppliers or about past projects that Mobile County has helped fund.
Chang's study will incorporate things such as an Airbus engineering center, an expansion at Austal USA's shipbuilding facility, and International Shipholding Corp. moving its headquarters from New Orleans to the RSA Battle House Tower. All of those projects received incentives from Mobile County and the city of Mobile.
"I think it's fair for everyone throughout the region to see what the city and county have stepped up to the plate to do," Nodine said.
Deravi's study focused solely on the impact of ThyssenKrupp employees, while Chang would also look at possible suppliers that will move to the area after the German plant begins production, Nodine said.
Chang's study also will examine the impact that new workers in those counties might have on property values and ad valorem taxes, Nodine said.
Chang's study should be complete in about two weeks and will cost the county up to $12,000, according to county spokesman Peter Albrecht.
Nodine said officials would use Chang's study when meeting with other area leaders to discuss their ThyssenKrupp contributions.
The commission held a special meeting on Tuesday when Nodine and Dean had planned to hire the Atlanta-based firm Competitive Strategies Inc. to conduct the study. But Nodine said officials from that company would not have been able to complete the research in the two-week time frame, so the county switched to Chang.
The Birmingham News
The threat of hurricanes wasn't enough to keep Nancy Carr from buying a condominium in Gulf Shores.
The three-bedroom beachside unit in Island Winds East was too good a deal to pass up. The condominium, which might have gone for about $500,000 a couple of years ago, was a steal at $300,000.
The Calera resident, who purchased the property with her husband earlier this year, will pay about $500 a month to a condo association to help cover structural insurance in case another storm hits the shore. That's on top of her mortgage. She'll also have to insure her furniture and other belongings.
She says the expense and the risk are worth it to have a waterfront gathering place for her family. But coastal real estate agents say they are seeing fewer buyers who feel that way these days in the wake of Hurricane Katrina, the most destructive storm ever to hit the Gulf Coast.
It's a buyer's market along the beaches of Alabama, real estate experts say, with an abundance of new properties at marked-down prices.
Two years ago, buyers would put a contract on a home without even seeing it. These days, they're taking their time, real estate agents say, knowing they can easily get a $400,000 condo at a reduced price.
So what's causing the slowdown? Dr. Semoon Chang, an economist with the University of South Alabama, points to two factors: fear of a devastating hurricane and fear of rising insurance prices. The fate of the market depends on this year's storm season, he said.
The National Oceanic and Atmospheric Administration predicts this hurricane season, which begins Friday, will be more active than last year. Forecasters expect 13 to 17 tropical storms, seven to 10 of them becoming hurricanes. Three to five of them are expected to be strong hurricanes.
"If we do not have a major hurricane hitting the area this year, the fears will calm down quite a bit," Chang predicted. If a major storm hits the Gulf Coast, it will definitely slow the recovery of the beachfront market, he said.
Real estate agents agree with Chang's assessment. Claudette Gable, managing broker of RealtySouth's Orange Beach office, said she saw a surge of buying activity after Hurricane Ivan battered the Gulf Coast in 2004 and triggered a wave a construction projects.
"But after Katrina in 2005, when the media showed so many pictures from New Orleans with the flooding, that's when sales started slowing down. That's when people got scared," she said.
Studying options:
Nowadays potential buyers are taking their time, studying their options and shopping around, she said.
That's a complete turnaround from a couple years ago, when buyers would make asking-price offers on condos without seeing them, she said. Many condos and waterfront homes drew "contract on top of contract," she said.
Today there are plenty of bargains for potential buyers to consider, she said. Two-bedroom condominiums that would have sold for $400,000 or more before Hurricane Katrina are now selling for $250,000, she said. "Prices have dropped considerably."
Home prices along the coast were bound to fall because they had soared for so long, said Tommy Brigham, chief executive of Birmingham-based RealtySouth. "Prices in that area a couple of years ago reached a point where they were not within reach of a broader market. Now there seems to be some bottom-fishing going on."
He estimates prices have dropped about 35 percent, even in the upper range. Condominiums that were priced at $1 million or more are selling for $650,000 to $750,000, he said.
In Carr's case, she and her husband offered $300,000 for a condominium priced at $329,000 and their offer was accepted.
"I think we were very lucky," she said.
Brigham said overbuilding along the Gulf Coast has contributed to the lower prices.
Prices have fallen to a point where people interested in waterfront property should start taking notice, he said. "There is only so much loss of value that will take place."
Last year, according to the Alabama Gulf Coast Convention and Visitors Bureau, 1,366 condominiums opened. A further 1,027 are set to open by the end of this year, and more than 900 next year.
Construction slows:
But the construction boom that led to the glut of inventory and lower prices is slowing, said Rob Burton, chief executive of Hoar Construction, which does work on the coast.
"From Panama City to Mobile the condo construction is starting to slow down," he said. The focus is now shifting to commercial construction, he said.
The Birmingham-based company is building Escapes to the Shore on Orange Beach, an 88-unit property set to open next year.
Burton says his company for the most part avoided the condo building boom so it wouldn't get caught in a bust. The Escapes project is more secure than some others, he said, because the developer is Cooper Communities, a well-established time-share developer. Many of the units are also presold, he said. But he expects younger, less stable developers might get pinched as more projects dry up.
Johnny Roberts, president of the Roberts Brothers Inc. real estate firm in Mobile, said he feels "the staying power" of residents and developers is being tested.
But positive things are happening, he said, noting that many restaurants, shops and other commercial businesses wiped out by Hurricane Ivan are back in business.
He estimates about 2,500 condominiums are on the market today along Alabama's beaches.
Two years ago, "there were none. Everything was sold" even before units were built, he said.
An analysis of the market along the Alabama Gulf Coast commissioned by Gulf Shores-based Condo Owner magazine found that in 2005, there were closings on 520 condos in Perdido Key alone. In 2006, there were 388.
Sales of condominiums and townhomes in Baldwin County dropped 15 percent last year, from more than 3,200 units sold in 2005 to fewer than 2,750 units last year, according to the analysis.
After Hurricane Katrina, some buyers of condominiums in projects still under construction backed out, in some case forfeiting as much as 30 percent of the asking price they paid to hold the property, Roberts said.
"I believe we'll have to go through another hurricane season unscathed for buyers to really start coming back," Roberts said.
Some of those buyers could have been scared off by the escalating insurance premiums, Gable said. "If you do get hit by a hurricane there are some pretty hefty assessments."
Chang estimates that insurance premiums have tripled for many waterfront property owners. A hurricane deductible of 2 percent, or a minimum of $1,000, is also being applied to every policy, according to the Alabama Insurance Underwriting Association, better known as the Alabama beach pool.
Ragan Ingram, spokesman for the Alabama Department of Insurance, says it has been difficult for some to find insurance. "Most are finding it, but it's been more expensive."
A storm-free season might help stabilize insurance rates, he said. "But I don't know that we're ever going to return to pre-Ivan insurance pricing."
Some property owners, like Carr, are willing to take the risk.
The coastal area is going to be an appealing place regardless to some people, Brigham said.
Carr recalled Hurricane Ivan, which did little damage to her previous beach home in Panama City. Two tornadoes spawned by the storm, however, ripped 15 trees and a fence from her Calera property.
"If it's your turn, then it will happen to you regardless," she said.
Saturday, May 26, 2007
Thousands of hourly Alabama workers are in line for a pay raise following Congress' decision this week to approve the first minimum wage increase in a decade.
Courtesy of an extra-tight labor market, however, relatively few of them are likely to be in Mobile and Baldwin counties, several observers said Friday.
At the University of South Alabama, economist Semoon Chang foresaw "virtually no impact" from the increase, which will push the current minimum of $5.15 an hour to $7.25 over the next two years.
Already, "you can't find anybody making less than $7 an hour," said Chang, who runs USA's Center for Business and Economic Research. The effect might be more pronounced, he added, in Washington County and other rural areas to the north.
In those areas, some "mom and pop" businesses may have difficulties that could lead them to consider layoffs, he said.
In tourist-centered south Baldwin County, the minimum wage increase will have little effect, said Herb Malone, president and chief executive officer of the Alabama Gulf Coast Convention and Visitors Bureau.
"Our businesses have been paying quite a bit over minimum wage for a number of years based on supply and demand," Malone said, adding that one Gulf Shores fast food restaurant was recently offering $9.50 an hour.
The increase won final approval Thursday evening as part of a $120 billion emergency spending package aimed mainly at paying the bills for the wars in Iraq and Afghanistan.
Among various add-on provisions that drew criticism from the White House, the legislation provides $3 billion in disaster aid to farmers, $85 million in assistance for Gulf Coast fishermen, $3 million for dredging on the Alabama River, and a waiver of federal cost-sharing requirements for help provided to Alabama and other Gulf Coast states following the 2005 hurricanes.
Under the bill, the minimum wage will tick up to $5.85 an hour in about two months, followed by increases to $6.55 next summer and then to $7.25 in mid-2009.
Last year, 43,000 Alabama hourly workers made $5.15 or less, according to U.S. Bureau of Labor Statistics estimates. Of that total, it's unclear how many of those are restaurant waiters and waitresses, who can be paid as little as $2.13 an hour on the assumption that much of their pay will come from tips.
The newly passed legislation won't raise the minimum for restaurant workers, said Liana Fox, an analyst at the Economic Policy Institute, or EPI, a labor-supported think tank in Washington, D.C. Although restaurant owners are supposed to make up the difference if employees' total compensation doesn't equal the standard minimum wage, Fox said, that requirement "is not very well-enforced."
In its own analysis, based on 2005 numbers, the institute predicts that 126,000 Alabama workers will directly benefit from the minimum wage increase. The reason for the higher number, Fox said, is that those calculations include people making between $5.15 and $7.25 whose wages will eventually be pushed up as the increase is phased in.
Congress last raised the minimum wage in 1997; after adjustment for inflation, the $5.15 threshold is the lowest since 1955, by the institute's reckoning.
"It's kind of shameful it's been a long time coming," Coden resident Paul Nelson said in a Friday phone interview. Nelson is maintenance manager for a Mobile shrimp processing plant that employs some minimum-wage workers. While the added costs will have to be passed on to consumers, Nelson acknowledged, he thought the total increase should have been higher, particularly as gas prices soar.
But the Business Council of Alabama, the state's leading business lobby, positioned itself against any raise. In a prepared statement, council President Bill Canary called it "a tax increase on Alabama's small business community that is both unfair and unproductive for economic development."
Representatives of the Alabama AFL-CIO union federation could not reached for comment Friday.
At the University of Alabama's Center for Business and Economic Research, Director Samuel Addy doubted that the boost would force businesses to let workers go.
"We're not talking about a huge increase," Addy said.
In other spending provisions, the $3 million for Alabama River dredging is needed to undo damage caused by Hurricane Dennis in 2005, Jerry Sailors, president of the
Coosa-Alabama River Improvement Association, said earlier this week.
As barge traffic has plunged in recent years, just two companies -- Alabama River Pulp in Monroe County and a sand-and-gravel operation in the Selma area -- now use the river, Sailors said. But a Selma wooden pellet company plans to join them, he said, and other firms are interested, but want assurances of a reliable river channel.
"It's imperative that we get that thing under way," Sailors said.
In regard to the waiver of cost-share requirements for federal disaster aid, a spokesman for U.S. Rep. Spencer Bachus, R-Birmingham, has said it could save the state and local governments in Alabama at least $20 million.
The Congressional Budget Office has not provided an official estimate.
Mobile Register
Study figures steel mill's economic impact
Thursday, May 24, 2007
By JEFF AMY and DAN MURTAUGH
Staff Reporters
The ThyssenKrupp AG steel mill will increase the level of economic activity in Alabama by $965 million a year, creating a total of 7,000 direct and indirect jobs when the plant is in operation.
That's according to a study released to the Press-Register on Wednesday by the Alabama Development Office. Keivan Deravi, an economist at Auburn University Montgomery, prepared the analysis for the state.
Alabama's total economic output was worth $134 billion in 2005, according to the federal Bureau of Economic Analysis, meaning the mill will add about 0.7 percent to the state's economy.
However, information about the local impacts of the $3.7 billion investment by the German steel behemoth remained unavailable as of Wednesday. State officials said it's up to the Mobile Area Chamber of Commerce to release those numbers.
Chamber officials said they weren't sure if they had received final numbers. Bill Sisson, the chamber's economic development chief, was in Paris on Wednesday, as was Alabama Development Office Director Neal Wade.
Local impact numbers could be key in Mobile County's negotiations with other cities and counties that could share some of the load of the incentive package.
Mobile County Commission President Stephen Nodine has said he aims to shift $20 million of the county's $83.5 million total onto other cities and counties, including some in Mississippi.
Officials in those other jurisdictions, though, have said they won't make any financial commitments until they have a better idea of how much their communities will benefit from the plant.
"We're still looking to get some kind of report (from Deravi) to determine how he believes each county is being economically affected by this project," said Baldwin County Commissioner David Ed Bishop.
Nodine, apparently unsatisfied with the Deravi study, wants to commission a second analysis.
Meanwhile, figures released by the city of Mobile show that increased sales taxes alone may not cover bond payments on the $33.5 million it has promised.
State and local governments offered ThyssenKrupp more than $811 million -- including $461 million up front -- in incentives to build the steel mill in northern Mobile County instead of Louisiana.
According to the overall study, state and local governments will reap $1.4 billion in tax revenues over 30 years, breaking even on the $461 million in state and local cash incentives by 2020, after 10 years of operation, and recouping all the property, income and utility tax breaks by 2030.
Of its $83.5 million, the county will get back about $45 million through the state transportation department paying to widen and expand Schillinger Road.
School property taxes, where no breaks have been granted, are projected to bring in $218 million for the state, Mobile County and Washington County over 30 years.
Beyond the 2,700 employees of ThyssenKrupp, spending from the mill is projected to create 4,300 indirect employees.
ThyssenKrupp employees will make an average of $41,900 a year, and indirect employees will make an average of $30,650, Deravi wrote.
The $41,900 salary for ThyssenKrupp employees is lower than the $50,000 to $65,000 range discussed by local economic development officials in the days just before and after the May 11 announcement.
Linda Swann, assistant director of the Alabama Development Office, said state officials expect jobs at the steel mill to pay more than $50,000.
Deravi's average figure comes from the expected payroll and total employment figures that ThyssenKrupp provided to the Alabama Development Office. Deravi, who has performed impact studies after all the state's major auto factory announcements, writes that his analysis is a "conservative estimate."
ThyssenKrupp spokesman Christian Koenig could not be reached for comment.
Deravi's study estimates that the construction payroll for the plant will reach $1 billion per year before operations begin in 2010 -- four times as high as the total payroll of $245.7 million from the direct and indirect jobs once the plant is in operation.
The economist predicted that the company will spend $1.8 billion on machinery and equipment, mostly from outside the state, but said the lion's share of $900 million in building material purchases would happen close to the Calvert site.
Though the local numbers were not released, Mobile city and county officials have seen some estimates.
Nodine said the report he saw focused on sales tax revenue increases and did not include property tax impact from new homes and new residents.
Deravi said his overall analysis accounts for property tax increases. He also said he had gone back and tried to refine the impact numbers for local jurisdictions. Deravi emphasized that benefits to individual areas are harder to project. "I would say there is a fair degree of estimation involved," he said.
Nodine said he plans to ask University of South Alabama economics professor Semoon Chang to study the property tax revenue impact to counties and cities in the area of the new workers and new homes the steel mill will spawn.
"That's up to him," Deravi said. "I tried the best I could to capture everything."
Deravi said he uses existing statistics and economic patterns to compute his analyses and said his methods can't predict if new population clusters will form or where individuals relocating into the area would choose to settle.
"All those are subject to unknowns we can't model," Deravi said.
Chang's study would also show the economic impact to those jurisdictions from other economic development projects that the city and the county have helped fund, such as Austal's shipbuilding plant and an Airbus engineering center at Brookley Field Industrial Complex, Nodine said.
"Mobile County and the city of Mobile are the ones who have historically put up cash for incentives," Nodine said. "It's really time for us to build a consortium to get this regional effect."
Mobile Mayor Sam Jones wrote to the City Council on May 11 that the plant would create an additional $50.2 million in city sales tax revenue over 20 years, citing numbers from the Alabama Development Office.
"I am confident it will be substantially higher than that," Jones said.
Assuming an interest rate the same as the 4.8 percent when the city borrowed money last year, it would cost $52.2 million to pay off $33.5 million in bond debt over 20 years, meaning the increased sales tax collections wouldn't be enough to cover the amount.
Originally, the state asked the city to chip in $10 million, and that was raised to $20 million weeks before the announcement.
Connie Hudson, chairwoman of the Mobile City Council's Finance Committee, said Alabama Gov. Bob Riley asked the city to increase its contribution from $20 million to $33.5 million at a meeting four days before the announcement.
"It was money well spent in their opinion," Hudson said, adding that Riley and Wade said the plant would bring suppliers and other spinoff activity.
Mobile Register
ThyssenKrupp
eyes state for giant plant
Mobile Register
Racetrack
plans take shape
Earnhardt family members play key roles
Sunday, January 28, 2007
By KATHY JUMPER
Real Estate Editor