Plastic Injection Molding Finance by hbi59934

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									2008157

                                 RESOLUTION NO. R-131-08

                         Requesting Opinion from Attorney General

       Whereas, in April 2006, George Wimbish, as the high bidder for the closed Progressive
Plastics building located in Commerce Center at 125 Thomas Drive within the corporate limits of
the City of Gadsden, sought assistance from the Gadsden-Etowah Industrial Development
Authority and the City of Gadsden in financing the acquisition of the property and the location of
a plastic injection molding manufacturing business there; and
       Whereas, Wimbish Enterprises, Inc., has stated that it filed its articles of incorporation on
September 25, 2006, and began to make plastic parts in the plant the same date; and
       Whereas, on November 1, 2006, Wimbish Enterprises, Inc., filed with the City Council
an application for abatement (pursuant to the Tax Incentive Reform Act of 1992, Sections 40-
9B-1 et seq.) of taxes of a new project, with the application listing September 13, 2006, as the
date the company was organized and December 31, 2006, as the estimated date when the
property would be placed in service,
       Whereas, on November 21, 2006, the City Council adopted Resolution No. R-474-06
authorizing a tax abatement agreement with Wimbish Enterprises, Inc.; and
       Whereas, as of November 30, 2006, the tax abatement agreement had been signed by
both parties; and
       Whereas, as a condition of the purchase of the property, Wimbish paid the ad valorem
property tax for the 2005-2006 tax year; and
       Whereas, because the tax abatement agreement was not approved until after
October 1, 2006, Wimbish was required to pay the full amount of ad valorem taxes on the
property for the 2006-2007 tax year; and
       Whereas, pursuant to Sections 40-7-2.1, 40-1-3 and 40-11-4, ad valorem taxes are
assessed as of October 1 of one year but are not due for payment until October 1 of the ensuing
year; and
       Whereas, in Opinion 97-119, the Attorney General opined that Section 40-7-6 did not
permit the retroactive application of a tax abatement exemption; and
           Whereas, in Opinion 2002-029, the Attorney General opined that an industrial abatement
begins (1) when bonds are issued to finance the acquisition of the property or (2) the later date of
(i) when title is acquired or vested in a city, county or public authority, or (ii) when the property
becomes owned, for federal income tax purposes, by a private user; and
           Whereas, in Opinion 2002-160, the Attorney General opined that a tax abatement
agreement may be amended to have retroactive effect to reflect the true intentions of the parties
to the agreement, when the application substantially underestimated the amount of the entire
project as actually built; and
           Whereas, upon the request of Wimbish Enterprises, Inc., and with the recommendation of
the Gadsden-Etowah Industrial Development Authority, the City of Gadsden desires to amend
the abatement agreement to permit its application to the 2006-2007 tax year; and
           Whereas, it appears that the property became owned by Wimbish Enterprises, Inc., as a
private user, for federal income tax purposes, prior to October 1, 2006; and
           Whereas, officials of the Etowah County Revenue Commissioner and the Alabama
Department of Revenue have informed Wimbish Enterprises that the abatement agreement
cannot be amended so as to retroactively cover the 2006-2007 tax year;
           Now, Therefore, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF
GADSDEN, ALABAMA, that the Honorable Troy King, Attorney General of Alabama, is
respectfully requested to render his opinion whether the City of Gadsden is authorized by the
Tax Incentive Reform Act or general contract law to amend the tax abatement agreement with
Wimbish Enterprises, Inc., to an earlier date (in or before October 1, 2006), so as to include the
2006-2007 tax year in the exemption from ad valorem taxes, as originally contemplated by the
parties.




        I certify that the City Council of the City of Gadsden, Alabama, duly adopted this
resolution at a meeting held on April 23, 2008.

__________________________
Iva Nelson, City Clerk

								
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