Hoover council OKs $100 million more in tax-free bonds for U.S. Steel project
The Hoover City Council on Monday night gave its consent for the city’s Industrial Development Board to issue another $100 million worth of bonds to help U.S. Steel finance construction of an electric arc furnace at its Fairfield Works complex.
The Industrial Development Board in March 2019 agreed to issue up to $275 million worth of bonds for the project. However, when the project was first scoped in 2019, the company didn’t have all the information it needed, said Paul Vercher, U.S. Steel’s director of government affairs and public policy.
Costs ended up being higher than originally anticipated once the project was fully scoped, Vercher said. U.S. Steel expects to need $50 million to $60 million more but asked for the Industrial Development Board to issue up to $100 million more in bonds just to make sure they have enough money, he said.
U.S. Steel will be responsible for repaying all of the bonds, as it is for the bond issue from 2019. “U.S. Steel assumes all risk under this deal,” Vercher said.
Neither the city of Hoover nor its Industrial Development Board incurs any liability by issuing the bonds, nor will the city’s credit rating be affected, City Attorney Phillip Corley said.
The benefit for the company is that it gets to take advantage of the tax-exempt bonds that Hoover’s Industrial Development Board can issue.
Vercher said U.S. Steel could have used any Industrial Development Board in Jefferson County but had a good experience with Hoover the last time and wanted to use Hoover as a conduit once again.
Under Alabama law, Hoover’s Industrial Development Board can finance projects within 25 miles of the city limits, and the Fairfield Works facility falls within that boundary.
U.S. Steel first initiated construction of the electric arc furnace in March 2015 but suspended construction in December 2015 due to unfavorable market conditions.
The electric arc furnace will be able to produce 1.6 million tons of steel per year, and the project should create about 150 jobs, company officials said.
Construction began not long after the first bond issue was approved in 2019, and U.S. Steel expects to start producing steel with the new furnace in the fourth quarter of this year, Vercher said.
In other business Monday, the Hoover City Council:
- Authorized the mayor to fill 10 vacant positions in city government, including chief finance and information officer, director of building inspections, assistant city engineer, assistant director of public works, a parks and recreation assistant for athletics, a senior park maintenance crew workers, two part-time park and recreation assistants for the control desk at the Hoover Recreation Center and two part-time lifeguards for the pool at the Rec Center.
- Amended the 2020 budget to provide $260,000 for new computer software for the Fire Department to replace software that soon will not be serviceable, $34,000 to replace the engine on a fire truck with an aerial ladder and $33,000 to buy 16 additional high-resolution fixed cameras for the Hoover Jail (using money the city receives from the federal government for care of federal inmates).
- Agreed to let the Family Dollar Store at 3202 Lorna Road sell alcoholic beverages.
- Declared property at 425 Shades Ave. as a public nuisance due to high weeds and/or grass and set a public hearing for Oct. 5 to authorize the cutting of grass at 2302 Locke Lane for the same reason, with the property owner to be billed for the work.