The $300 million of Gulf Opportunity Zone bonds allocated for a rail car manufacturing plant in Colbert County, Ala., would be in jeopardy under a bill that has been introduced in the House that would effectively block any tax-exempt financing for the project.
The bill, introduced by House Ways and Means Committee member Rep. Earl Blumenauer, D-Ore., would restrict the two newest additions to the Gulf Opportunity Zone - Colbert County as well as Dallas County in Alabama - to allocating GO Zone bonds only for projects that began after they were added to the zone. The bill is pending in the committee.
Meanwhile, Rep. John Peterson, R-Pa., and other members of the House Bipartisan Energy Working Group introduced the group's renewable energy bill, which would extend the authorization for clean renewable energy bonds for another five years through 2013.
The National Conservation, Environment, and Energy Independence Act is currently pending before a number of committees, but a congressional aide said if another 81 cosponsors are added to the current 109, the bill could proceed straight to the full House for consideration.
Colbert and Dallas counties were added to the GO Zone by a provision in the omnibus housing bill, which was enacted into law on July 31. The manufacturing facility in Colbert County that is currently being constructed by National Alabama Corp., a subsidiary of National Steel Car Ltd., would not qualify for tax-exempt financing under the proposed legislation because it was underway before the housing legislation was passed.
Blumenauer, who represents a different rail car plant within his own district, the Greenbrier Cos., has spoken out against the inclusion of Colbert County in the GO Zone. He has argued that the county is far removed from the coast and the hurricane damage the GO Zone bonds are intended for, and that including the region in the program so it can attract a specific project amounts to a disguised earmark. He also has criticized the measure as a subsidy for a foreign company, since National Steel Car is based in Canada.
"[The county is] 300 miles from the coast and doesn't have much to do with housing and has nothing to do with damage from Katrina," Blumenauer said on the House floor last month.
Colbert County is in northwest Alabama, and is not contiguous with the GO Zone to the south.
Since Blumenauer's bill is so specifically targeted, it is likely that in order for it to be approved it would have to be included in a larger tax bill, for example, such as one of several "extenders" bills pending in both the House and Senate that would extend several expiring or expired tax provisions.
Blumenauer's bill currently has three additional co-sponsors - Reps. Sam Johnson, R-Tex., John Murtha, D-Pa., and Maxine Waters, D-Calif.
But regardless of the legislation, Alabama and Colbert County are already facing challenges with the rail car plant. State and local governments are currently facing $30 million in penalties due to the lengthy time it took Congress to pass the GO Zone legislation.
Their contract with National Steel Car stipulated that the governments would suffer the penalties if Congress failed to enact the GO Zone legislation by the beginning of 2008. The state would have to pay $13 million and the county and other local governments would be responsible for the remaining $17 million.
In addition, Alabama has committed its "best efforts" to obtaining tax-exempt financing for the project, meaning that it could be responsible for the funding if the federal government does not come through.
Alabama officials could not be reached for comment on the legislation.