Cape County Commission approves $300 million in bonds for P&G

Tuesday, August 14, 2012

Aside from construction permits still needed, a $300 million expansion of Procter & Gamble facilities is a go after Monday's approval by the Cape Girardeau County Commission to issue industrial development bonds.

Commissioners unanimously approved issuing $300 million in Chapter 100 bonds, which company representatives have said will help fund additional manufacturing capacity needed at P&G's Cape Girardeau County plant to meet future consumer demands. The expansion will also create around 200 construction jobs and 35 full-time positions once building is complete, according to the company.

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. Chapter 100 bonds also allow for a sales tax exemption on construction materials for the project.

Approval by the commission was a final step for the company in moving ahead plans for the expansion project, which has been in P&G's master plan since the 1990s and a focus for the company for nearly seven years, said Lenn Hess, a project engineer.

"This is an exciting time. We have worked quite a long time to get it to this point," said Linda Greaser, external relations leader at P&G.

Greaser said she believes a good workforce and strong partnerships between the company and the community have influenced the company's progress in obtaining the funds it needs to expand.

Hess said with the commission's approval of bonds, the next step is for the company to finish receiving construction permits so that work on the expansion can begin.

P&G has declined to provide details about the expansion, citing a need to protect strategic plans from competition.

Right now plans call for $250 million to be spent on new equipment and $50 million to be spent on construction. A permit application with the U.S. Army Corps of Engineers shows plans for addition of manufacturing space, parking lots, loading docks, warehouse space, a railroad spur, an access road, relocation of Route J and construction of a bridge over Turkey Creek.

Hess said some limited earthwork may begin at the site within two weeks on projects for which the company does not need specific permits. Most construction permits should be issued next month, Hess said, although the schedules for that to occur is sometimes unpredictable.

Commissioners praised the company for the strength and stability they say P&G provides for the local economy and workforce. Jay Purcell, District 2 Commissioner, asked company representatives at Monday's meeting to "diligently pursue" local contractors for construction projects.

The advantage for the company to use Chapter 100 bonds are the related tax abatements it will receive.

"There is clearly a public benefit to bringing the jobs in, but it is also a benefit to Procter & Gamble as a corporation to get those tax savings, so I think it's a good trade off as long as we are able to employ our local workforce," Purcell said.

Company representatives have already announced intent to hire a local firm for overseeing construction and will hold a competitive bidding process.

Jackson superintendent Ron Anderson attended Monday's meeting and afterward expressed approval of the expansion funding. Anderson said the district's long history of benefiting from revenue additions due to use of Chapter 100 bonds has been positive.

The company and its supporting businesses also help provide regional stability, Anderson said.

Mark Grimm, an attorney with Gilmore & Bell in Cape Girardeau, said the county is not liable for the bonds should P&G ever default and that the bonds are purchased solely by the local company's parent corporation, which then charges interest to the local company.

eragan@semissourian.com

388-3627

Pertinent address:

1 Barton Square, Jackson, MO

14484 State Highway 177, Cape Girardeau, MO

Map of pertinent addresses

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