Chesterton Tribune

 
 

Board endorses bond issue for Urschel Laboratories financing

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By KEVIN NEVERS

The Chesterton Economic Development Commission has formally endorsed the issuance of up to $25.86 million in economic development revenue bonds, to assist Urschel Laboratories Inc. with the financing of its new corporate headquarters and manufacturing facility at Coffee Creek Center.

Members voted 3-0 to approve the endorsement resolution at a meeting on Thursday. An ordinance will be prepared for consideration by the Town Council.

Town Attorney Chuck Lukmann told the Chesterton Tribune before the meeting that the “bond closing will not be a typical type closing where money is put into an account.” Instead, he said, the arrangement will work like this.

Urschel Laboratories will pay all costs associated with the project—including the acquisition of the land, the construction of the facility, and the installation of infrastructure—with its own liquidity, that is, with cash which it has on hand. Urschel Laboratories does have the option of obtaining financing for the project from a third-party lender, Lukmann said.

Then, the company will recoup a portion of its total costs—only a portion, Lukmann said—through the 20-year, 85-percent break which the town is granting on real and personal property taxes, which Urschel Laboratories would normally have paid as a property owner in a tax increment financing district.

The formula to keep in mind, Lukmann said: “project costs equal bond proceeds.”

In other words, the company is not so much repaying the bonds—inasmuch as no money is actually being made over to Urschel Laboratories—as it is recouping its costs, up to $25.86 million worth.

Lukmann has said that the town, over the 20-year life of the arrangement, will nevertheless receive an estimated $4,566,455 in property-tax revenues.

Lukmann emphasized a couple of other points as well: that the financing arrangement pertains only to the 49 or so acres—of the 160 which the company is buying at Coffee Creek Center—on which the HQ and manufacturing facility are being located; that the “bonds do not constitute a debt to the town”; that “the town is not pledging its full faith and credit”; and that Urschel Laboratories “doesn’t have the ability to levy taxes.”

Finally, Lukmann said that a just-released plan indicates that 100 full-time construction jobs will be created during the two to three years in which the facility is being built, with an annual payroll of $13 million; and that, at the end of construction, 15 to 20 permanent full-time jobs will have been created, with a payroll of $1,080,000, in the year following completion of the project.

Public Hearing

At a public hearing which preceded the vote, one person expressed his concern over the 20-year, 85-percent tax break. In particular, Jim Stoner told the commission that he would like to see some formal hiring arrangement struck with Urschel Laboratories, insofar as the company is “essentially buying a tax abatement.”

“We have people capable in this town and I’d like to see them get a fair shot,” Stoner said.

Member Jeff Trout said in response that he found Stoner’s point well taken. “That’s a very good comment about local hiring,” Trout said.

Lukmann, later in the meeting, noted that steps in that direction have already been taken, consistent with state and federal law. “There will be language in the covenants,” he said, under which the company has “agreed to give preferences to qualified Chesterton residents in hiring.”

Speaking in favor of the financing were numerous members of the Duneland business community, including Heather Ennis, executive director of the Chesterton/Duneland Chamber of Commerce; Tom Roberts in an e-mail read into the record; Jim Anton of the Anton Insurance Agency; Tracy Freeze, president of the Chesterton/Duneland Chamber; Laura Gerhardt, Dave Arnell, and Gene Novello, all of them members of the Chamber’s Board of Directors; and Joe Grossbauer.

Anton’s statement was representative. “This is a major win for the Town of Chesterton but it is also a win for Porter County,” he said. “While our friends to the south are losing a business, many of their taxpayers will not be negatively affected, as they would have been had Urschel left the county. I encourage the town to continue its efforts in bringing sustainable economic development and applaud them for the work that’s already been done.”

Finally, Bill Baker, director of real estate for Urschel Laboratories, thanked the commission for its time and urged anyone with questions to “let us know.”

 

Posted 2/11/2013