HOBART | Attorney Rich Hill on Tuesday called industrial development bonds a no-risk incentive for cities like Hobart wanting to lure new businesses.
"It's one of the things in your tool boxes," Hill said.
Hill, a partner with Faegre Baker Daniels in South Bend, on Tuesday gave a presentation to the Redevelopment Commission, the City Council and the Economic Development Commission.
"He's given this presentation before. It's worthy of our continuing education," Director of Development Denarie Kane said.
Hill said the industrial development bonds are payable solely from payments made by the company and not the municipality.
"The city is lending its name but no funds are involved," Hill said.
Hill said the reason companies look to use bond financing for projects is because interest on the bond is exempt from taxation in Indiana.
For instance, Hill said a company recently wanting to expand its business was able to obtain a $1.5 million bond at a 1.15 percent interest rate.
"It's a wonderful deal," Hill said.
The city or issuer of the bonds remains in control, he said. During the process, the Economic Development Commission and City Council must hold public hearings, Hill said.
Hill said the company applying for the bonds must demonstrate that the project will create or retain jobs in the community and not have any adverse competitive effect on similar facilities.
When City Councilman Pete Mendez, D-2nd, asked if officials can set wage guidelines as part of the bond process, Hill said that's definitely a possibility.
"The city has the latitude to do that, set wages," Hill said.
Hill said his law firm is seeing a lot more activity when it comes to businesses applying for the industrial bonds.
"There's two to three that could be coming to the city of Hobart," Hill said.
Kane said officials will be tested on lessons learned at the session when ITR America goes before the Economic Development Commission and City Council in coming weeks.
Late last year ITR America, a heavy machinery equipment parts distributor, announced a $6.2 million expansion of its Hobart headquarters in Northwind Crossings Business Park.
The Hobart-based company was offered up to $125,000 in conditional tax credits based on its job creation plans.