News/PRLoan request for Kemp Street property has tight deadline
September 1, 2016
Time is apparently of the essence when it comes to a request from a division of Expera Specialty Solutions for a $15 million loan from Oneida County and the city Rhinelander.
The project, which became public last week, has been described as "time critical" and, according to Roger Luce, executive director of the Oneida County Economic Development Corporation, the window to get the venture up and running is very narrow.
"It is very time-sensitive in terms of a contract," Luce said. "And it is very time-sensitive to do the borrowing and do all the credit risk summary, etc."
The city of Rhinelander and Oneida County have been asked to lend $15 million to the Northeast Wisconsin Development Corporation (NEWEDC), sister corporation of the Oneida County Economic Development Corporation (OCEDC), as part of lease/purchase contract with Rhinelander Coated Products (RCP), NEWEDC announced last week in a press release. Under the agreement, NEWEDC would purchase the former Printpack facility on Kemp Street, renovate the building to fit the potential new use and purchase the equipment utilized in the RCP manufacturing process.
The lease term would be 6 1/2 years and the project would provide an increase in the number of well-paying manufacturing jobs in the area as well as increase the tax base, the release states.
RCP is a unit of Expera Specialty Solutions which operates the Rhinelander paper mill and earlier this summer secured a Conditional Use Permit to increase the height of the former Printpack building and install a taller smokestack.
"Rhinelander Coated Products has identified a major growth opportunity for the business that is time critical," Expera spokesperson Addie Teeters said in the press release. "The company appreciates the innovative solution proposed by NEWEDC/OCEDC and we wish to expand in Rhinelander. We feel this will create long-term economic improvement for the area."
The source of the borrowing by Oneida County and city of Rhinelander would be the State of Wisconsin Board of Commissioners (BCPL) of Public Lands State Trust Fund, a component of which is designed to spur economic development. According to its website, the agency has made loans to municipalities and school districts for public purpose projects including economic development, local infrastructure, capital equipment and vehicles, building repairs and improvements and refinancing existing facilities to reduce future borrowing costs since 1871.
Since the project was first introduced, a question has been raised as to whether the city of Rhinelander would be able to borrow and loan such a large amount of money, given its recent borrowing for its $9.8 million city streetscape upgrade.
Former city administrator Kristina Aschenbrenner, who was fired Monday (See related story), was the first to mention the issue. She told the River News the city signed a disclosure as part of the financing of the streetscape project indicating it would not be borrowing additional funds this year.
However, Luce said the city's potential borrowing limitations may not spell the end of the project.
"That will depend on the county board, I guess," he said. "I know Kristina did make reference to that in the past, about the city and their debt schedule."
In a closed door meeting last month, the county board was given "an outline of the project," however a formal request has not been made," Luce added.
"It was in very great detail," Luce said of the presentation to the board. "We weren't in there asking them, we were just requesting they consider it. But we wanted to show them, in detail, the entire project and what it could mean."
At the time of the presentation to the county board, there were a lot of aspects to the deal that had yet to be worked out, he added. While the board could take up the issue at its Sept. 20 meeting, waiting until the Oct. 18 regular meeting might be too long of a delay, he added.
"I would say that is probably going to be too late," Luce said. "Knowing what all has to transpire within the next 20 months, I would say that is probably too far out."
When asked if he thought the county would be willing to borrow the entire $15 million without a city contribution, Luce replied, "I'm hopeful they would. But I haven't seen a letter from Kristina to the county board saying the city won't or can't."
When reached for comment on the project Friday, alderman and county supervisor Alex Young voiced his support for the venture, although he is aware of the city's debt concerns.
"I haven't looked at it (the disclosure), word for word, recently, so I don't know what was in there," Young said. "But I would assume that it involves us not taking on any additional debt levy."
He said he could understand Aschenbrenner not wanting the city to rush into too much additional borrowing.
"If you look at the history of the city's finances, there was a point in history not that long ago when one of the bond rating agencies had us on a negative watch list, and they were talking about lowering our bond rating due to a number of different financial factors," he said. "And ballooning debt is one of those things we have to be cognizant of."
He said "the nuts and bolts' of the proposed deal are still being worked out and a lot of the details remain confidential.
"In any project like this, there are a lot of different seats at the table, I mean there are multiple numbers of government agencies that participate in it," Young said. "And I think, right now, everyone is kind of trying to work out who is going to play what role in this project. From the city's standpoint, yes, there are financial concerns. I mean the city is not in a position where they could take on $15 million all by themselves."
What can't be overlooked is that the project would created good paying manufacturing jobs, Young added.
"Without getting into too much detail, this project will really bolster a key local employer and industry that we have already," Young said. "So there may have to be some give and take in that. I think from strictly a financial standpoint, the county is in a better position to participate in this."
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