Rhinelander City Council takes another step toward ABX deal

January 22, 2020

Jamie Taylor and Heather Schaefer

River News

Rhinelander City Council takes another step toward ABX deal
By Jamie Taylor and Heather Schaefer
Of the River News

The Rhinelander Common Council took another step earlier this month toward helping local plastics company Advanced Barrier Extrusions (ABX) with a planned $15 million dollar expansion project.

On Dec. 9, the alderpersons voted unanimously to direct city administrator Daniel Guild to develop a $600,000 financing package for ABX.

The money is to come from Tax Incremental Financing (TIF) District #6, which includes the Rhinelander-Oneida County airport and the industries along U.S. Highway 8. The TIF District has been doing better than forecasted, and the additional value to the district would go up with the addition to the ABX facility, it was noted.

According to the Department of Revenue, tax incremental financing allows a municipality to fund infrastructure and other improvements, through property tax revenue of newly developed property. A municipality identifies an area, the Tax Incremental District (TID), as appropriate for a certain type of development. The municipality identifies projects to encourage and facilitate the desired development. Then as property values rise, the municipality uses the property tax paid on that development to pay for the projects. After the project costs are paid, the municipality closes the TID. The municipality, schools, county, and technical college are able to levy taxes on the value of the new development.

Rhinelander currently has 6 active TIDs, including one environmental district, all of which are scheduled to close between 2025 and 2040. TIF District 6 is scheduled to close in 2026, however the expenditure period is slated to end in the fall of 2020.

Alderperson Steve Sauer made a motion to approve the resolution and Andrew Larson provided the second.

The resolution authorized city administrator Daniel Guild to develop a financing package which will create a $600,000 business development grant from TIF District #6 "for the benefit of ABX," subject to the following terms and conditions:

• Consult with the Financial Advisor and Finance Director on financing options.

• Present a Developer's Agreement for Council consideration & ABX signature.

• Present a financing package for Council consideration and execution.

Alderman Lee Emmer repeated a concern he mentioned during previous discussions related to ABX's request for financial assistance from the city.

"I do not believe that the TID (Tax Incremental District) is going to generate enough revenue over the rest of its life to return the $600,000," Emmer said. "I know one of the things that the Department of Revenue wants to see is a developer's agreement (that shows) how the money is going to come back."

Emmer also noted that the Council recently hired Kristin Fish-Peterson of Redevelopment Resources, a Madison-based consulting firm, to review all of the city's TIDs.

"She was going to come back and tell us how it could be done, whether it's an overlay TID, because it's a lot of money and there's money still owed in this district and there's only very few years left in the life of that zone."

Sauer said the resolution is another step in a deliberate process.

"This resolution is simply acknowledging the fact that we are allowing the administrator to move forward," Sauer said. "We are not giving them $600,000, we are just saying that we will consider $600,000 as long as you bring forth the items we're asking for."

Mayor Chris Frederickson asked clerk Val Foley call the roll, but Emmer again repeated that the resolution "is authorizing a financial incentive to ABX from TID District #6 in the amount of $600,000."

"The money is not there in TIF District 6," Emmer added.

"The $600,000 site improvement grant and the subsequent $15 million addition that ABX is looking to build in the industrial park, that information was given to Sean Lentz, who works at Ayers and Associates who is the city's financial advisor," Guild replied. "In talking with Mr. Lentz, three different potential options for financing the $600,000 out of TIF #6 were created."

Those three proposals were included in the Council's packet.

"I have an affirmative recommendation from Mr. Lentz that the district will be able to support the $600,000 site improvement grant, if the $15 million of added increment is constructed before the end of the expenditure period in September of 2020 which will be a component and requirement of the developer's agreement," Guild said.

"This is a business that wants to make a huge expansion in our area, it's a business that provides well-paying jobs for people to support families," noted alderman Ryan Rossing. "Why aren't we excited about something like this? I intend on voting for this."

Emmer said he is excited about the prospect of the expansion, but "you have to have $15 million of the development done by the end of next year."

Frederickson said the company is working with the Oneida County Economic Development Corporation (OCEDC) to move the project forward.

OCEDC executive director Stacey Johnson explained that ABX is planning to add equipment which will create additional capacity at the plant. As ABX officials have already researched what would be needed and how much it would cost, the aggressive timeline is feasible, she added.

"They know the timeline in order for this expansion to happen," Johnson told the council. "They know they need to have this piece of equipment here on time. So, although that seems like a short period of time, if we were building a new building that cost $15 million, a lot of that expense comes from the equipment."

Johnson also said that ABX recently acquired another plastics firm in southern Wisconsin that makes the second portion of the finished product.

"By making that acquisition we are already seeing new contracts generated here in Rhinelander," she said. "So not only are we going to be able have 30 percent more business, as far as new employees go, with this expansion we're going to have exceedingly more product produced here and we've added another business in Wisconsin instead of potentially relocating the whole entire thing."

"Of course we'll have a full presentation, a public hearing because we want people to be excited about (the expansion). This is the kind of thing we really need here within the city," Johnson added.

She urged the alderpersons to contact her if they have additional questions about the ABX project.

The vote on the resolution was unanimous.