Alabama’s Commerce chief, Kay Ivey note economic development successes and challenges
Alabama has seen more than $40 billion in capital investment and the creation of more than 130,000 jobs since 2012.
Alabama, Birmingham preparing for economic impact of Opportunity Zones
A new national tax incentive program that some believe could be the most transformative economic development tool ever has communities in Alabama, led by Birmingham, preparing to cash in on its share of potentially trillions of dollars in new investment. Opportunity Zones are low-income census tracts with a poverty rate of at least 20 percent and a median family income of less than 80 percent of the statewide or area median income. The program was established as part of the Tax Cuts and Jobs Act of 2017 in hopes of spurring new investment into these areas. Alex Flachsbart is an attorney with Balch & Bingham and an expert on Opportunity Zones. He recently presented on the subject to members of the Economic Development Association of Alabama. “What it does is provides people with capital gains an incentive to put those gains back into low-income communities, to redeploy that capital to places that really need it,” he said. Alabama Gov. Kay Ivey tasked the Alabama Department of Economic and Community Affairs with choosing the 158 Opportunity Zones that Alabama would designate from the 629 eligible census tracts. The guidelines for Opportunity Zones are still being written, with the initial regulations expected this month and proposed regulations in place by year’s end. What is known is that those who have capital gains from the sale of everything from stocks to businesses can reinvest those gains into qualified projects within designated Opportunity Zones and receive tax deferral and reduction benefits over time. Birmingham and other cities want to be prepared when investors are ready to put capital gains into approved projects like startup businesses and real estate developments. Alabama has designated 158 census tracts as Opportunity Zones. (ADECA) The city is creating the Birmingham Inclusive Growth (BIG) Fund to attract investments in Opportunity Zones in the city. Josh Carpenter, director of innovation and economic opportunity, said Birmingham has to be ready now because it will be competing with cities across the country for those dollars. “We’re excited because Birmingham was able to secure 24 Opportunity Zones and also because we have a lot of investable assets here,” he said. Carpenter said the city is prepared to lead, direct and maximize investments in Opportunity Zones. He and Birmingham Mayor Randall Woodfin see the city’s role as not only increasing quality of life and economic growth in neighborhoods but in helping investors. Carpenter said areas like the Innovation District, the Civil Rights District and the Fourth Avenue Business District, as well as the area around the Birmingham-Shuttlesworth International Airport, all stand to initially benefit from Opportunity Zone investments. David Fleming, CEO of REV Birmingham, said he envisions communities in downtown Birmingham but also neighborhoods like Avondale, Woodlawn, East Lake and others benefiting. “I think the Opportunity Zone incentive that’s been created holds tremendous potential for Birmingham, especially since most of the city was able to be designated an Opportunity Zone,” he said. “That means that this is not just an incentive for downtown, but it’s an incentive that could encourage business investment as well as physical redevelopment in a wide range of the territory of the city.” Fleming said the best incentives help attract new capital, leverage private sector dollars and can be combined with incentives that a district or community has in place. “When you talk about the scope of the market for Opportunity Zones, you’re talking about the potential for $6.1 trillion worth of capital gains that could be flowing into communities all over the country,” Flachsbart said. In Alabama, every county has an Opportunity Zone. Alabama is preparing to tap into potentially trillions of dollars across the country that may invest in Opportunity Zones. (Economic Innovation Group/Alabama Newscenter) “Across the state, this incentive will be available for investment, not just in urban communities but rural ones, too,” Flachsbart said. Active businesses, startups and business that have been around that comply with certain tax rules are potential investments. New real estate construction projects, as well as qualified rehabilitation of older buildings, will be among the investments. Investors get the most benefit by investing in an Opportunity Zone for the long haul, Flachsbart said. “There are a series of incentives to sort of help them do that, but the basic point is the longer you hold your investment in one of those distressed areas, the more incentive you get as an investor,” he said. “We’re hoping that this program will really catalyze getting investment off the coast and into places like Alabama.” Investors are anxious to put their capital gains into Opportunity Zones, Flachsbart said. “Interestingly, you’re already starting to see money flow through this program now,” he said. “That’s what’s amazing about this program is the level of excitement within the investor community around what’s going on.” Investors are putting money into one-off projects now but as regulations are approved, the expectation is that large, national funds will be created to invest in Opportunity Zones based on the best chance to enhance investment. “What we have to remember is, here in Alabama, while we’ve got 158 incredible Opportunity Zones, we’re competing with places all over the country,” Flachsbart said. “What we need here in Alabama is a strategy to ensure that we can get our share of that massive $6.1 trillion of potential dollars invested here.” Birmingham will be ready, Carpenter said. “We’re already putting things in place,” he said. Republished with the permission of the Alabama Newscenter.
Alabama port looks to add to its $22.4 billion economic impact with expansions
The Alabama State Port Authority is one of the largest economic engines for the state and wants to build on its $22.4 billion economic impact. The 4,000 acres that make up the state docks have multiple complexes that handle everything from auto parts to coal and from poultry to pine. But the port could be doing more, according to Jimmy Lyons, director and CEO of the Port Authority. Alabama port moving forward with growth plans from Alabama NewsCenter on Vimeo. “We’ve got a couple of exciting projects going on right now,” Lyons said. “We’re in the midst of doing a second expansion to our container terminal, actually our third phase. We finished phase two last year and realized that’s not enough, so we’re going to phase three right away. We’re on schedule to have that work all completed by the end of ’19.” The start of 2019 should see construction begin on a new $60 million automobile roll-on, roll-off terminal, a major move to support automotive logistics in a state where automotive manufacturing is a major industry. Another major event will take place Aug. 14 when Walmart officially opens its $135 million import distribution center in Mobile. In addition to creating 550 full-time jobs, that 2.5 million-square-foot facility will generate something the port desperately needs: empty shipping containers. Lyons told the Economic Development Association of Alabama at its 2018 Summer Conference this week that the state struggles to find enough shipping containers to meet the demand. With Walmart bringing in 50,000 containers per year when fully operational, that will help provide more empty cargo containers for exporters. That will reduce costs for exporters who pay to bring in empty containers; it will also help Alabama’s port retain business that now goes to other ports when containers aren’t available, Lyons said. The Army Corps of Engineers is seeking comments now on a $388 million plan to enlarge the port’s Mobile Ship Channel. A deeper and wider channel will clear the way for the port to accommodate larger ships that are already starting to come through the expanded Panama Canal, Lyons said. A deeper channel also allows ships to carry more weight, making the port more efficient for importers and exporters, he said. According to an economic impact study from the University of Alabama’s Center for Business and Economic Research, the port is responsible for 134,608 direct and indirect jobs in the state with a direct and indirect tax impact of $486.9 million. In 2017, the port handled 28.7 million tons of goods and 318,889 shipping containers. Republished with the permission of the Alabama Newscenter.
Personnel Note: Patrick Murphy takes over as President of EDAA
The head of economic development at Alabama Power has been named the new president of the organization representing those who practice the profession that is behind job growth and investment in the state. Patrick Murphy, vice president of Business, Sales and Economic Development at Alabama Power, received the gavel Wednesday as president of the Economic Development Association of Alabama at the organization’s 2018 Summer Conference. Lee Lawson, president and CEO of the Baldwin County Economic Development Alliance, is outgoing president. Murphy said he steps into the role at a time when he feels it’s important to emphasize the work that economic development professionals do throughout the state. “Economic development is a local issue,” Murphy said. “It is done, performed locally and regionally, by people in the communities. Our goal this year is to highlight that a little bit better.” Murphy said Alabama’s economic development success over the past couple of decades has been due in large part to the teamwork among the state, regional, local and private-sector economic developers. “This is not a weekend job and it’s not something you can do after hours,” Murphy said. “We can’t create the demand, but it’s important for us to create the awareness.” Jim Searcy is the executive director of EDAA. He said the organization is made up of 475 professionals throughout the state. He said EDAA seeks to represent those professionals with networking, education and advocacy that support the important work they do for the state. “Economic development used to be kind of a ‘mother and apple pie’ issue and it’s obviously something that is critical for the future of the state,” Searcy said. “One of the things that has been kind of disconcerting to us is that economic development has taken some hits to the meaning of that term and it’s been kind of lessened.” Patrick Murphy elected new president of Economic Development Association of Alabama from Alabama NewsCenter on Vimeo. Searcy said EDAA will be leading a public relations effort to improve and capture the true meaning of economic development. He said it’s not incentives and ribbon cuttings, it’s the work that goes into convincing business leaders that they will have the most success in a community in Alabama. “When you ride by an industrial facility or you ride by a commercial facility and you see all of those cars in the parking lot, they’re not just cars, those are lives that have been changed through economic development,” Searcy said. One key issue the organization faces is the need for legislation preventing economic developers from being listed as lobbyists in the state. While they were successful in getting such language passed in this year’s legislative session, that law sunsets in April 2019, putting pressure on EDAA to get a permanent fix early in the new session. “We’ve got to get a permanent fix,” Searcy said. “If we do not fix it, it will hurt Alabama’s competitiveness.” Should economic developers be defined as lobbyists, they would lose the confidentiality that comes with working with companies conducting site searches in multiple states, putting Alabama at a disadvantage. “Our competitor states – whether it’s Georgia or whether it’s Tennessee or whether it’s Ohio or California – were starting to use that against us,” Searcy said. “It just goes without saying that economic developers aren’t lobbyists. We advocate for better schools. We advocate for better infrastructure – transportation, broadband. We advocate for all of that because that makes the communities, it makes the state more competitive to go after projects. But we’re not lobbyists and that’s the clarification we’re looking to do legislatively in the next session.” In addition to Murphy as the new president, EDAA voted Megan McGowen-Crouch, city of Auburn Deputy Economic Development director, as second vice president; Brooks Kracke, president of NAIDA, as secretary and treasurer; and added board members Jeff Rabren of Regions Bank, Mike Swinson of Spire and Tanya Maloney of the city of Heflin. Republished with the permission of the Alabama Newscenter.
Kay Ivey to Alabama economic developers: “Momentum is on our side.”
Alabama’s two main economic development leaders urged state economic developers to continue to evolve and advance to help keep the momentum Alabama has enjoyed in landing and expanding industry. Alabama Gov. Kay Ivey and Alabama Commerce Secretary Greg Canfield addressed the 2018 Summer Conference of the Economic Development Association of Alabama Monday. Both had much to brag about. Alabama’s economy has roared back since the Great Recession a few years ago to post the lowest unemployment in state history and some of the biggest names in business now — or soon will — have significant operations in the state. Gov. Kay Ivey addresses the 2018 EDAA Summer Conference from Alabama NewsCenter on Vimeo. Consider: Alabama unemployment in October 2009 was 11.8 percent. In May 2018, it was 3.9 percent. Alabama’s gross domestic product (a measure of total economic output) was 2.5 percent in 2009. In 2017, it was 3.3 percent. In 2017, the state announced economic development projects with $4.4 billion in capital investment that will create an estimated 15,456 jobs. Monday, AIDT, the state’s lead workforce training department, announced it is working a record number 135 projects with 30,000 jobs. Alabama Commerce Secretary Greg Canfield shared his cautious optimism with leaders at the Economic Development Association of Alabama summer conference. (Mike Tomberlin/Alabama Newscenter) “Times have gotten better. The strategy is paying off,” Canfield said. “But we’re not yet where we want to be.” Ivey credited economic developers at the local level across the state with helping achieve the success. “These jobs are in large cities like Mobile and Birmingham, but they’re also in smaller towns like Brewton and Bridgeport,” she said. “We’ve celebrated announcements and groundbreakings with companies like Google and Facebook and Boeing and with some growing companies, too, like Kimber Firearms and AutoCar. Y’all, momentum is on our side and I want Alabama to be every company’s first choice for their location.” Ivey said corporate CEOs from around the world tell her they are successful in Alabama because of the quality and productivity of their employees in the state. Part of keeping the momentum the governor talked about is gearing economic development toward the jobs and businesses of the future. “We’re really focused a lot on technology and innovation, the growth of entrepreneurship,” he said. “It’s really about growing the knowledge economy in Alabama that will support the industry that’s here.” Canfield said the state is about to get a major tool to work with in that regard. Alabama EPSCoR, which represents research universities and private institutions like Southern Research and HudsonAlpha, is close to unveiling a gamechanger. “EPSCoR is putting together and about to launch a digital database that’s searchable so that economic developers and site consultants and companies who want to be able to find out where they can link their product development and their own internal research with that of public universities or private research institutions, they will actually be able to go into this database and if they want to find something like who is doing research right now on composite materials, who is doing research on nickel alloys in the aerospace sector, who is doing additive manufacturing and powder alloy research in technology development? They can actually go in and be linked to the specific researchers doing that work, not just at the university level, but at the researcher level,” Canfield said. “So at the state level, we will be able to provide that connectivity. This will really help us advance economic development to the next level.” Canfield’s optimism is due, in part, to education at all levels of the state (K-12, community colleges and universities,) along with worker training initiatives working closely to complement each other’s efforts. “I think the state has never been better aligned in terms of workforce preparedness,” he said. “That terminology really includes everything from education – the academic side of education but also skills development and certifications – anything that’s industry-specific, industry-recognized and equips Alabamians with the right tools necessary to be able to do the right jobs.” With that alignment, Ivey wants to ensure education and worker training are looking ahead to what’s needed. “We’ve got a great workforce, but we have got to keep the pipeline full with folks trained with higher skills to meet the jobs that we know are coming, and some of them are already here,” Ivey said. Many of those next-generation jobs will be in aerospace. Ivey said the state delegation’s recent efforts at the Farnborough International Air Show are paying off. “Even more good news may be on the horizon for Alabama,” she said. “I’m proud of what Airbus and Bombardier are doing to finalize their plans to create a second assembly line in Mobile for the A220 series. And, also, Leonardo is still in the running to be awarded the contract from the United States Air Force to build the T-100 trainers. Y’all, if Leonardo is successful and gets that contract, there are going to be 750 new jobs in Macon County. That is huge.” Canfield, too, is hopeful for the state’s chances on the T-100 trainer. “I am so eager to hear positive news for Tuskegee and Macon County,” he said. Ivey said watching Alabamians get good-paying jobs is the true goal of economic development. “All of this good news gives me great hope about our fine state,” she said. “We all want Alabamians to be able to achieve their dreams, live in a safe environment, have a quality of life and create a reputation for the state of Alabama that is envied worldwide.” Greg Canfield at the 2018 EDAA Summer Conference from Alabama NewsCenter on Vimeo. Republished with the permission of the Alabama Newscenter.
