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Cape County Commission supports $300 million in bonds for Procter & Gamble project

Thursday, July 19, 2012

(Photo)
The Cape Girardeau Procter and Gamble plant is shown in this Southeast Missourian file photo.
(Fred Lynch)
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.

mmiller@semissourian.com

388-3646

Pertinent address:

14484 State Highway 177, Cape Girardeau, MO


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Jay Purcell, a proven effective absent leader.

-- Posted by TheOneDude on Wed, Jul 18, 2012, at 1:04 PM

Really 300 million for 15 jobs.

-- Posted by interesting on Wed, Jul 18, 2012, at 1:06 PM

There is more to this story.

-- Posted by NoDisclosure on Wed, Jul 18, 2012, at 1:25 PM

corporate welfare

-- Posted by whom on Wed, Jul 18, 2012, at 1:51 PM

Good that it passed. P&G could pull out of here lickity-split if they wanted to!

-- Posted by vietnamvet on Wed, Jul 18, 2012, at 2:25 PM

More corporate welfare. When will it stop.

-- Posted by 3forone on Wed, Jul 18, 2012, at 3:27 PM

This is a Sign that Cape Co wants to bring jobs to the area, we need more of this.

-- Posted by falcon2412 on Wed, Jul 18, 2012, at 5:16 PM

This project is fine, but I must agree with the Pipefitters Rep Mr. Lane the majority of that work should be done by our own local contractors who employ our people that way the money stays here instead of leaving the area.

-- Posted by swampeastmissouri on Wed, Jul 18, 2012, at 6:21 PM

"Work will be awarded through a competitive bid process"

If local contractors have the most competitive bids, local contractors will be awarded the work.

-- Posted by FreedomFadingFast on Wed, Jul 18, 2012, at 7:31 PM

as if they cant afford to pay for it themselves

-- Posted by bagman75 on Wed, Jul 18, 2012, at 8:21 PM

It beats putting 300 million in a food stamp program. I don't care which private taxpaying company reaps the benefit.

-- Posted by yy4me on Wed, Jul 18, 2012, at 8:56 PM

yy3me, Do you understand what tax abatement means?

-- Posted by re.tired on Wed, Jul 18, 2012, at 9:07 PM

It means a company that produces products is more likely to stay and invest here than relocate to another community or country. Businesses have more than enough roadblocks set up to discourage them from hiring here than relocating.

-- Posted by yy4me on Wed, Jul 18, 2012, at 9:45 PM

No, tax abatement means zero to reduced property taxes for 20 years, without guarentee the company won't still relocate if the wind blows.

Joe the ditch digger from Jackson who scrapes by pays annual property taxes, which for the most part funds local education.

Federal, state and local governments need to stop encouraging corporations' dependency on welfare programs like this one. In most cases, the incentives are not needed, they merely pad the corporations bottom line. Pay attention, this is not about 'needing' the money--watch how fast the bonds are repaid.

-- Posted by re.tired on Thu, Jul 19, 2012, at 6:06 AM

Why should P&G be treated any differently than Cape county"s other major employers - SEMO, Southeast and St Francis? None of them pay property tax and the voters seem happy to make up the difference with sales tax hikes. What"s another quater percent to support P&G.

-- Posted by semowasp on Thu, Jul 19, 2012, at 6:18 AM

It will be awarded through a competitive bid, if you think that let me sell you the golden gate bridge cheap. You will probable have half of mexico there. Our frucon that does sub-standard work.

-- Posted by ssinteriors on Thu, Jul 19, 2012, at 6:59 AM

I could be wrong but I always thought Southeast Health aka Southeast Hospital was a for profit hospital. Please feel free to correct me.

-- Posted by carlee4 on Thu, Jul 19, 2012, at 8:48 AM

Does their profit situation matter? For profit or not, the three S's are being subsidized by the citizens of this area. Benefits - as I recall Cape has the highest medical costs in the state and the SEMO tuition rivals MIZZOU.

Maybe Cape County residents should enjoy a Charmin discount to off-set the profit difference.

-- Posted by semowasp on Thu, Jul 19, 2012, at 9:14 AM

Hmmm.... so instead of placing millions in money into the county coffers with property taxes the money will go directly to people who will get a job, earn a living and spend the money the way they want to?

Spend it on food, houses, cars, education, boats, clothing and recreation? And all along the way they will pay income tax, sales tax, fuel taxes, etc.

Sounds like a better deal to place the money into jobs instead of county coffers. In a free-market, municipalities and governments must compete for companies and jobs. Makes sense to me.

-- Posted by Dug on Thu, Jul 19, 2012, at 10:06 AM

So, Procter and Gamble just paid 25 people early retirement buyouts and they are now claiming to want to create 35 new jobs with 300 million. Looks like a net gain of 10 jobs.

-- Posted by 3forone on Thu, Jul 19, 2012, at 11:47 AM

P&G hired about a dozen new technicians earlier this year. They also hired several new College Engineers as well. The company is currently hiring and Cape is not a "leading contender" as Linda Greaser describes, but that Cape has already been chosen. Several P&G employees have already relocated to the area and purchased homes.

Here is a very interesting document......

http://www.mvs.usace.army.mil/permits/pn...

-- Posted by NoDisclosure on Thu, Jul 19, 2012, at 12:12 PM

A lot of confusion on here. A $300 million BOND is a loan that must be repaid. It is not "free money" to P&G so they can creat 35 jobs with 300 million. It's a LOAN - just like the last one was and it was paid off.

-- Posted by Dug on Thu, Jul 19, 2012, at 12:19 PM

Banks

-- Posted by bbollmann on Thu, Jul 19, 2012, at 5:04 PM

It may be a loan, but it's still corporate welfare in my opinion. Didn't we go through this a year or two ago with that airport fiasco? I guess we don't learn. Yes, I'm glad P&G is here. It has allowed the town to sustain its population over the past 40 years, but, I can't see the benefit here given the risk (our local governments have had a history of being duped over this kind of thing) and impact to the taxing districts.

-- Posted by Beaker on Thu, Jul 19, 2012, at 7:35 PM


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