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April 16, 2010

Birmingham officials say stimulus money will create jobs, improve infrastructure

Source: http://blog.al.com/spotnews/2010/04/birmingham_officials_say_stimu.html

The city of Birmingham would use low-interest bonds shunned by Jefferson County to help create 1,200 jobs and improve streets, transit and hospitals, a city official said Wednesday.

Tracy Morant Adams, director of the Mayor's Office of Economic Development, told county commissioners that Birmingham would use money borrowed through the sale of taxable bonds under the American Recovery and Reinvestment Act of 2009 on infrastructure projects.

The commission last month voted not to borrow money through the federal plan, saying the county, already weighed down by billions in debt, can't afford to take on more.

The County Commission's finance committee voted Wednesday to give the city the option to issue $67 million in low-interest bonds for capital projects.

The full commission will vote Tuesday.

The proposed projects identified by the city include improvements at neighborhood recreation and athletic facilities; street alignment at Baptist Princeton Hospital and work at Sloss Furnaces Museum Visitors Center.

"Based on our initial analysis, the projects can yield over 1,200 additional jobs for the city and Jefferson County, which I think is substantial," Adams said. "We know that by benefiting the city certainly the county benefits as well."

Adams said the city would use $12.3 million of its bonding allocation and $26.8 million of the county's allocation to help finance some of the city's economic development projects. It would use $18.4 million of its bonding allocation and $10.2 million of the county's allocation for private facility bonds. Those tax-exempt bonds would benefit private companies -- who would also be responsible for paying interest on the bonds.

Griffin Lassiter, senior project manager for Birmingham, said the City Council will vote Tuesday on several economic development projects that include improvements to parks and recreation centers throughout the city; streets and mass transit.

A list of projects must be submitted to the Alabama Development Office by April 30. The city wants to issue the bonds by July 30, Lassiter said.

Under the stimulus bill, the federal government would cover 45 percent of the bonds' interest costs, but the city would be responsible for repaying the principal and the rest of the interest.

"The benefit is from a cost-saving perspective," Adams said. "For any of the economic development bonds that we pursue, there is a 45 percent credit against any interest that we would pay."

Commission President Bettye Fine Collins said she had hoped the county could take advantage of the bonds, but is happy the money will be used by the city.

"I stressed to the mayor's staff that we wanted things that would produce jobs and benefit people all over the county," she said.

The low-interest bonds will remain available to all the municipalities in Jefferson County, Collins said. "No one has expressed interest except the city of Birmingham," she said. "If anyone else has interest we will give them the deadlines."

Adams said "private facility bonds" enable developers to borrow money more cheaply without any risk to the municipality "because it would be the onus of the developer to get their bond counsel to structure that debt and sell that paper."