TERRE HAUTE — Clabber Girl seeks to have Vigo County officials establish a “recovery zone,” a program under the federal Stimulus Act that would enable the company to obtain a lower-interest federal tax-exempt bond to build a new 153,600-square-foot warehouse/distribution center.
The measure could save the company between 1 and 2 percent on interest costs to construct its proposed $4.5 million facility on Margaret Avenue, west of Indiana 46.
Denise Y. Barkdull, attorney with the Indianapolis law firm Ice Miller LLP, told commissioners that the Stimulus Act, passed in February, increased the borrowing capacity of local governments through a $25 billion allocation to issue two types of bonds.
The act provided $15 billion for Recovery Zone Facility Bonds and $10 billion for Recovery Zone Economic Development Bonds. The allocations go to each state and to each county in a state, Barkdull said. The U.S. Department of Treasury released the allocation amounts June 12.
Barkdull said county commissioners determine how much capacity is issued to each private business.
Vigo County received about $5 million in Recovery Zone Economic Development Bond capacity. The county also received $8.6 million in Recovery Zone Facility Bond capacity. Clabber Girl is seeking just over half that allocation, at $4.5 million.
“It is for capital expenditures and allows private businesses to borrow on a tax-exempt basis for which they normally would not be eligible,” Barkdull said.
Under the Recovery Zone program, all bonds must be issued by Dec. 31, 2010, Barkdull said.
The facility bonds are issued to private businesses and do not impact the bonding capacity of the county, Barkdull said. A private business that receives the bonds is responsible to pay them off. The economic development bonds allow a county to obtain lower borrowing costs for economic development projects, including public infrastructure, public facilities, job training and educational programs.
Both bonds require commissioners to establish a “recovery zone,” identified as an area with high unemployment, high mortgage foreclosures or general economic distress, Barkdull said.
“There is no categorization, there is no comparison, it doesn’t have to be in the most distressed area, so we are advising counties to designate the entire county, as it is a matter of fact-finding,” Barkdull told commissioners.
In Indiana, unemployment rates and home foreclosure rates and other information are collected on a county-wide basis, she said.
Vigo County Commissioners on Tuesday voted to proceed with the recovery zone. Commissioners plan to designate the county as a “recovery zone” at its Oct. 6 meeting. Commissioners then plan to conduct a public hearing Oct. 13 on the zone, after which commissioners can allocate a bond amount to Clabber Girl.
Clabber Girl must then go before the Terre Haute City Council, because the proposed facility is within the city limits, on Nov. 5 for its consent to issue a bond. The city’s Economic Development Commission would then conduct a public hearing and approve a bond resolution. The City Council would then vote at its Nov. 17 meeting whether or not to adopt a bond ordinance, enabling Clabber Girl to later close on a bond issue.
The proposed warehouse/distribution center is important for Clabber Girl’s future, said Marla Flowers, executive director of corporate operations.
“We lease space in 23 public warehouses from coast to coast, but it is hard for us to manage inventory in all of those spaces, so our goal is to get down to seven warehouses, which would include the [proposed new] one here in Terre Haute,” Flowers said.
The new facility would be along Margaret Avenue and a new road constructed along the facility’s east side, said Paul Thrift of Thompson Thrift Inc., which will construct the tilt-up concrete warehouse structure.
An existing road on the south side of Walmart East on Indiana 46 — to be named Bill Farr Drive — will be extended west of the Walmart. That road will connect with a west extension of New Margaret Avenue on the north side of Walmart. Both roads will connect to an unnamed north-south road along the east side of the new Clabber Girl facility, connecting to Margaret Avenue, Thrift said.
A further extension of New Margaret Avenue, Thrift said, is planned for the future to extend west and connect to Fruitridge Avenue.
Thrift said he seeks to start construction of the Clabber Girl facility in December, to be completed by early summer next year.
Howard Greninger can be reached at (812) 231-4204 or howard.greninger@tribstar.com
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