To help expand a local manufacturer in suburban Jasper County, the supervisory board on May 18 accepted a tax increase funding proposal that JEDCO executive director Jeff Davidson said would ask ” very little âfinancial risk for the county.
Co-Line Manufacturing, of Lynnville, has contacted JEDCO regarding the construction of a new 50,000 square foot building north of its existing campus in Jasper County. Despite Lynnville’s mailing address, all of Co-Line’s buildings and facilities are currently located in Mahaska County, Davidson said.
However, about half of the 207 employees at metal fabrication companies are residents of Jasper County.
In addition to being Co-Line’s first manufacturing facility in Jasper County, the proposed building would be associated with a new line of products that would be manufactured by the company and distributed across the United States. Davidson was unable to disclose what the product was at the supervisors meeting.
“I will say that while we can’t disclose the product, this is a product that if a lot of things are going as it seems with the federal stimulus money being talked about right now in Washington, being a product that would have very high use with some of those stimulus dollars, âhe said.
The Jasper County building would include 10 to 15 new skilled production positions added to Co-Line’s workforce. If sales develop as expected, it is possible that an additional second production shift will be implemented at the plant. There is also room to welcome more expansions, but none have been initiated.
âThere will be an additional building in Mahaska County that will be built at the same time,â Davidson said. âSo I think it’s fair to say we’re in a competitive environment. Economic development is always a competitive environment. The state basically gives us a tool: and that is the financing of tax increases. “
The FIT funding will fund about 25 percent of the expansion’s construction expenses, currently estimated at $ 1.5 million. Davidson said the arrangement was similar to what Co-Line received for its projects in Mahaska County.
Davidson said what makes the TIF so attractive is that decision-making remains local, as long as the parameters set by the state are followed.
âThe way TIF works is you take ownership and see it as it is now, and everything stays fixed,â he said. âNo one receives less tax than they currently receive in terms of the distribution of property taxes, primarily to the county and school district in this case.
âBut there’s also the community college and some smaller levies that also exist. These taxes are fixed and continue to be distributed. “
Currently, the existing property where the new facility is proposed generates $ 3,100 in property taxes annually. It should be noted that the TIF agreement would last for 12 to 13 years. The new building would pay about 10 times that amount, or about $ 30,438 per year starting in 2035.
âCo-Line would pay their property taxes for their new building and then ask them to reimburse it to fund the 25 percent of the construction costs,â Davidson said. “And that’s just the new increment that gets redistributed to them.”
Co-Line was first established as a welding shop with two employees in 1979. Since then the steady growth of the manufacturer has resulted in the development of an entire manufacturing campus. Production growth has been particularly robust over the past three and a half years.
âThey’ve practically doubled their production,â Davidson said. âSo the growth has been really phenomenal.â
This will be beneficial for Co-Line, which finances the majority of the financing of this project. The FIT repayment will be used for the final quarter of the construction loan – approximately $ 375,000 – as Co-Line pays property taxes on the new building. Jasper County is also not being asked to provide upfront money.
Often, companies do not have “the financial means” to obtain the construction loan necessary to build a facility for TIF projects.
âSo they have to have the money up front, and what that means is that the municipal government has to fund that money up front,â Davidson said. âThe city or county has to sell a bond and give the proceeds to the company so they can build it. And that introduces a lot of risk into the project. “
Davidson said what sets the Co-Line project apart is that the county is not being asked to provide that initial funding.
âWe are happily working with a company that can finance the construction of the project,â he said. âSo there is very little risk for the county to carry out a project like this where it is only a discount. If they don’t pay their property taxes on the new building for whatever reason, then there is no increase.
On the other hand, if Jasper County were to fund the project up front by selling a bond, Davidson said there would be a hole in the county’s funding to pay off that bond. The county “will not have this situation” with this project. Co-Line would be refunded the new property taxes until the $ 375,000 is refunded.
Even though Davidson cautiously estimated 12-13 years, he felt the TIF could be lifted sooner.
âWe’re really interested in establishing a presence in Jasper County for this great, growing, central Iowa company,â Davidson said. âYou hear all kinds of good things about this companyâ¦ I really think it’s a very, very reputable group that we can harness our wagon to.â
Welcoming the proposal, the Jasper County Supervisory Board unanimously approved the TIF Agreement-in-Principle, which will lead to the drafting and execution of the TIF Agreement itself. Jasper County Supervisor Brandon Talsma said it was a âgreat opportunityâ to help a local employer continue to grow.
âThis time around, I might add that I could lay down on the right side of the county road,â Talsma said. âI said that during the last campaign. It seems like we spend a lot of time and a lot of effort trying to attract outside entities to Jasper County instead of focusing on our local employers, our local businesses.
Co-Line is one of those employers that has continued to grow and projects more growth, he added. With half of her workforce made up of Jasper County employees, Talsma said that’s something to keep in mind as well. Still, if there was money up front, it would have been a harder pill to swallow, he said.
Contact Christopher Braunschweig at 641-792-3121 ext. 6560 or [email protected]