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Noted Articles
August 24, 1993


The Harbinger reported in Vol. XI, No. 18 ("City of Mobile IDB Violates Rule It Adopted April 8, 1993") that the City of Mobile Industrial Development Board (IDB) awarded a $3 million bond issue at the board of directors' meeting on May 28, 1993. The City of Mobile IDB did not award new bonds; rather, the bonds, which were issued in the 1970's, were redeemed. Mack Binion, board attorney, said the board had not announced its May 28 meeting in the Mobile Register, even though its directors voted unanimously to adopt a resolution on April 8, 1993 to begin publishing the time and place of future directors' meeting in the Mobile daily, because of an "administrative error."

The City of Mobile IDB did take out a public notice in the Mobile Register on August 10 to announce its August 12 meeting. At the August 12 meeting, the IDB directors voted unanimously to approve Alabama Power Company's application to refinance its bonds. Also at the meeting, a board director asked board president Walter Hovell about the sum-in-lieu payments that industries financed by IDB bonds had agreed to pay the school system instead of property tax. However, only a small fraction of the payments have arrived at the school treasury. In March Hovell told The Harbinger that "a procedure was not developed that would guarantee that the payments reach the school system." Hovell also said that the City of Mobile IDB has appointed a committee to check into the sum-in-lieu matter.

Hovell told the IDB directors that he is in the process of "tying up the loose end" concerning sum-in-lieu payments and expects to make a report in 30 to 45 days. He added that industries with sum-in-lieu language in their contracts will send payments directly to the school system.

The legislation requiring industries financed by IDB bonds to begin paying property tax to school systems took effect in January, 1993. However, property taxes to state and municipal governments are still exempted. In Fall, 1990 the City of Mobile IDB passed a resolution requiring industries financed by its bonds to make payments "in-lieu" of property tax to the school system. Harbinger research has found that City of Mobile and Mobile County IDB agreements contain in-lieu payments totaling $700,000 per year, with some agreements dating to the early 1980's. -- Edmund Tsang

-- August 24, 1993

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