The Rhinelander Common Council approved three resolutions Monday as it moves closer to finalizing its plan to help fund the planned 50,000- square foot expansion of local plastics company Advanced Barrier Extrusions (ABX).
The council has indicated a willingness to contribute $600,000 to the project, contingent upon approval of a developer's agreement.
City administrator Daniel Guild outlined the financing plan, which involves tax incremental financing (TIF), for the alderpersons.
"After some internal discussions, we have settled on a distribution from TIF 6 which would go to the company (ABX) per the authorization of a developer's agreement. And then after which TIF 6 would be reimbursed through borrowing," Guild said. "So, the first thing that we do is look at the amount of money TIF 6 has on hand in order to do something like this. Regrettably, it does not have cash on hand to do this disbursement. So, looking at city funds and looking at the fact that we do not have an internal investment policy, the first resolution is for the creation of an internal investment policy that allows us to transfer money from a different fund in the city to TIF 6 with the understanding of how that money is going to be reimbursed later on. The next resolution talks about the specifics of the financing plan for ABX. After some consultation with Wendi (Bixby, the city finance director) and some considerations, our thought is to transfer $300,000 from Water Utility and $300,000 from the Wastewater Utility to TIF 6, that would total $600,000, and TIF 6 would make the payment to ABX. After which time we would go through and borrow money to then replenish TIF 6 which would then pay back the water and wastewater utilities. We would do that over the course of about 90 days."
There are three options for the borrowing aspect of the plan - a bank loan, a loan through the state trust fund or general obligation borrowing, he added.
"We will be exploring and have been exploring all three options to see which one gives us the best terms and the best finance rate," Guild said..
The third resolution involved the council authorizing the release of the draft developer's agreement to ABX.
"This doesn't approve the developer's agreement, this doesn't authorize it or finalize it," Guild stressed. "I believe that the document is at a point in its drafting where we can share it with you as council members .... and then also with your permission we'd like to then share it with ABX so they can give it to their attorneys so that inevitably the attorneys can chat over the language."
A final version of the agreement will come back to the council for approval, he added, noting that the funds will not be disbursed until the finalized developer's agreement is approved by the council.
"No monies will be exchanged until that final version is approved," he said.
Guild also noted that the water utilities have the necessary cash "on hand" to make the transfer and this course of action "should not affect any operations" of the water and wastewater utilities.
After hearing Guild's presentation, the council unanimously approved the resolutions.
The resolution establishing an internal investment policy for the city includes the following requirements:
All loans must specify the term of the loan
All loans must specify the interest rate of the loan
The current investment rate must be greater than the rate being charged internally
The current loan rate must be lower than the market rates
The agreement must be in writing and approved by appropriate bodies.
The internal loan rate will be determined by the city administrator, after consultation with the finance director.
In addition, in order to complete the loan, the city will need to obtain 3 quotes on loan rates for comparison purposes. In addition, the city will obtain 3 quotes for investments closely using the same term as the internal loan being considered."
The council has moved relatively quickly to assist ABX with its expansion project.
ABX cofounder Steve Pawelko first mentioned the project, which involves increasing the company's output by 50 percent, during an Oct. 21, 2019 city budget workshop.
"I do want to announce that ABX is looking at expanding in our community," Pawelko said. "Obviously, we need some support to accomplish that."
The company, which was founded in 2005, produces high technology films for food, medical and industrial packaging.
ABX now employs 64 people and has a $5 million payroll, Pawelko said.
"The expansion that we're looking at is basically increasing our output by 50 percent," he continued. "What we're looking at, if everything goes well and I think it will, I'm being conservative with these numbers, in four years after we do the expansion adding another 16 people, moving payroll from $5 million today dollars to $6 million today dollars."
To increase capacity, the company is looking to add a piece of equipment called a slitter, according documents submitted to the city.
"The project is to prepare the site for expansion by removing a significant amount of dirt, install additional building space and install another cast line and eventually a slitter for volume growth," the documents state.
According to the Wisconsin Policy Forum, tax incremental financing is a development tool available to local governments in Wisconsin. TIF projects typically use public funds to pay for infrastructure developments within a designated area. The municipality generally borrows money for the improvements and pays it back over time through increased property tax revenues generated by the new development.
In other business, the council spent over an hour in closed session discussing its collective bargaining agreements with IAFF Local 1028 and WPPA Local 38, the unions that represent the city police and fire departments.
In open session, alderman David Holt made a motion to send the agreements back for further negotiations. The motion passed on a 6-0 vote.
Alderpersons George Kirby and Dawn Rog were absent.
Posted: Thursday, February 13, 2020
Article comment by:
Isn't it interesting that the two alderman not running for council are absent from another council meeting. They have been absent from multiple meetings. Maybe they packed up their toys and went home for good
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