Posted on Jan 9, 2015
by Tony Brown
Maryville Daily Forum
According to a municipal staff report attached to the agenda for Monday’s Maryville City Council meeting, Kawasaki Motors Manufacturing Corp. U.S.A. has announced plans to undertake a 100,800 square-foot expansion that will include upgraded machining operations and new equipment.
The report stated that the $25 million expansion could create up to 30 new jobs in conjunction with weekend shifts.
In the report, City Manager Greg McDanel stated that Missouri law authorizes municipalities to issue Industrial Development Revenue bonds, also known as Chapter 100 bonds, to provide tax incentives to facilitate such expansion projects.
At Monday’s regular council session, McDanel is expected to recommend that the council adopt a resolution in support of issuing municipal Industrial Development Revenue Bonds in an amount not to exceed $25 million to finance the Kawasaki expansion.
McDanel stated that the expansion aligns with the council’s stated goal of enlarging the city’s tax base by “pursuing strategic economic development and private investment.”
IDBs may be issued by any Missouri municipality to finance the cost of offices, warehouses, distribution facilities and industrial plants. In conjunction with such projects, bond proceeds can be used to construct or install buildings, fixtures and machinery.
There are two primary reasons to issue IDBs, McDanel said. First, when the bonds are tax-exempt, they may possess lower interest rates than those obtained through conventional financing. The second reason is that property taxes on bond-financed property may be abated because legal title to the property and improvements is held by the city during the financing period.
In a typical IDB transaction, the municipality holds fee title to the project and leases it to the company, thereby making it exempt from real and personal property taxes during the bonding period.
IDBs can be issued as revenue bonds that do not require voter approval and are payable solely from revenues received from the project. In other words, the municipality merely acts as a conduit for the financing.
At then end of the bonding term, the property is transferred back to the company for a nominal fee.
Building materials and other real property improvements financed with IDBs may also be exempt from state and local sales tax.
The Kawasaki Motors Manufacturing Corp. U.S.A. plant operated just outside Maryville’s south city limits for the past 25 years before voluntarily annexing into the city in December.
The annexation, which required no extension of city services, will provide the city with significant new tax revenue from sales and property taxes on the facility as it now exists.
Anticipated annual revenue totals $134,952 for the city proper, $35,738 for Maryville Parks & Recreation and $15,770 for the Maryville Public Library.