An amendment that would have increased the baseline private investment needed to qualify for new tourism incentives in Alabama failed in a Senate committee on Wednesday morning.
House Bill 241 by State Rep. Danny Garrett (R-Trussville) would extend the sunset dates to 2028 and increase the incentives cap on the Alabama Jobs Act and the Growing Alabama Act. The legislation would also allow for new tourism incentives for qualifying projects with a minimum investment of $35 million.
State Sen. Arthur Orr (R-Decatur), chairman of the Finance and Taxation Education, attempted to amend the legislation to raise the minimum investment to $50 million.
“It raises the bar for projects to qualify,” Orr argued. “Right now, you see the low bar is $35 million…that would go to $50 (million). The reason for that is this isn’t for any hotel that happens to be on a lake, a river, or the coast or somewhere. We need to make sure it’s a special, nice resort-type area if we’re going to put the schoolchildren’s money towards that to really drive tourism and make it a destination point.”
Orr said at a Finance and Taxation Education committee meeting on Wednesday “the tourism component is a first impression incentive.”
“We’ve never offered, to my knowledge, any type of incentives with tourism-type destinations,” he said. “That’s the reason, in my opinion, we need to start with maybe a high bar and then see how it impacts the marketplace and then re-visit it in due time and if we need to tweak it we obviously can.”
Orr added, “I have a problem when we start doling out education money – we need to have a high bar in my opinion.”
“Now, I’m one vote. That’s what I think we need to do to start off at a safer level and then, like I said, if we need to make changes, we’ll make changes,” he continued. “We need to see some serious investment coming to help make it a destination point. If you look at today’s construction costs, $35 million including land…I hate to pick and call names but a Hampton Inn is $30 million give or take and then you throw the land price in, is that something we want to subsidize? Now, it has to be on a river, lake or something. There has to be some other attraction. It can’t be on the side of an interstate, but still if we’re going to have high-quality tourist destination points, we need to have a decent bar up there.”
State Sen. Garlan Gudger (R-Cullman) his "worry is that $50 million obviously in the private investment world is a lot.”
State Sen. President Pro Tem Greg Reed (R-Jasper) said at the meeting the tourism component was his idea because “one of the largest industries that we have in Alabama is tourism, and so the fact that we could look for a small opportunity within this package to be able to offer some level of promotion to one of the largest industries that we have in the state I just thought was a good focus and a good idea.”
“How we wind up coming up to the detail of the numbers…I hear what the Chairman (Orr) is saying. I think there’s validity there,” Reed said. “My whole goal in this in trying to make sure this was a part of the package was just to be able to recognize we’ve got a huge industry here that we want to encourage and offer some level of minimal incentive. Obviously, if you’re getting a $1 million and you’ve got a $50 million project, that’s not going to make the decision for anybody whether they’re going to do their project or not, but it offers some incentive and some encouragement from the state of Alabama.”
State Senate Minority Leader Bobby Singleton (D-Greensboro) said the amendment would “kill any potential tourism investment” in his district.
“While I respect what you’re trying to do, I know that when I look at my district…maybe some of you may not think that nobody ever want to come to West Alabama (and) want to do anything, but this would kill any potential tourism investment,” Singleton argued. “Even with land in my area it probably wouldn’t come up to no $60 million if they were trying to do something in the area. It doesn’t give me an opportunity across the state. It may give you in Huntsville or Mobile and these other areas an opportunity to do those things, but for the rest of us it may not give us that opportunity to bring and invite somebody in who wants to make those investments. They’re going to go to where they can make the investment and possibly get the incentives. If the incentive cap is so high and they want to invest $35 million, they can’t get an incentive on my end of the state.”
Singleton said, “I respect what you’re doing but at the end of the day I think it kind of kills the qqindustry in the state.”
“I know you said let’s do it high first and see do we need to go back down low but at the end of the day, it kills my area if somebody wants to come in and invest. Hampton Inn is just like a Marriott to me,” he continued. “If I can get 50 jobs, it’s like 2,000 for me. We don't have any incentives for 50 jobs versus 2,000 jobs so I think it comes to be discriminatory against certain parts of the state that can not get those investments coming in when the bar is set so high.”
Under the legislation, qualifying tourism-related companies would be limited to $1 million in tax rebates per calendar year. Tourism destination attractions that qualify for the program include theme parks, water parks, entertainment parks, museums, motor speedways, professional sports facilities, natural or scenic landscape attractions, waterfront marine facilities, and aquariums.
The amendment failed by a vote of 6-9 and the legislation passed out of committee unamended unanimously. The legislation will be voted on by the Senate on Thursday. It passed the House unanimously last week. Gov. Kay Ivey said at a breakfast meeting of the Montgomery Area Chamber of Commerce on Wednesday that she hopes to sign the multi-legislation incentives package into law by the end of the week.
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