Alabama Improvement Districts 

ALABAMA IMPROVEMENT DISTRICTS 

 

An Alabama Improvement District has the ability to issue bonds and confer exemption from certain state and local taxes.  The primary benefit of an Improvement District is its use as a financing vehicle to issue tax-exempt bonds to provide funds for the construction of infrastructure, but the state and local tax exemptions can also be significant.

The Alabama Improvement District has the authority to acquire or construct infrastructure improvements.  However, the Improvement District is limited to a specifically defined area and may not assess landowners without the consent of the landowners and the approval of the appointing government.  Further, a federal income tax exemption is also available for bonds issued by the District so long as the bonds are issued in compliance with the tax-exempt bond rules contained in Internal Revenue Code.

Once improvements have been identified, the District may then issue Bonds to finance the construction of the improvements.  The Bonds are secured by a pledge of the assessment revenues.  There is no appointing government involvement at this stage and the appointing government has absolutely no liability, financial or otherwise, for the District or the District’s Bonds.   

Developers desire to utilize Improvement Districts in order to obtain the following items:

Access to tax exempt financing rates.  
Access to additional credit support provided through assessments on third party lot buyers Access to tax savings, with consent of the City.

For more information contact The Montgomery Area Chamber of Commerce