Two new industrial operations with total investments estimated at $320 million are looking to set up shop in Elizabethtown and hopes the city will help them do it.
Two industrial revenue bonds summary of engagement agreements, which are incentives through the city, were presented Monday to Elizabethtown City Council for a new aluminum plant and whiskey operation.
According to the summaries, Lotte Aluminum Materials USA, a Korean company which will make products to support BlueOvalSK battery park in Glendale, is proposed to receive an estimated $250 million industrial revenue bond.
The second bond would be issued for Kentucky Whiskey House at an estimated $70 million.
Both are 20-year bonds and are expected to be issued Jan. 1.
“We had an idea that we were going to have a lot of ancillary projects come to our region after the BlueOvalSK announcement and this may be one of the first shoes to drop,” Mayor Jeff Gregory said in an interview Tuesday. “What’s exciting about Lotte, and the same for Kentucky Whiskey House, is the fact that it diversifies our industrial park.”
Gregory said he was glad to attract companies to the park that offer opportunities and jobs outside the automotive industry because “you don’t want to put all the eggs in that one basket.”
“While Lotte does support the BlueOvalSK battery venture, they’re an aluminum plant that can do other things as well,” he said. “They’re not just necessarily dialed in to the automotive industry.
Apart from its diversification, Gregory said he hopes the whiskey venture will help draw tourism to Bourbon’s Backyard.
“Just based on our geography and being where we are in regards to the Bourbon Trail that is so popular with so many people now, that gives us the opportunity to partake in that a little bit,” he said.
Boundary Oak Distillery master distiller Brent Goodin said he welcomes a second whiskey maker in Hardin County.
“We have never, ever since 1875 in the Kentucky Distillers Association, there has never been any rivalry between any of us,” he said. “It’s probably one of those very few industries that have been there to help each other the whole way.”
Kentucky bourbon is so unique that it competes against other spirits across the world as a collective, Goodin said, adding he has been distilling for 10 years in Hardin County.
“I never dreamed it would take 10 years before another distillery would get over here,” he said. “But I’m glad because I always wanted Hardin County to be a player in the state’s most recognized product.”
Goodin said with another spirit producer locating in the county it will help solidify Hardin County as a tourism stop on the Kentucky Bourbon Trail.
While the new companies want to call Elizabethtown home, few other details have been released about the scope of the project pending official announcements expected in the coming months.
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.obligated for debt repayment,” a Just the Facts sheet about the bonds reads.
City Attorney Ken Howard, who presented the summaries Monday, said he was presenting the information to council for its consideration in order to take action on the bonds at its next voting meeting.
Howard said the city is required to use “nationally recognized bond counsel” who will act as legal counsel 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 property tax for Hardin County Schools, he said.
“That is a commonplace practice,” he said, adding it helps support an educated workforce.
Gregory said Tuesday the bonds were “not out of the ordinary” and they give companies a break on property taxes and helps with financing with a financial institution.
