Chesterton Tribune

 
 

Urschel TIF district formalized; no one speaks at public hearings

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By KEVIN NEVERS

The Chesterton Redevelopment Commission has formally created a new tax increment financing (TIF) district for Urschel Laboratories Inc.

At a special meeting Monday night, members put their stamp of approval on what was essentially a two-step process: carving out 157.41 acres from the existing TIF district in Coffee Creek Center, then designating that acreage a new TIF district in its own right.

The commission took each of those steps separately—the carve-out and the designation—by voting 5-0 to adopt one “confirmatory resolution,” then 5-0 to adopt the other.

At a public hearing which preceded each vote, no one spoke in favor of the given confirmatory resolution and no one in opposition to it.

It was necessary to create a new TIF district for the company because the old one—established nearly a decade and a half ago—is due to expire in about 18 years. The financing arrangement, however, has a lifetime of 20 years and that clock will begin ticking only after the actual construct of the company’s new corporate headquarters and manufacturing facility has been completed.

The financing will work this way:

Urschel Laboratories will pay all costs associated with the project—including the acquisition of property, the construction of the facility, and the installation of infrastructure—with its own liquidity, that is, with cash which it has on hand.

Then the company will recoup a portion of the total costs—up to $25.86 million of them—through a 20-year, 85-percent break on the real and personal property taxes which the company will pay as a property owner in that TIF district.

The town still expects to receive, over the 20-year lifetime of the arrangement, an estimated $4,566,455 in property taxes from the company.

The Redevelopment Commission took one final action on Monday with respect to Urschel Laboratories: it voted 5-0 to pledge TIF revenues for the repayment of the tax-exempt economic development bonds—up to $25.86 million of them—which the town is issuing to the company and which are, under Indiana Code, the basic mechanism for the deal.

In fact, what that move means is this: over the 20-year lifetime, Urschel Laboratories will dutifully pay its annual personal and property taxes to the Town of Chesterton; then, each year, the Redevelopment Commission will make back to the company 85 percent of those taxes. In that way Urschel Laboratories will recoup a portion of its investment equal to no more than $25.86 million.

As the town’s contracted financial consultant, Ted Somer of London Witte Group, explained to the Chesterton Tribune after the meeting, the mechanism appears complicated but is specifically mandated to work that way under state law. And, Somer added, it’s less complicated than other financial instruments with which he’s familiar.

 

Posted 3/12/2013