VALPARAISO | The outcome was never really in doubt but a vote on issuing $207.5 million in bonds for two companies was delayed Monday, requiring the City Council to hold a special meeting Tuesday.
For the council to suspend its usual rule of reading ordinances at two meetings before voting on them, unanimous consent is required. Motions to suspend the two-reading rule and vote on the bonds for Pratt Industries expansion project and a refinancing of a previous bond by Task Force Tips were blocked by Councilman Joey Larr's lone negative vote.
Larr made it clear he supported both issues but did not favor altering the normal process. Larr's opposition was anticipated by the city, which already had advertised Tuesday's special meeting prior to Monday's introduction of the ordinances.
Pratt plans to start construction in April on a 250,000-square-foot paper recycling plant to feed its existing 500,000-square-foot corrugated cardboard box plant. Pratt plans to spend about $260 million on the new recycling plant, which will employ about 104 people when it opens in 2015.
To help finance the project, the city is sponsoring $200 million in tax exempt industrial revenue bonds. The city will have no responsibility for paying off the bonds should something happen to Pratt. The city also is expected to provide tax abatement on the plant and equipment.
The company also is getting a number of other incentives from the city's Redevelopment Commission, the city's Utilities Board, NIPSCO, the Indiana Economic Development Corporation and the Northwest Indiana Regional Development Authority.
The proposed 10-year tax abatement will save the company about $16.2 million, but Pratt is expected to pay $21 million in taxes over the next 20 years based on an assessed value of $190 million. The Redevelopment Commission is fronting $3.5 million for infrastructure improvements to serve the new plant.
Of the $21 million in expected tax revenue, half will be returned to Pratt to pay off the bonds and the other half will be used by the commission to pay off the infrastructure improvements. An additional $500,000 will go to pay to upgrade the ultraviolet treatment facility at the city's sewage treatment plant.
The utilities board also is expected to borrow $10 million to build an industrial pretreatment facility at Pratt, and Pratt will pay the debt service. When the bonds are paid off, the city might sell the facility to Pratt.
East Porter County Schools have asked the city to consider passing through a portion of the revenue going to the redevelopment commission to help the school meet capital needs from the expected growth the plant might bring.
Commission Executive Director Stuart Summers said no money will be available for the first 10 years to pass through, as the money will be needed to pay for obligations in the incentive package. After that, the city will take up the issue again.
The Task Force Tips bond is a refinance of the multimodal economic development revenue bonds approved by the city in 2008 to help finance the company's move from its Evans Avenue site to the larger facilities in the Montdale Industrial Park.
Task Force Tips has $7.47 million left on the bond issue it plans to refinance at a lower rate. The votes on both bond issues was unanimous with Larr absent.