HUNTSVILLE — The city of Huntsville will retire its third tax increment financing (TIF) district this month, two years ahead of projection, and nine years before its required closing.
The TIF closing helps establish Huntsville’s sound fiscal footing, including AAA bond ratings from Moody’s and Standard & Poor’s, according to Mayor Tommy Battle.
“Our capacity to borrow and take on more debt is a sign to the rating agencies and our investors that Huntsville is a good place to do business,” Battle said. “Closing our third TIF district is also a great indicator that we’re continuing to head in the right direction.”
TIF 3A was projected to end in 2024 with projected to-date taxes for the TIF at $37.4 million. Actual taxes collected totaled more than $46.2 million for a performance rate of 23.7% collected taxes over projections.
TIFs are a key factor in job creation and infrastructure improvements. Battle said TIF 3A allowed eight schools in northwest Huntsville – Johnson High, Rolling Hills Elementary, West Mastin Lake Elementary, ASFL/Davis Hills Elementary/Middle, Ed White Middle, Highlands Elementary and Lakewood Elementary – to make $12 million in capital improvements.
“This TIF is an example of how great investments ultimately go back into our schools and provide the best education possible,” Battle said. “It not only improved education, but it also provided thousands of jobs at the North Huntsville Industrial Park.”
Penny Smith, the city’s finance director, said the benefits impact students and workers now and into the future. She also said paying off debt and closing the TIF early is indicative of the city’s due diligence.
“It really shows we’re planning to meet the demands of a growing city,” she said. “Not only did we pay off our debt for capital projects on time, but we paid it off early.
“That funding now goes back into the community and benefits our schools and creates jobs.”
Since 2000,Huntsville opened eight TIFs and TIF 3A is the third to close. In TIFs, municipalities borrow money for projects within a designated district and then repay bonds using property tax proceeds.
“They allow us to make an investment in an area through infrastructure, schools and attracting and retaining businesses,” Smith said. “It raises the overall value of the properties, and it’s a great way for us to invest in our community.”
The origins of TIF 3A began in 1999 with the purchase of 500 acres to build North Huntsville Industrial Park. Two years later, Toyota Motor Manufacturing purchased a substantial portion of the property to erect its first North American V8 engine plant.
Anticipating additional tenants at the industrial park, the city created TIF 3A in 2001. The 5,600-acre TIF includes the park and surrounding areas.
In the years since, Toyota expanded its footprint through additional expansions and the park welcomed Meta and Aerojet Rocketdyne. TIF 3A also provided more than $13 million in infrastructure improvements there.
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