Alabama’s New “Jobs” Law: Two Steps Backward For Property Rights

Last month Alabama Governor Robert Bentley signed into law SB96, titled the “Major 21st Century Manufacturing Zone Act.”  The law allows any Alabama city to create a “manufacturing” tax increment financing, or TIF, zone for a number of industries including automotive, aviation, medical, pharmaceutical, semiconductor, computer, electronics, energy conservation, cyber technology and biomedical but requires any municipality wishing to create a TIF zone under the law to invest at least $100 million on a site larger than 250 contiguous acres.

Tax increment financing (TIF) is a method of subsidizing improvements today by using the hypothetical tax revenue increases a redevelopment project might bring in the future.  TIF creates opportunities to finance debt incurred to construct a project by borrowing against the anticipated future increases in property tax revenues.  By establishing TIF districts, municipalities can borrow money to purchase land, construct improvements such as roads, sewer and water lines and, in Alabama, construct “21 Century Manufacturing” facilities.

In response to criticism (recently retracted here) suggesting that the law expands eminent domain in favor of private redevelopment, the law’s supporters have said that it is designed to attract high-tech manufacturing jobs to the state rather than give cities greater eminent domain powers.  Yet, as was pointed out here, this law reverses the position Alabama took in 2005 in response to Kelo when a bipartisan effort enacted legislation protecting private property owners and rejecting the use of eminent domain for private development unless the property posed a true threat to human health and safety.  One step forward, 2 steps back…

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