Alabama GO Zone Private Activity Bonds
The Gulf Zone Opportunity Zone Act will provide private businesses and
corporations in Alabama with the opportunity to finance construction
and reconstruction of projects through the issuance of tax-exempt bonds.
The Act provides for approximately $2.1 billion in additional authority
for Alabama and its political subdivisions to issue private activity bonds.
Private business owners and corporations may borrow tax-exempt money to
cover the costs of acquiring, constructing and renovating nonresidential
real property located in the GO Zone.
Issuance of any bonds authorized under this provision must also be
approved by Governor Riley.
Alabama Counties in the GO Zone
Tuscaloosa, Pickens, Sumter, Greene, Hale,
Marengo, Choctaw, Clarke, Washington, Mobile and Baldwin counties.
(Counties shown in orange on this map)
Projects That Qualify for Tax-exempt Financing
Eligible projects may include, but
are not limited to: retail stores, warehouses, manufacturing facilities,
industrial plants, office buildings, bank branches, hotels and motels, restaurants,
physician office buildings, medical hospitals and clinics.
The Benefits of GO Zone Bond Project Financing
Interest on bonds is exempt from federal and State of Alabama income taxes;
therefore the interest rate is lower than through conventional financing,
historically saving a borrower 1.50% to 2.00%. Congress has also excluded
the interest on the GOZB from Alternative Minimum Taxation.
Special Depreciation Election Benefit
The Act permits businesses to claim an additional first year depreciation deduction
equal to 50 % of the cost of new capital investments made in the Zone (depreciation
will be taken in lieu of tax-exempt financing). The depreciation deduction
is exempt from AMT, does not require approval by the State, and applies to
property placed in service prior to January 1, 2008, or January 1, 2009 for
real property. We recommend consultation with your certified public accountant
regarding qualification and treatment of this benefit. Morgan Keegan and Regions
welcome the opportunity to assist in evaluating and executing taxable or conventional
financing alternatives for those who select the depreciation deduction.
Advance Refunding Benefit for Municipal Debt
The Act provides for an approximate $1.125 billion of funds to permit an additional
advance refunding opportunity for municipal debt. Through this, the State, counties,
municipalities, etc. may apply to the Governor’s office for an allocation
of the proceeds. This opportunity is NOT restricted solely to the Zone;
it applies to ALL Alabama counties.
Securities offered through Morgan Keegan are not FDIC
insured, not bank guaranteed, and may lose value. |
