Airbus incentive details revealed

MONTGOMERY, AL (WSFA) - The state of Alabama, the city of Mobile, and Mobile County provided nearly $160 million dollars in cash incentives to convince Airbus to establish its first North American plan at Brookley Aeroplex, according to the Alabama Department of Commerce.

Overall, the incentives package is worth $158 million. The biggest costs are for initial bond payments for buildings at $52 million, an on-site Alabama Industrial Development Training Center at $52 million, and land-lease assistance at $12 million over 15 years.

Airbus announced Monday that it would build and operate an assembly plant for the A320 and A320 Neo commercial jets at Mobile's Brookley Aeroplex. The parts for the jets will come from suppliers in Europe, and the plant is expected to produce four planes each month once it is fully operational.

[DOCUMENT: Airbus Economic Impact Study (.pdf)]

In a statement, Gov. Bentley's Deputy Communications Director said, "Competition is fierce among the states for major economic development projects.  That's why incentives are needed – to make sure we have economic development in our state, which provides new jobs and new opportunities for the people of Alabama."

There are three primary sources of cash to provide the incentives. The Alabama Incentives Financing Authority uses funds provided by "payment in lieu of taxes" funds, or PILOT payments from the Tennessee Valley Authority. They are mainly federal funds used for improving existing communities all over Alabama.

The second source is the state's Capital Improvement Trust Fund. It provided funds for Hyundai, Thyssenkrupp, and Mercedes-Benz when they explored locating in Alabama.

The final source, and perhaps the biggest, is a collection of general obligation bonds that previous administrations financed. Governor Robert Bentley's administration felt it to be a good investment to use those funds toward luring Airbus to Mobile.

The Airbus US Assembly Line Mobile will have an economic impact of approximately $600 million once it reaches its fully employed capacity of 1,000 workers. Airbus will pay approximately $61 million in payroll.

The construction impact of the project is estimated to be $400 million by the Alabama Department of Commerce. 3,200 construction related jobs will be created over a period of three years to complete the project.

The City of Mobile and Mobile County are providing a combined $33.6 million toward the incentives package for Airbus. The state is paying the lion's share of $124.87 million.

Construction on the plant will begin during the first quarter of 2013. The plant is expected to be fully operational by 2016 with the first planes rolling off of the assembly line by the beginning of 2017.

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