Two companies could receive more than $300 million in incentives to locate in Elizabethtown.
At a work session Monday evening, Elizabethtown City Council was presented with industrial revenue bonds summary of engagement agreements for an aluminum factory and whiskey operation in the city’s T.J. Patterson Industrial Park.
The two industrial revenue bonds are an estimated $320 million, according to the summaries.
One summary said Lotte Aluminum Materials USA, a Korean company that will make products to support BlueOval SK battery park in Glendale, is proposed to receive an estimated $250 million industrial revenue bond.
The second industrial revenue bond to be issued is for Kentucky Whiskey House at an estimated $70 million, its summary said.
Both are 20-year bonds and are expected to be issued Jan. 1.
According to information from the state, industrial revenue bonds can be issued by state and local governments to finance industrial buildings to include total project costs.
“Generally, the issuer serves as a conduit to provide a lower interest rate to the borrower, but the issuer is not obligated for debt repayment,” a Just the Facts sheet about the bonds reads.
According to city attorney Ken Howard, who presented the summaries to council, he was presenting the information to council for their consideration in order to take action on the bonds at its next voting meeting Monday.
Howard said the city is required to use “nationally recognized bond counsel” who will act as legal council to the city and not the companies.
The cost of services for David Malone of Steptoe & Johnson PLLC is $40,000 for Lotte Aluminum and $35,000 for Kentucky Whiskey House, according to the summaries. Both fees will be paid from bond proceeds, it said.
“It’s been my experience this early in the game, these companies typically are going to ask for what they think is the most they can use,” Howard said. “Then when they get closer to issuance, that number may come down. This is just what is projected.”
Although the city doesn’t pay legal counsel fees, Howard said the city will incur “fairly minimal” administrative costs providing information needed for the bond.
“The industrial revenue bond, if they are going to issue it for property and equipment, the property and equipment then gets transferred to the city and then we issue the bonds,” Howard said of the process. “We will have a lease agreement between the city and each of these companies that requires them to pay the lease payments … .”
Howard said the bonds do not affect the bonding capacity of the city or its bond rating.
By applying for the bonds and because the title is held in the city’s name, Howard said the companies are not responsible for paying city property tax and could receive a reduced state tax. It does not exempt the companies from paying the county school tax for Hardin County Schools, he said.
“That is a commonplace practice,” he said, adding it helps support an educated workforce.
After the meeting, city Public Information Officer Amy Inman said the bonds issuance is a normal practice to recruit and keep businesses local.
“We do it for most every industry that’s in the city limits,” she said. “It’s an incentive for them to locate and do business here, but it excuses them from their property tax.”
