Infrastructure investments big and small will bolster Mobile, Alabama, with a mix of pay-as-you-go funding, bond sales and a big dollop of federal taxpayer subsidies for big ticket transportation projects.
Mobile Mayor Sandy Stimpson, elected in 2013, has "remained focused on paying down debt and avoiding borrowing to fund operations or routine capital improvements," said Jason Johnson, Mobile director of communications.
"Over the past decade, we've made infrastructure investments through a dedicated sales tax, general fund allocations and by leveraging federal and state grants," Johnson said.
It did tap the bond market in March to sell $222.5 million in general obligation warrants, generating a $28.6 million premium, to build a new arena for sports, music and entertainment presentations in March. The bonds, rated Aa2 by Moody's Investors Service and AA by S&P Global Ratings, sold at competitive auction to JPMorgan Securities.
"This bond issue is the first new debt added to the city's bottom line since 2013," the city says on a f
The arena will replace the 1964 Mobile Civic Center, and city leaders say the venue may attract
The city had significant infrastructure needs when the mayor took office in 2013, due to the city's age and the accumulation of deferred maintenance, Johnson said. "Investing in the city's infrastructure — our streets, sidewalks, lighting, parks, public buildings, and stormwater systems — has been a major focus since he was first elected."
Stimpson will leave office later this year after declining to seek re-election.
Starting in fiscal 2016 city government started collecting a 1 cent sales tax allocated just for supporting the capital improvement plan. With this new funding source and some improvements in the other funding sources, the city is managing to spend about three to four times more annually on capital projects than it did in the fiscal 2010 to 2015 period.
From fiscal 2022 to fiscal 2025 it expects to spend an average of $89 million per year on capital projects, according to its capital improvement plan.
The new arena is expected to open in 2027.
Work on the airport is much further along.
The Mobile Airport Authority, a state-chartered agency with commissioners appointed by Mobile's mayor, operates four airfields in the region.
It plans to move passenger services to a new five-gate terminal at Mobile International Airport from its Mobile Regional Airport.
There will be space to expand to 12 gates in the new airport.
The new terminal will be five miles and an eight-minute drive from downtown Mobile, and has easy access to an Interstate highway, unlike Mobile Regional, which is 12.6 miles and a 27-minute drive from downtown.
The facility has a 9,600-foot runway and is home to a final assembly plant for Airbus narrow-body jetliners.
The new terminal will have a parking deck with 1,200 spaces.
The authority decided to move the passenger terminal when a study found 55% of the Mobile market's air travelers are lost to neighboring airports and that the city could improve its draw if it moved its location to near downtown.
The airport move is expected to cost $403 million.
The terminal, which had been projected to open late this year, is now expected to open in 2026, according to the airport authority.
The authority, which had about $11.7 million of revenue bond debt at the end of September 2023, according to its most recent annual comprehensive financial report, has not issued bonds to finance the new terminal.
It had already reported $162 million in federal grant commitments for the new terminal at the time of the 2023 ACFR, and has continued to
The Mobile Airport Authority didn't respond to Bond Buyer questions about its plans for financing the planned airport.
"This is an exciting next step on Mobile's plan to progress," said then-Mobile City Council President Levon Manzie in 2021. "Having our airport downtown makes more sense for our residents and will be key in our continued efforts to make Mobile a hub for tourism."
The new airport is expected to contribute to $530 million to the City of Mobile, Johnson said. This will be through increased use, attraction of additional carriers to Mobile and lowered airfares.
A new Mobile Bay bridge is earlier in the planning process.
A roughly 200 car and truck collision that took place in foggy conditions on Interstate 10 over the bay in September 1993 led city residents to talk about improving the city's infrastructure, said Joseph Krist, publisher of Muni Credit News.
However, for many years there was talk but little action, Krist said.
Hurricane Katrina in 2005 beat up the area badly, Krist said.
Expectations for public infrastructure have increased in the last few decades and Mobile felt these expectations particularly, since it is a port, Krist said. It didn't want to lose its competitive position.
These developments combined to push the city's government into action about 10 years ago, Krist said.
About 30 percent of the city's planned capital funding in fiscal 2025 and 2027 are expected to come from federal and state grants, according to the city's CIP. To the extent they are federal funds, there is a danger the federal government could cut them, Krist said. Fiscal years 2026 and 2028 are expected to be much less dependent on state and federal grants.
The 1 cent sales tax initially provided $21 million per year for infrastructure, according to the city. Starting in 2019 the sales tax provided $25 million per year.
The city also gets pay-as-you-go financing from Mobile County government.
The county "has contributed significantly to all 11 municipalities within the county's infrastructure by funding or partnering on municipal projects through the Pay-As-You-Go Transportation Improvement Program," said Sharee Broussard, director of community affairs and community services for the Mobile County Commission. "These investments have already led to better roads, safer intersections and more efficient public facilities."
The county allocates revenue from a property tax for this purpose. By state constitution the money can only be issued if there are bonds issued and the county doesn't want to have long-term bonds, so it issues bonds as part of the program that are recalled the same day, Broussard said.
"With over $231 million in planned projects, the investments though the CIP program will help create a more vibrant and economically robust city for all who live, work and visit here," Stimpson wrote in the 2024-2028 CIP. He said the projects focus on transportation, parks and greenways, environmental protection and city facilities.
"The projects implemented through this CIP, along with many other improvements, make Mobile a more desirable place to live, work, and invest," Johnson said Wednesday.
"People want to live in and bring their businesses to places that have nice roads and sidewalks, modern drainage systems, and parks with amenities for children and families," he said.
Mobile has more than 200,000 residents
"When it comes to hard infrastructure, delaying repairs only increases costs and the likelihood of complete failure," Johnson said.
The city in its CIP said it hopes soon to fund a Copeland Cox Tennis Center expansion for $15 million to $20 million, a combined public safety headquarters for $50 million to $70 million and a public works complex for an undetermined amount.
The city's investment in infrastructure comes amid warnings that infrastructure investment
The Interstate 10 project is currently expected to build a new six-lane bridge over Mobile River and widen and elevate a set of bridges over Mobile Bay to eight lanes from four lanes. The Alabama Department of Transportation expects the project will cost $3.5 billion. This work is either in or adjacent to the city.
Residents and government officials want it built to reduce traffic congestion in the crossings. The current I-10 infrastructure was designed to carry 35,000 cars and trucks each day but on peak days there are 100,000 cars and trucks crossing Mobile Bay, according to the state department.
The federal government has already pledged $675 million in grants, which is the largest amount of federal grants ever for an Alabama infrastructure project.
The state is seeking a Transportation Infrastructure Finance and Innovation Act loan to pay for 49% of the project.
There will be tolls to use the new bridge. However, the state transportation department hasn't yet settled on all the financing.
