Cape County Commission supports $300 million in bonds for Procter & Gamble project
Thursday, July 19, 2012
A proposed $300 million expansion at Procter & Gamble's Cape Girardeau County plant could bring up to 200 construction jobs and 35 full-time positions.
In an effort to help secure the project for the county, the Cape Girardeau County Commission approved a resolution of intent to issue $300 million in industrial development bonds to finance the project for Procter & Gamble at a special meeting Wednesday.
The resolution passed on a 2-0 vote with commissioners Paul Koeper and Clint Tracy casting votes in favor of the resolution. Commissioner Jay Purcell was absent. He told The Southeast Missourian he was not at the meeting because he was ill. Purcell also missed a Tuesday night voter forum after receiving several yellow jacket stings.
The local plant is the "leading contender" for the expansion, said Linda Greaser, external relations leader at P&G.
"This community partnership is a key enabler in being able to attract this project here," Greaser said. "Our central location doesn't hurt, either."
The expansion will add manufacturing capacity necessary to meet future consumer demands, she said, but declined to release any details about the expansion in order to protect the company's strategic plans from its competition.
Chapter 100 of Missouri statutes allows counties, cities and other municipalities to issue bonds to finance the costs of industrial development projects for private corporations. Government entities can issue bonds at a lower interest rate than conventional financing corporations could receive. As long as the bonds are outstanding, the company can receive tax abatements, resulting in a significant savings. Chapter 100 bonds also allow for a sales tax exemption on construction materials for the project.
The county's most recent use of Chapter 100 bonds was in June 2011 when the county issued $25 million in bonds for Nordenia's Hubble Creek Plant in the Jackson Industrial Park off U.S. 61.
Several of Procter & Gamble's previous expansion projects, including a $600,000 expansion project in 1998 and a $300 million expansion in 2002, were funded by Chapter 100 bonds issued by Cape Girardeau County.
Wednesday was the first commission meeting in which Chapter 100 bonds for this project have been discussed. Prior meetings or discussions weren't necessary, Tracy said, because the commissioners were already familiar with the Chapter 100 process.
"In these tough economic times, we are lucky to have this opportunity to put local folks to work. I think this is going to be a good thing for our area," he said.
Under this arrangement, the county will hold the title to the project and lease it to P&G. The company's lease payments will be used to retire the bonds. The company's property tax abatements will be based on a sliding scale over the next 25 years, Tracy said.
The resolution approved by the commission provides that if the company is unable to fulfill its obligation, the county is not obligated to repay the debt.
Tracy said he is not concerned about default because of P&G's financial condition and the long-standing relationship the company has had with the county.
Wednesday's resolution was just the start of the process, which will take several weeks, Tracy said.
During the next week the commissioners will notify all of the taxing districts that could be affected by the project and give them time to review a cost-benefit analysis and respond.
The taxing entities include the Jackson School District, Fruitland Fire District, Riverside Regional Library, the Cape County Board for Developmental Disabilities and the state government. Countywide property taxes for mental health, county health and senior citizens will also be affected.
Jackson school superintendent Ron Anderson said he supports the expansion project and is comfortable with the a tax abatement schedule that is phased out. Anderson did not attend Wednesday's meeting but said he met with Tracy recently to discuss the project.
Concerns about using local labor for construction were raised during the meeting by JJ Lane, business representative for the Plumbers and Pipe Fitters Local 562.
Lane said he doesn't want to see construction workers flocking in from out of state to work on a project receiving local government incentives.
"I believe that we should give our local people the first opportunity to perform the work that their tax dollars are helping fund," he said.
P&G intends to use BIS Frucon Industrial Services in Cape Girardeau to oversee the construction of the expansion project and work will be awarded through competitive bidding, Greaser said.
"We expect much of the workforce for this will come from our surrounding area," she said.
Since P&G's Cape Girardeau County plant opened in 1969, the manufacturing facility has seen eight major expansions. Its most recent expansions occurred in 2002, when the plant expanded its tissue and towel manufacturing capacity and in 2004 when it added more space for its baby care lines. The company currently employs about 1,150 people.
14484 State Highway 177, Cape Girardeau, MO