Incentives Incentives

Investment Tax Credit

5% UP TO 10YRS.

An Investment Tax Credit (ITC) is a federal tax incentive that provides a dollar-for-dollar reduction in an individual's or business's income tax liability based on a percentage of the cost of qualifying investments. ITCs are designed to encourage investment in specific activities the government deems beneficial to the economy, most notably in the areas of renewable energy and green technology. 

How the Investment Tax Credit Works

The ITC functions as follows:

1.Qualifying Investment: An individual or business makes an investment in eligible property or a project, such as installing a solar energy system or rehabilitating a historic building.

2.Credit Calculation: The taxpayer calculates the credit amount, typically a percentage of the eligible costs (for many clean energy projects, the current base rate is 30% if wage and apprenticeship requirements are met).

3.Claiming the Credit:The credit is claimed when filing the federal tax return. Businesses generally use IRS Form 3468, Investment Credit, while individuals claiming the residential clean energy credit may use other relevant forms.

4. Reducing Tax Liability: The calculated credit directly reduces the amount of federal income tax owed. For example, a $5,000 credit reduces the tax bill by exactly $5,000.

5. Handling Excess Credit: If the credit amount exceeds the tax liability for the year, the unused portion generally can be carried forward to offset further taxes.

  Types of Qualifying Investments

While the original ITC was broader, modern federal ITCs primarily target specific areas. Common types of investments that may qualify include: 

• Renewable Energy Systems: Installation of solar panels, wind turbines, geothermal heat pumps, and fuel cells for both residential and commercial properties.

• Energy-Efficient Home Improvements: Investments in certain energy-efficient windows, insulation, and heat pumps for a personal residence (under the Energy Efficient Home Improvement Credit).

• Rehabilitation of Historic Buildings: Costs associated with rehabilitating certified historic structures can qualify for a credit.

Property Tax Abatement

A property tax abatement is a government-approved reduction in the amount of property taxes owed for a specified period, typically granted to encourage specific activities like new construction, property improvements, or economic development in designated areas. 

How It Works

Local and state governments use abatements as an incentive for property owners and businesses to invest in an area that needs revitalization or development. The mechanics typically involve the following steps: Designation of Zone: A local governing body first identifies a "reinvestment zone" or an area targeted for development or revitalization.

1. Eligibility Criteria: The local government establishes specific criteria for which properties or projects qualify for an abatement. Common criteria include a minimum investment amount, the type of development (e.g., residential, commercial, historic preservation), or income stipulations for residents.

 A property owner or developer must apply to the local assessing office or relevant governing body for the abatement, providing detailed documentation of the property and proposed improvements. The     application can be found on the local municipality's or county's website, such as the Town of Orleans Assessor's Office or the City of Philadelphia Services site

3. Agreement and Approval: If the application is approved, a formal abatement agreement is established between the property owner and the government, detailing the terms, duration (e.g., 5, 10, or 15 years), and conditions (e.g., job creation for businesses).

4. Reduced Payments: For the duration of the agreement, the property owner pays reduced taxes. The abatement often only applies to the increased value of the property resulting from the new construction or improvements, meaning the owner continues to pay full taxes on the property's original value.

5.Expiration: When the agreed-upon period ends, the property owner is responsible for the full, unabated property tax amount based on the property's current market value. Property owners should plan for this increase to avoid a financial shock. 

 Purpose

The primary goals of tax abatements are to:

• Attract investment: Provide a financial incentive for businesses to build new facilities (e.g., factories, retail centers) and create jobs in a community.

• Revitalize neighborhoods: Encourage home buyers and landlords to construct or renovate properties in distressed or underdeveloped areas, which improves the overall appearance and integrity of the neighborhood.

• Stimulate economic growth: By fostering development, abatements can lead to a larger long-term tax base and a more robust local economy. 

Key Considerations

• Abatements vs. Exemptions: Unlike an exemption, which may reduce a property's assessed value to zero, an abatement is a reduction in the tax amount owed, or a tax on a frozen assessed value, for a set period.

• Compliance: Property owners must adhere to the terms of the abatement agreement (e.g., completing improvements, maintaining income thresholds for residential programs) or risk having the abatement revoked.

• Variability:Abatement programs vary widely from one municipality to another, so it is important to check the specific requirements and benefits in your local area. Local government websites, such as the Alabama Department of Revenue site, are generally the best source of information.

Sales Tax Abatement

A sales tax abatement is a government-granted reduction or elimination of the sales and use taxes owed on certain purchases for a specific, limited period. These are typically offered to new or expanding businesses as an economic incentive to encourage capital investment, job creation, and development in a specific area. 

How a Sales Tax Abatement Works

The process generally involves an agreement between a business (private user) and a local or state government authority (granting authority), such as a city, county, or industrial development board. 

1. Application and Agreement: The business must apply to the appropriate authority for the abatement before construction or purchases begin. If approved, the government body passes a resolution and enters into a formal agreement with the business, outlining the terms, duration, and specific purchases that qualify for the abatement.

 The business is issued a Sales and Use Tax Exemption Certificate for the approved project. This certificate allows the business (and its contractors) to make qualified purchases of tangible personal property, such as construction materials and new equipment, without paying the state and local sales tax to the vendor at the point of sale.

3. Specific Exemptions: The abatement typically applies to state and non-educational local sales and use taxes. Taxes earmarked for educational purposes generally must still be remitted.

4.Oversight and Compliance: The relevant state department of revenue (e.g., the Alabama Department of Revenue in Alabama) often supervises the process, and the business must provide annual certification of compliance with the terms of the agreement.

5. Expiration: The abatement is temporary and lasts for a specified duration, often until the project is placed in service or for a set number of years. Once the abatement period ends, the business is responsible for paying all standard sales and use taxes at the full rate. 

The main goal for governments is that the initial tax savings for the business will stimulate economic activity and lead to a larger overall tax base in the long run.

Sherwin-Williams Paint Grant

The Sherwin-Williams paint grant generally refers to programs sponsored by the company or The Sherwin-Williams Foundation that provide paint or financial support for community beautification projects and other charitable causes, often in partnership with non-profit organizations. These programs are not single, universal grants, but rather specific initiatives with defined eligibility and application processes. 

How Sherwin-Williams Paint Grants Work

The specific mechanisms for obtaining a grant vary depending on the program:

• Partnerships with Non-Profits: Sherwin-Williams frequently collaborates with established non-profit organizations, such as Keep Ohio Beautiful or Global Paint for Charity, to distribute paint and resources to communities in need. In these cases, eligible local affiliates or community groups must apply directly through the partner organization and meet their specific requirements, such as providing project plans, photos, and proof of insurance.

• Grants for Volunteers Program (Matching Gifts): The Sherwin-Williams Foundation offers a "Grants for Volunteers" program, through which employees, directors, and retirees who volunteer a minimum number of hours (e.g., 50 hours) to a qualified non-profit organization can request a monetary grant (up to a specified maximum, such as $200 USD) for that organization. The volunteer initiates the process by submitting a form to the non-profit, which then completes its portion and sends it to the Foundation for verification and final approval.

• Targeted Community Initiatives: The Foundation also provides significant grants to specific organizations (e.g., The Northeast Ohio Hispanic Center for Economic Development) to support initiatives like workforce development, healthy housing access, and community preservation. These are typically high-impact, strategic investments rather than an open application process for the general public.

• Local Store/District Donations: Store managers or district managers may have some discretion to coordinate local paint events or provide smaller donations to non-profits. 

  Key Details

• Eligibility: Grants are generally available to non-profit organizations, certified affiliates, or community groups, not private property owners or individuals.

• Application Process: The process usually involves submitting a detailed application to the relevant partner organization or the Foundation, including project descriptions, proof of tax-exempt status (e.g., 501(c)(3)), and often "before" and "after" photos for painting projects.

• Purpose: The goal is to enhance community assets, support social services, and foster economic well-being and workforce development in the communities where Sherwin-Williams does business.

• No Central "Neighborhood Grant" Form: There isn't a single, universally available "Sherwin-Williams Neighborhood Paint Grant" application form for the public; the programs are administered through various channels and partnerships

Land Purchase & Infrastructure

EDPA: Alabama SEEDS Program - S.E.E.D.S = Site Evaluation Economic Development Strategy

Administered by the Alabama Department of Commerce, mostly for industrial

· Match fund based on county population

· Eligible applicants; local economic development organization, cities, counties, industrial development boards and etc.

· Funds can be used for either site assessment or site development

· Examples of projects: support site development in both large cities and smaller, rural communities

· Site development grant which could cover land purchase, infrastructure improvements, site utilities

Examples of projects: 

· Supports site development in both large cities and smaller, rural communities 

· Funds infrastructure improvements, to make site more attractive for new businesses

CDBG - Community Development Block Grants 

· Can support economic development, downtown revitalization, infrastructure, sometimes acquisition or clearance of commercial or blighted property

The USDA Rural Economic Development Loan and Grant Program (we would need to talk with Chris Womack or the local USDA rural development office on this)

· A federal grant where rural utilities act as intermediaries; USDA gives them zero-interest loans or grants. They in turn pass through funds and loans to projects that will create or retain jobs for rural areas.

· Could be used for commercial acquisition or site improvements if part of a job creating project and the utility is involved.

· Serves job creation in rural area

The USDA Rural Development has an office is located in Camden and the State Director is Twinkle Cavanaugh

 Rural Business Development Grants (USDA RD) 

· For public bodies, government entities to facilitate community development in rural areas

· Could help if property acquisition supports new businesses or jobs

 Rural Community Development Initiative (RCDI) grant (USDA) = help with the street improvement for the property that Dexter talked about at council.

· Helps low-income rural communities with housing, community facilities and economic development improvements

Alabama Department of Economic and Community Affairs (ADECA) / CED (Community & Economic Development Division) = help with the street improvement for the property that Dexter talked about at council.

· Administers CDBG Grants (public infrastructure and economic development)

These grants usually go to rural cities for infrastructure, rehab or public improvements. Could be used for acquiring property might be eligible under certain CDBG projects especially if tied to blight elimination or economic development 

New Market Tax Credit Program

The New Markets Tax Credit (NMTC) Program is a federal initiative designed to stimulate economic development and job creation in distressed low-income communities by attracting private investment. It works by providing investors with a significant federal tax credit in exchange for making equity investments in certified financial intermediaries. 

How it Works

The NMTC program involves a three-step process: 

1.Allocation of Authority: The U.S. Department of the Treasury's Community Development Financial Institutions (CDFI) Fund awards the authority to offer tax credits to certified Community Development Entities (CDEs) through a competitive application process. CDEs are specialized financial intermediaries with expertise in lending and investing in underserved areas.

: Investors (typically corporations, such as large banks) make an equity investment into a CDE in exchange for the ability to claim a federal tax credit. The total credit equals 

, claimed over a seven-year period (5% for the first three years, and 6% for the remaining four years).

3.Project Financing: The CDE uses the capital raised from investors to provide favorable financing (loans or equity investments) to businesses and real estate projects located in qualified low-income communities. The terms of this financing are typically more flexible and at below-market rates than traditional loans, providing "gap funding" to projects that might not otherwise be feasible. 

Benefits and Project Types

The program is flexible regarding project types, but all investments must be in a qualified census tract (generally, an area with a poverty rate of at least 20% or a median income no more than 80% of the area median). 

• For Communities: The program helps finance projects that create jobs, provide new goods and services (e.g., healthcare, education, or fresh food access), and revitalize commercial and industrial real estate.

• For Businesses/Projects: Qualifying entities receive access to capital with more flexible terms (e.g., lower interest rates, interest-only periods, and potentially some loan forgiveness).

• For Investors: Investors receive a valuable tax credit against their federal tax obligations, in addition to meeting potential Community Reinvestment Act (CRA) requirements and philanthropic goals. 

Examples of funded projects include manufacturing facilities, health centers, schools, grocery stores, and community centers. Residential rental properties generally do not qualify unless there is at least a 20% commercial component. 

Opportunity Zone

An Opportunity Zone is an economically distressed community, designated by state and U.S. Treasury officials, where new investments may be eligible for preferential tax treatment. The program's purpose, created by the Tax Cuts and Jobs Act of 2017, is to encourage long-term private investment, job creation, and economic growth in low-income areas using tax incentives for investors. 

How the Program Works

The program offers three primary tax benefits to investors who reinvest eligible capital gains into a Qualified Opportunity Fund (QOF), a specialized investment vehicle, within 180 days of realizing the original gain. 

• Temporary Deferral of Capital Gains Tax: Investors can defer paying federal taxes on their original capital gains until the investment is sold or exchanged, or until December 31, 2026, whichever is earlier.

• Partial Reduction of Deferred Gain (Expired for new investments): This benefit is no longer available for new investments. It previously provided a 10% or 15% reduction in the deferred capital gains tax liability for investments held for at least five or seven years, respectively, by the 2026 deadline.

• Permanent Exclusion of New Gains: The most significant benefit is that if an investor holds their QOF investment for at least 10 years, any subsequent appreciation or gains from the sale of that QOF investment are permanently excluded from capital gains tax. 

Investment Requirements

To qualify for these tax benefits, investments must adhere to specific rules: 

• Investment Vehicle: Investments must be made through a Qualified Opportunity Fund (QOF), which is a corporation or partnership organized for this purpose and must hold at least 90% of its assets in qualified opportunity zone property.

• Eligible Property: QOFs can invest in qualified real estate projects or operating businesses located within an Opportunity Zone. Real estate must be new construction or undergo "substantial improvement" (meaning the fund must invest at least as much in rehabilitation as the purchase price of the building itself, excluding the land value).

• Community Impact: The goal is to drive new economic activity. Simply buying an existing, unimproved property does not qualify. Certain "sin" businesses, such as golf courses, liquor stores, and massage parlors, are ineligible for investment. 

Investors can find designated Qualified Opportunity Zones using the map and resources provided on the IRS Opportunity Zones page or on the CDFI Fund website. 

 The Opportunity Zones program is an economic development tool that offers investors significant tax benefits in exchange for long-term investment in economically distressed communities .Investors can defer or potentially eliminate capital gains taxes by investing realized gains into a Qualified Opportunity Fund (QOF), which in turn invests in projects within designated zones. 

 How the Program Works

The process involves investors, Qualified Opportunity Funds (QOFs), and designated Opportunity Zones (QOZs). 

1. Realize a Capital Gain 

An investor first sells an appreciated asset (such as stocks, bonds, or real estate) and realizes a capital gain. 

2. Invest in a Qualified Opportunity Fund (QOF) 

To receive tax benefits, the investor must invest the amount of the capital gain into a QOF within 180 days of the sale. The investment must be an equity interest, not debt. 

A QOF is an investment vehicle (a corporation or partnership) created to invest in QOZ property. Funds self-certify as QOFs by filing Form 8996 with their federal tax return and must hold at least 90% of their assets in QOZ property. 

3. The QOF Invests in the Opportunity Zone 

The QOF then invests in eligible property or businesses within a QOZ, such as: 

• Real estate development/rehabilitation: Existing buildings must be "substantially improved," meaning the fund must invest at least as much in improvements as the building was purchased for (excluding land cost) within 30 months.

• Operating businesses: The business must derive at least 50% of its gross income from activities within the QOZ, and substantially all (generally 70%) of its tangible property must be located there. Certain businesses, like golf courses, liquor stores, and massage parlors, are excluded ("sin businesses"). 

Key Tax Benefits for Investors

Investors can receive three primary tax benefits on initial investment, depending on how long they hold their QOF investment: 

Holding Period - Benefit - Status for New Investors (as of late 2025)

• Tax Deferral of the original capital gain. The deferred gain must be recognized and the tax paid by December 31, or when the investment is sold, whichever is earlier.      

Status for New Investors (as of late 2025) - Available 

• Reduction in the deferred capital gain amount (10% at 5 years and an additional 5% at 7 years, for a total of 15% reduction)      

Holding Period - 5 & 7 Years.                                 

Status for New Investors (as of late 2025) - Deadlines have passed to achieve the full 15% reduction by the  Dec. 31, 2026, recognition date

•   Permanent Exclusion of all capital gains tax on the appreciation. of the QOF investment itself. After 10 years, the investor's basis is adjusted to fair market value upon sale.  

Holding Period -10+ Years.  

Status for New Investors (as of late 2025)- Available

Investor Actions

• Find QOZs: Investors can find a map of designated zones on the IRS website or through the Community Development Financial Institutions Fund (CDFI Fund).

• File Forms: Investors must file Form 8997 annually with their federal tax return to report their QOF investments.

Non-Educational Property Tax Abatement

SEE RURAL AREA SECTION = UP TO 10YRS

A non-educational property tax abatement is a financial incentive offered by local and state governments to encourage specific types of development (such as industrial, commercial, or residential projects) by temporarily reducing or eliminating the portion of property taxes not earmarked for educational purposes. 

How It Works

The process generally involves an agreement between a government entity (city, county, or state) and a private individual or company, and typically follows these steps: 

• Purpose and Negotiation: The primary goal is to stimulate economic growth, attract new businesses, encourage construction/rehabilitation in designated revitalization zones, or create jobs. The terms of the abatement, including the percentage of reduction and its duration, are often negotiated on a case-by-case basis.

• Eligibility: To qualify, a project must typically meet specific criteria related to its location, the type of property, intended use, and capital investment or job creation projections.

• Agreement and Duration: The terms are formalized in an abatement agreement or development agreement between the granting authority and the property owner. Abatements are temporary, commonly lasting from a few years up to 10 or 20 years, and can be structured as a full reduction for a set period, a flat percentage discount, or a phased reduction where the tax gradually increases each year until the full amount is paid.

• Implementation: The abatement typically applies to the increase in property value resulting from new construction or improvements, not the pre-existing value of the property.

• Application and Compliance: Property owners must apply for the abatement and provide necessary documentation, such as the application, resolution, and abatement agreement, to the local assessing official. They must also comply with the terms, or the abatement may be revoked.

• Expiration and Future Revenue: Once the abatement period ends, the property becomes fully taxable at its enhanced value. The government benefits in the long run from a larger tax base and the overall economic growth the development brought to the area (e.g., increased sales tax revenue, new jobs, enhanced property values in surrounding areas). 

 The "non-educational" aspect means that taxes dedicated specifically to funding public education are still collected and passed through to school districts or educational funds, ensuring that essential public services continue to receive revenue during the abatement period.

Jobs Credit Rebate

SEE RURAL AREA FOR UP TO 4%

A Jobs Credit Rebate is a specific type of state-administered performance-based incentive, most notably used in Alabama, that provides an annual cash refund to qualifying businesses for the creation of new jobs. It is distinct from federal tax credits like the Work Opportunity Tax Credit (WOTC), which are non-refundable credits applied against income or payroll taxes. 

How the Jobs Credit Rebate Works (Alabama Jobs Act example)

The Alabama Jobs Credit functions as a cash rebate to incentivize job creation and capital investment within the state. 

• Eligibility: The program is discretionary and requires companies to meet specific criteria, including a minimum number of new jobs created (generally 50, but can be as low as 10 in targeted areas or for specific industries like technology companies) and payment of competitive wages to eligible, full-time Alabama residents.

• Rebate Amount: The rebate amount is typically up to 3% annually of the previous year's gross payroll for the eligible new employees. Enhanced benefits can increase this percentage (e.g., up to 4%) for companies locating in "Targeted" or "Jumpstart" counties, hiring a certain percentage of veterans, or operating in specific high-tech industries.

• Duration: The credit/rebate is available for up to 10 years.

• Process:

1. A business must enter into a project agreement with the state and receive approval from the Governor and the Secretary of Commerce.
2. Once eligibility criteria are met, the company can claim the credit.
3. The credit performs as a rebate against Alabama income tax and/or utility taxes (e.g., electricity, natural gas, and telecom).
4. The company receives a cash refund for the approved amount, or the credit can be used to offset applicable tax liabilities.
5. Any unused credit may generally be carried forward for a specified number of years (e.g., five years). 

Federal Job Credits (Work Opportunity Tax Credit)

Federally, the main incentive for hiring from specific groups is the Work Opportunity Tax Credit (WOTC). This is a general business tax credit, not a cash rebate. 

• How it works:
• Employers hire individuals from one of 10 targeted groups facing employment barriers (e.g., certain veterans, formerly incarcerated individuals, SNAP recipients).

• The employer must apply for and receive certification for the new hire from their State Workforce Agency within 28 days of the start date.

• The employer then claims the credit on their federal income tax return (using IRS Form 5884 and Form 3800, General Business Credit).

• The credit amount is typically 40% of the first $6,000 of wages (up to a maximum of $2,400 per employee), provided the employee works at least 400 hours. 

In essence, a "jobs credit rebate" typically refers to specific state-level programs that offer a direct cash refund based on payroll, while a federal "jobs credit" like the WOTC is generally a non-refundable tax reduction

State-Level Rural Area Incentives (e.g., Alabama)

The up to 4% mentioned likely pertains to state-level programs like the Alabama Jobs Act, which offers a cash rebate of up to 3% of the previous year's gross payroll for new jobs. 

• Enhanced Benefit: This rebate can increase to 4% for projects in designated "Targeted" or "Jumpstart" counties, which are rural areas or areas with significant economic need.

• Process: Eligibility is determined by state agencies such as the Alabama Department of Commerce. 

In summary, "job credits" provide incentives for hiring specific populations or in certain geographic areas. The federal WOTC offers a general business credit, while state programs like Alabama's provide enhanced benefits up to 4% for job creation in rural areas. 

Community Development Block Grants

HISTORIC FUNDING SOURCES FOR INFRASTRUCTURE

Community Development Block Grants

The state’s CDBG program is administered by ADECA, with funding provided by HUD. It can be used to extend water and sewer service to industrial sites. The program is available to all non-entitlement communities that meet applicable threshold requirements. Projects must benefit at least 51% low and moderate-income persons or aid in the clearance of slums.

With its Competitive Fund, ADECA awards money for its Large City, Small City and County categories. Applicants’ area scored soon competitive factors including community need, cost efficiency, appropriateness and impact. Application deadlines are announced during a workshop in the first quarter of each year. The Small City and County funds have grant ceilings of $400,000 and the Large City Funds has a ceiling of $500,000.

·        Look at ADECA website for more programs

·        New companies and expansion upgrades

·        Sewer service 20% match needed

Appalachian Regional Commission (ARC) and Delta Regional Authority Grants (RAG)

These are federal-state partnerships that work in Alabama’s 37 northern-most Appalachian counties and the Mississippi Delta region’s 20 Alabama counties to create opportunities for economic development. Of particular interest to development practitioners, they offer grants to help fund public infrastructure improvement projects. 

Regional Appalachian Commission: ADECA administers the ARC’s development programs in Alabama. The typical maximum funding per project is $200,000. Your regional planning and development commission helps in the preparation of grant applications. This can be used in combination with ADECA funds.

·        Example – park and recreation, fire and police needs

ADEM Infrastructure Improvement Loans

The Clean Water State Revolving Fund (DWSRF) and the Drinking Water State Revolving Fund (DWSRF) are low-interest loan programs intended to finance public infrastructure improvements.

·        The SRF has a loan interest rate about 1.5% - 2.0% less than the prevailing municipal bond rate.

·        The interest rate is fixed with a 20-year payback.

·        Loan repayment does not begin until construction is completed, but capitalized interest accrues.

·        Sewer and water expansion

·        Need approval before work starts or buyinh land

Industrial Access Road Improvement Grants

The Alabama Industrial Access Road and Bridge Program offers financial assistance to communities needing to provide access to new and expanding industries. The program allows for the construction of roads, bridges, etc. on public rights-of-way in conjunction with industrial projects.

The Alabama Department of Transportation administers this program and reviews applications and presents to the Industrial Access Bond Authority for consideration, consisting of the ALDOT Director, the State Treasurer, and the State Finance Director.

A local sponsor is required and this sponsor is responsible for any project costs above approved Industrial Access Road funding, securing all right-of-ways, all future maintenance, plan preparation, and all preliminary engineering, without cost to the state.

·        Has to be for industrial use only

·        Need at least 100 jobs

·        Project driven

·        Cannot be for single user need, to be for multi-site

·        Will need engineer and dept commerce manager involved in all projects

Site Preparation Grants

Retroactive state grants of up to $150,000 can be made to public bodies holding title to sites that qualifying projects will occupy. A project must be an industrial, warehousing, research or headquarters facility. In general, funds can be used to help pay for surveying, clearing, excavating and grading. Grant amounts are based on a sliding scale based on the % of a project’s capital cost or % of investment.

Growing Alabama Program

Is a credit equal to 100% of the donating taxpayer’s contribution (up to the reserved amount) to the EDO during the tax year for which the credit is claimed ad may offset up to 50% of the donor’s tax liability. Financial institutions may use the credit to offset 50% of their state portion of the excise tax liability.

The credit can be used to offset individual and corporate income taxes, the state portion of the financial institution excise tax, insurance premium tax, and state utility license tax.

The funds can be used on a number of expenses including site  development and infrastructure investments to industrial sites

The Alabama Site Evaluation and Economic Development Strategy

NEW FUNDING SOURCES FOR INFRASTRUCTURE

The Alabama Site Evaluation and Economic Development Strategy (SEEDS)

Is a grant program that aims to speed up development of economic sites throughout the state. Under the SEEDS program, the State Industrial Development Authority (SIDA) is authorized to award grants for site assessments and site development to local economic development organizations.

To be eligible for the grant, an organization must be a non-profit Alabama entity with a record of supporting or participating in economic development activities in the state.

The SEEDS helps address the urgent need for quality industrial sites in the state by providing roughly 50% of the cost to purchase land, prepare sites, or provide infrastructure for use by targeted industrial users.

·        For site preparation or assessment

·        Need to have Dept of commerce on your side to help say sale is a quality industrial site

·        Rural, they pay more, who have the land but not the capital or resources.

·        Limited (1). ED organization a year.

Alabama Development Fund

Will become effective on June 1, 2026 and will generate new funding for economic development by retaining a small portion of sales and property taxes that are abated in qualified economic development projects after that date.

·        Job Creation – the fund aims to attract high-quality jobs and capital investment.

·        Rural Revitalization – it focuses on providing resources to rural investment.

o   BIG FOCUS! Like a main street program

·        Infrastructure and Workforce Development – the fund will support site development and training programs to enhance workforce skills.

·        Placemaking – competitive grant program to be established to enhance and support communities to be more attractive to qualified economic development projects.

Rural Microentrepreneur Assistance Program 

Intermediary Relending Program

The USDA Intermediary Relending Program (IRP) provides low-interest loans to local organizations that, in turn, lend money to businesses and community development projects in rural areas. The program is designed to stimulate economic growth, create jobs, and improve economic conditions in rural communities.

How the Program Works

USDA Rural Development makes loans to eligible intermediary organizations, such as:

• Nonprofit corporations
• Community development organizations
• Public agencies
• Cooperatives
• Tribal entities

These organizations establish a revolving loan fund and re-lend the money to local businesses and community projects that may not qualify for traditional financing.

Eligible Uses of Funds

Loans can be used to:

• Start or expand a business
• Purchase land, buildings, equipment, or inventory
• Provide working capital
• Support community development projects
• Finance infrastructure that supports business development

Eligible Areas

Projects must be located in rural areas, generally communities with populations of 50,000 or less.

Loan Terms

USDA to Intermediary

• Up to $2 million per loan
• Fixed 1% interest rate
• Repayment term up to 30 years

Intermediary to Local Borrowers

• Loan terms and interest rates are established by the intermediary organization
• Funds revolve back into the loan pool as loans are repaid

Program Goals

• Increase access to capital in rural communities
• Support small business growth and entrepreneurship
• Create and retain jobs
• Strengthen local economies
• Encourage private investment

Potential Opportunities for Atmore

The IRP could be a valuable tool to support:

• Downtown business recruitment and expansion
• Small business startup financing
• Building rehabilitation and adaptive reuse projects
• Commercial property improvements
• Business incubator and entrepreneurial development efforts
• Gap financing for redevelopment projects identified in the Main Street Atmore Redevelopment Plan

Key Benefit

Unlike traditional grants, IRP funding creates a revolving loan fund, allowing the same dollars to be reused repeatedly to support multiple businesses and projects over time, creating a long-term economic development resource for the community.

Main Street Atmore Consideration

Main Street Atmore could explore partnering with:

• United Bank
• Escambia County Economic Development organizations
• Regional Community Development Financial Institutions (CDFIs)
• The City of Atmore
• Existing USDA Rural Development lenders

to establish or access a revolving loan fund that could complement the organization's existing Rainy-Day Micro Loan Program, helping provide larger-scale financing for downtown redevelopment and business growth through 2030.

Wallace Property Tax Relief Act

An ongoing 50% reduction in property taxes. If your building is a designated historic property, you may be eligible. (AL Historical Commission/County Tax Assessor

Alabama State Historic Tax Credits

Extension of current legislation required -- 25% state tax credit on eligible rehab costs applied against AL state income taxes. (AL Historical Commission/AHC

Federal Historic Tax Credits

Dollar-for-dollar tax credit against federal income tax of up to 20% of eligible rehab costs - if building is non-historic, but built before 1936, project may qualify for 10% tax credit on rehab costs. REV can help determine eligibility

Jobs and Capital Investments Incentive Package

Effective June 24, 2015, the Alabama legislature passed enhanced job credits and tax abatements to qualified projects. Eligibility depends on business activity, capital investment costs, employment, and wages. (AL Dept. of Revenue)

The Brown Field (ADEM)

Brownfields are abandoned, underused, or potentially contaminated properties that may be suitable for redevelopment. Developers often consider these sites because they are typically located near existing infrastructure such as highways, utilities, and commercial areas, which can make redevelopment more practical and cost-effective than developing undeveloped land.

Alabama's Brownfields Redevelopment and Voluntary Cleanup Program, established in 2001, helps facilitate the cleanup and reuse of these properties. The program allows eligible property owners, developers, local governments, and other non-responsible parties to assess and remediate contaminated sites while receiving liability protections from environmental claims. Most contaminated sites qualify, except certain hazardous waste facilities, Superfund sites, and properties already under cleanup orders.

To participate, applicants submit an application, conduct environmental assessments, develop and implement a cleanup plan, and complete any required remediation. Once cleanup is successfully completed, participants receive liability protections from the state.

The program has helped assess and redevelop hundreds of sites across Alabama and offers additional support through low-interest cleanup loans available to local governments and nonprofit organizations

Recycling Program (ADEM)

The Solid Wastes and Recyclable Materials Management Act (SWRMMA), enacted in 2008, established Alabama's goal of reducing solid waste by 25%, created a landfill disposal fee to fund recycling and waste management programs, provided grants for local recycling initiatives, and supported cleanup of illegal dump sites.

ADEM's updated recycling facility regulations (effective August 15, 2025) require facilities involved in recycling activities to register under specific categories, including Materials Recovery Facilities (MRFs) and Recovered Materials Processing Facilities (RMPFs). Existing PRF registrations expire on February 11, 2026, and facilities must obtain new registrations valid for five years.

MRFs handle solid waste to recover recyclable materials and are considered solid waste management facilities, while RMPFs process recovered materials for reuse and are not considered solid waste management facilities. Energy Recovery Facilities (ERFs) and End-Use Manufacturing Facilities (EUMFs) have separate notification requirements.

All recycling facilities must submit annual reports to ADEM by February 15 each year through AEPACS. Additionally, ADEM's Recycling Fund Grant Program provides financial assistance to local governments, authorities, and nonprofits for recycling equipment, infrastructure, education, personnel, and other recycling-related projects, with over $37 million awarded through 321 grants.

Alabama Drycleaning Environmental Response Trust Fund Act

The Alabama Drycleaning Environmental Response Trust Fund Act (ADERTF) created a fund to help pay for the investigation, assessment, and cleanup of environmental contamination caused by drycleaning operations. The program is jointly administered by the Alabama Drycleaning Environmental Response Trust Fund Board (DERTFB) and ADEM, with funding coming from registration fees paid by drycleaners, wholesale distributors, and certain owners of abandoned drycleaning facilities.

Participation is voluntary, but businesses that choose to be covered must register with ADEM and pay annual fees. Drycleaners generally pay 2% of their gross receipts (up to $25,000 per year), while wholesale distributors and owners of contaminated abandoned facilities pay $5,000 annually.

ADEM oversees the program by establishing regulations, prioritizing contaminated sites, reviewing investigations and cleanup plans, and ensuring remediation is completed properly. The cleanup process includes:

1. An Initial Investigation to determine site priority.
2. A Property Assessment Plan and Report.
3. A Property Remediation Plan.

Once cleanup is complete, ADEM issues a Letter of Concurrence to the property owner.

The DERTFB manages the Fund itself and approves consultant work, cost proposals, and reimbursement requests. Only approved consultants may perform investigations and sampling if costs are to be reimbursed through the Fund.

Small Business Administration (SBA) 504 Loan Program

(Permanent Financing) Small business loans providing long-term, fixed asset financing for acquisition, renovation, construction, and purchase of long-life equipment for owner-occupied real estate. For established businesses, 50 percent of the loan is financed through a bank first mortgage, 40 percent through a Certified Development Corporation (CDC), and 10 percent owner equity

Small Business Administration(SBA) 7(A) Program

The SBA program is designed to help start-up and existing small businesses obtain financing when they may not be eligible for business loans through normal lending channels. The SBA does not make loans per se, but guarantees a portion of loans made and administered by commercial lending institutions. 7(a) loan proceeds can be used to purchase commercial real estate, buy heavy equipment, obtain working capital, make leasehold improvements, and be used for debt refinancing.

Appalachain Regional Commission (ARC) and Delta Regional Authority Grants (RAG)

These are federal-state partnerships that work in Alabama’s 37 northernmost Appalachian counties and the Mississippi Delta region’s 20 Alabama counties to create opportunities for economic development. Of particular interest to development practitioners, they offer grants to help fund public infrastructure improvement projects. 

Regional Appalachian Commission: ADECA administers the ARC’s development programs in Alabama. The typical maximum funding per project is $200,000. Your regional planning and development commission helps in the preparation of grant applications. This can be used in combination with ADECA funds.

ADEM Infrastructure Improvement Loans

The Clean Water State Revolving Fund (DWSRF) and the Drinking Water State Revolving Fund (DWSRF) are low-interest loan programs intended to finance public infrastructure improvements.

·        The SRF has a loan interest rate about 1.5% - 2.0% less than the prevailing municipal bond rate.

·        The interest rate is fixed with a 20-year payback.

Loan repayment does not begin until construction is completed , but capitalized interest accrues

Industrial Access Road Improvement Grants

The Alabama Industrial Access Road and Bridge Program offers financial assistance to communities needing to provide access to new and expanding industries. The program allows for the construction of roads, bridges, etc. on public rights-of-way in conjunction with industrial projects.

The Alabama Department of Transportation administers this program and reviews applications and presents to the Industrial Access Bond Authority for consideration, consisting of the ALDOT Director, the State Treasurer, and the State Finance Director.

and this sponsor is responsible for any project costs above approved Industrial Access Road funding, securing all right-of-ways, all future maintenance, plan preparation, and all preliminary engineering, without cost to the state.

Site Preparation Grants

Retroactive state grants of up to $150,000 can be made to public bodies holding title to sites that qualifying projects will occupy. A project must be an industrial, warehousing, research or headquarters facility. In general, funds can be used to help pay for surveying, clearing, excavating and grading. Grant amounts are based on a sliding scale based on the % of a project’s capital cost or % of investment.

Growing Alabama Program

Is a credit equal to 100% of the donating taxpayer’s contribution (up to the reserved amount) to the EDO during the tax year for which the credit is claimed ad may offset up to 50% of the donor’s tax liability. Financial institutions may use the credit to offset 50% of their state portion of the excise tax liability.

The credit can be used to offset individual and corporate income taxes, the state portion of the financial institution excise tax, insurance premium tax, and state utility license tax.

The funds can be used on a number of expenses including site development and infrastructure investments to industrial sites.

Alabama Development Fund

Will become effective on June 1, 2026 and will generate new funding for economic development by retaining a small portion of sales and property taxes that are abated in qualified economic development projects after that date.

·        Job Creation – the fund aims to attract high-quality jobs and capital investment.

·        Rural Revitalization – it focuses on providing resources to rural investment.

·        Infrastructure and Workforce Development – the fund will support site development and training programs to enhance workforce skills.

– competitive grant program to be established to enhance and support communities to be more attractive to qualified economic development projects

Amendment 772

Allows public funds to be used for the direct benefit of private companies. Amendment 772 to the Alabama Constitution was ratified in 2006 and then allowed the governing body of any county and any municipality to have full and continuing power to do any of the following benefits;

·        Use public funds to purchase, lease, acquire, donate, transfer, or exchange property, buildings, plants, factories, machinery, equipment of any kind for the benefit of a qualifying economic development project.

·        Lend its credit to or grant public funds and things of value to any individual, firm, corporation, or other business entity for the benefit of a qualifying economic development project.

Alabama Job Acts

Jobs Credit

·        Amounts: up to 3% of the previous year’s annual wages for eligible employees

·        Duration: available for 10 years

·        Additional Benefits: an extra 0.5% credit is available if at least 12% of the workforce are veterans. Companies in targeted counties may receive an additional 1% credit.

Investment Credit

·        Amount: up to 1.5% of a company’s capital investment

·        Duration: available for 10 years.

Usage: Can offset income tax, financial institution excise tax, insurance premium tax, or utility tax.Unused credits can be carried forward for up to 5 years.