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Steel mill package may total $1 billion
German company could get tax breaks; incentives bill expected to pass Friday

By Phillip Rawls
Associated Press Writer

MONTGOMERY — A $400 million industrial incentives package, set for final approval by the Legislature on Friday, is only part of the lure Alabama is using to try to land a German steel company that is also eyeing Louisiana.

Tax breaks and tax abatements over the next two decades could push the total package toward $1 billion.

On Thursday, the Senate Finance and Taxation-General Fund Committee approved a version of the incentives package that passed the House on Wednesday. The House Government Appropriations committee did the same thing Wednesday with the Senate-passed version of the legislation.

So far, every vote has been unanimous, and all that's left is for the House or Senate to take a final vote on Friday.

Lt. Gov. Jim Folsom Jr., who has helped the governor recruit the steel mill, predicted the final vote Friday will be routine. "I felt all along we'd be successful in enacting this legislation," he said Thursday.

A site about 25 miles north of Mobile is competing with a location between New Orleans and Baton Rouge, La., for a $2.9 billion ThyssenKrupp steel mill that will employ 2,700. Gov. Bob Riley plans to use the $400 million incentives package to help recruit the steel plant and other industries.

The $400 million, which could be used for roads, site preparation, job training and other incentives, is not the only ingredient in the state's economic development bait. State officials expect county and city governments near the proposed steel plant site to chip in money. Also, property tax breaks, good for 20 years, and income tax abatements could push the total package toward $1 billion.

With negotiations still going on, state officials said it's too early to put a price tag on the state's total package.

In addition, state Finance Director Jim Main said the state has set aside $900 million in Gulf Opportunity Zone bonds that ThyssenKrupp could use for low-cost plant financing. The federal government authorized the tax-free bond program after Hurricanes Katrina and Rita to help Gulf Coast states rebuild their coastal economies, and businesses using the bonds have to repay them, not the states, Main said.

Louisiana also has bonds that it can provide.

Alabama officials said the competition includes several other factors:

n Electric rates are cheaper in Alabama than in Louisiana, and the electric steel mill will be a huge user of electricity.

n The soil near Calvert in northern Mobile County is easier to build on than the site in Louisiana.

n Part of the ThyssenKrupp plant will process slabs from the company's new steel mill in Brazil. The Mississippi River's deeper channel will provide cheaper transportation costs than the shallower channel in Alabama.

"Everyone knows that is one of the issues in the decision," Folsom said. But he said the higher water transportation costs could be offset somewhat by Alabama's closeness to Southern auto plants that would be using finished steel from ThyssenKrupp.

Besides having the incentives package ready for a final vote on Friday, the Legislature is poised to pass two bills setting up trust funds to save money for future health care costs for retired public employees and school workers.

Copyright 2005 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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