Alabama business roundup: Headlines from across state – 10/18/16 edition
Who’s purchased the low-income housing tax credit portion of Sterling Financial? Where’s there a funding boost for tech startups in the Yellowhammer State? Which gourmet hot dog chain is eyeing the state for its newest location? Answers to the these questions and more in today’s Alabama business roundup. Alabama News Center: Funding wave boosts Birmingham tech startup scene Entrepreneurs and innovators are getting noticed for their work in Birmingham, attracting millions of dollars in new investment for their technology-based startups. Recent months have brought at least three major funding announcements involving local firms: On-demand grocery delivery service Shipt announced during the summer that it had secured $20.1 million in Series A funding. Fleetio raised $750,000 from private investors, the fleet management software firm said earlier this month. Swell Fundraising, a software company that serves nonprofits, in August announced $500,000 in angel investor funding. Meanwhile, Daxko, a veteran of Birmingham’s tech scene, recently announced that San Francisco-based private equity firm GI Partners has acquired a majority stake in the company that will further accelerate its growth. Daxko provides software for health and wellness organizations. All the funding activity shows Birmingham has the right ingredients to fuel a thriving technology landscape and more growth is on the horizon, said Kathleen Hamrick, director of the UAB iLab at the downtown business incubator Innovation Depot. “The components people need to live, work, play and collaborate are here, in Birmingham,” she said. “That said, it’s exciting, but not all that surprising that we’re now seeing increased support for startups — evidenced by activity such as that of the recent funding rounds seen with Fleetio, Swell Fundraising, Shipt and Daxko.” Read more here. AL.com: Regions Bank buys low-income housing tax credit portion of Sterling Financial Regions Bank has purchased a portion of First Sterling Financial that manages low income-housing tax credits. First Sterling, based in Great Neck, New York, was founded in 1979 and deals in syndication, asset and portfolio management of Affordable housing investments. Regions has acquired the Low Income Housing Tax Credit (LIHTC) corporate fund syndication and asset management businesses. Terms of the deal were not disclosed. “Regions has a long history of supporting affordable housing developments that benefit communities through direct investment in Low Income Housing Tax Credits,” John Turner, head of Regions’ Corporate Banking Group, said in a statement. “The addition of First Sterling’s industry-leading syndication and asset management capabilities will allow us to grow non-interest revenue and offer clients additional solutions to meet the affordable housing needs of more communities.” Sterling has raised more than $1.9 billion in investor equity through both proprietary and multi-investor funds. It has been used to develop more than 700 properties in 45 states and Puerto Rico. Birmingham Business Journal: Hot dog chain eyes expansion into Alabama A fast-growing chain of gourmet hot dog restaurants is planning to add 300 stores over the next 12 years, and Alabama is one of the states on its radar. Pasadena, Calif.-based Dog Haus has inked a deal with American Development Partners that will result in hundreds of new restaurants for the chain, which currently has 21 stores open in the Western U.S. The deal is valued at more than $500 million. The company hasn’t disclosed which markets in Alabama it would target for franchises. American Development Partners will aid in the development of new locations, and facilitate the acquisition of land and oversee construction of this deal’s over 300 new franchise locations. Dog Haus specializes in gourmet hot dogs, sausage and burgers. AL.com: Polaris to host grand opening this fall for new Alabama vehicle plant Polaris will finally unveil its new Center of Manufacturing Excellence months after starting vehicle production in Huntsville-annexed Limestone County. The Minnesota company will host a grand opening at 10 a.m. Nov. 1 on 7049 Greenbrier Parkway N.W. The location, which has a Madison address, spans 910,000 square feet on 505 acres and will serve at least 1,700 workers at full capacity. The powersports leader announced it began making Polaris RANGER vehicles and Slingshots this summer at the plant, which handles assembly, chassis and body painting, welding, fabrication and injection molding. In addition to a multi-shift manufacturing hub, the campus has a research and development (R&D) center and distribution warehouse. Polaris spokeswoman Marlys Knutson said the facility has about 450 workers. AIDT, the state’s workforce development agency, is seeking welders, painters and assembly operators for the Polaris site. Some roles require applicants to complete AIDT pre-employment training to be considered. The starting wages, which will increase after three and nine months of employment, are as follows: Welders ($14.25) Painters ($14.25) Assembly Operators ($12.75) Click here for more information. A Polaris worker was taken to UAB Hospital a week ago for burn injuries he sustained while on the job in Huntsville. Polaris, which said it is investigating, has not released details about the cause of the incident.
Daniel Sutter: Who do we care about?
The fall semester is underway and so I will start this week with a question. What common issue is raised by the following local, state, and national policies? Pike County enacts a 4% tax on hotel rooms. Alabama’s $80 million incentive package of tax breaks and assistance induces Polaris to build a new all-terrain vehicle manufacturing plant in Huntsville. The Environmental Protection Agency’s (EPA) Clean Power Plan to reduce greenhouse gas emissions from electricity generation claims billions of dollars of benefits from reduced global warming. Each involves how we should evaluate the effect of government policies on people who do not live in the enacting government’s jurisdiction. Let’s consider how each issue affects nonresidents in more detail. A hotel tax will increase the price of rooms, and so economists would say that customers pay part of the tax. Many customers will be out-of-town visitors, meaning that the tax would be “exported.” Therefore visitors will pay in part for services provided by our local governments in Pike County. The Polaris plant will employ nearly 2,000 people with an estimated payroll of $75 million. The new jobs with good pay and relocation of current company employees will benefit Huntsville. But Polaris was looking at sites in 13 other states, and the benefits to Huntsville would have materialized wherever Polaris built the plant. From a national perspective, Alabama’s incentive package to Polaris merely diverted the plant from some other state. Global warming is a global problem, so greenhouse gas emission reductions by the U.S. (or any country) create benefits around the world. Bangladesh, for example, is a low-lying nation vulnerable to rising sea levels, and would benefit a lot from the reduction of greenhouse gas emissions. The U.S. may realize perhaps as little as 7 percent of the benefits from slowing global warming. Should we consider other nations’ benefits on par with domestic benefits for the Clean Power Plan? The treatment of nonresidents or foreigners involves economic, political and ultimately ethical dimensions. How should we as Alabamians or Americans consider the effect of government actions on “outsiders,” and should our politicians concern themselves exclusively with the well-being of the people they represent? A reasonable case can be made to count all benefits and costs regardless of the political jurisdiction. All lives matter because of our basic humanity, not because of whether someone votes in our elections. If we adopt this view, the international benefits for greenhouse gases should count, and we should dismiss the local gains in the site selection for Polaris’ new plant. A reasonable case can also be made to exclude international benefits. Consider national defense. Many Americans, myself included, would object to a defense policy built around what is good for other nations. Our military should protect our interests, and we have no duty to serve as the world’s policeman, even if this benefits foreigners. If we adopt this view, then the EPA should consider the benefits of its regulations for the people who must abide by and bear the costs. I do not see a good case, however, for why all Americans do not matter. Consequently we must view state and local economic development policies differently. Taxes on hotels and rental cars are “exported” beyond the community, but still paid (primarily) by Americans. Local economic developers view dollars diverted from elsewhere in the nation as a gain for the region or state. Furthermore, pursuit of tax breaks distracts businesses from what actually matters for the economy, namely locating plants where economic costs are lowest. Finally, taking advantage of neighbors through exported taxes fosters enmity among Americans and produces taxation without representation. People across Alabama, America, and the world prosper when we cooperate and trade with one another. Cooperation creates wealth. Discounting the effects of our government acts on outsiders encourages policies that benefit some at the expense of others. Our state and local governments should follow the guidance of the Golden Rule. Daniel Sutter is the Charles G. Koch Professor of Economics with the Manuel H. Johnson Center for Political Economy at Troy University and host of Econversations on TrojanVision.
