There are various resources available for new and expanding industry that the City of Madison IDB can assist with and facilitate. Contact us at 256-772-2885 for more details.
Face 2 Face with Industry
F2F with Industry, Madison’s face to face business visitation program allows representatives of the City Council, Industrial Development Board and the Madison Chamber of Commerce Board to visit manufacturers throughout the year. If you would like to request a visit please let us know! F2F Visits include:
- A brief company overview
- A plant tour
- A chance to introduce a few members of our team
As a Madison business, F2F with Industry is your opportunity to speak directly to community leaders and our chance to hear more from you how we might assist in matters of workforce, roads and infrastructure, business growth and/or physical expansion, and overall marketing and promotion.
Industrial Development Grants
Industrial development grants are available to the Industrial Development Board or other government entity that will be leasing land or buildings to a new or expanding company. The agency can use the money to prepare a site or do repairs and thus save the company from that cost.
Industrial Revenue Bonds
Industrial revenue bonds (IRBs) are financing instruments issued by designated local industrial development boards (IDBs) or other issuers authorized by state law. Since 1949, IRBs have been a preferred method of financing used by industries locating to and expanding in Alabama. Often, financial institutions and other intermediaries participate by providing letters of credit backing the bonds. Thus, the company seeking the bonds must be considered creditworthy by the financial institution.
IRBs provide financing for land, building, and equipment for new and expanding manufacturing plants. Certain expenses such as architectural, engineering, legal, and administrative fees associated with the sale of the bonds can be paid from the bond proceeds (subject to the limitations of Internal Revenue Service regulations.)
Industrial Development Board issuing the IRB retains ownership of the bond-financed facility and leases it back to the company at a rate sufficient to pay the principal and interest on the bonds as they mature.
Tax Exempt Bonds
Tax-exempt IRBs are issued at rates lower than conventional sources because the interest paid on the bonds is exempt from both federal and state income tax. No more than $10 million in bonds may be issued by the Madison Industrial Development Board and no company can have more than $40 million outstanding. Companies using an IRB may not invest more than $10 million in one location, regardless of fund sources, for a period of three years prior to the issue and three years after it.
Companies may choose to lease all or part of their equipment and therefore eliminate that portion from the $10 million limit. IRBs are not generally cost-effective for amounts under $1 million because of the fees involved in issuing a bond. To be eligible, the company must obtain a letter of inducement from the Madison Industrial Development Board before any monies are expended on a project. In the case of tax-exempt IRBs, the Internal Revenue Code requires that land acquisition cost must be less than twenty-five percent (25%) of the total bond issue.
If the bond proceeds are used to finance the acquisition of an existing building, at least fifteen percent (15%) of the proceeds must be spent on renovation of the building within two years. Bond proceeds may not be used to purchase used equipment except in limited situations. There are a number of other requirements, including a public hearing and volume cap allocation. With this type of financing, competent legal counsel should be obtained early in the project.
Income Tax Capital Credit
Alabama law allows for a capital credit to be applied to income tax liability generated from projects approved by the Alabama Department of Revenue. The credit is 5% of the capital costs applied each year for 20 years.
Unlike many other states, Alabama does not levy property tax on inventory. There are also exemptions for raw materials inventory and finished goods inventory.