Pettis County and Sedalia officials on Monday voted to authorize the Industrial Development Authority of Pettis County to issue $21.79 million worth of federal stimulus bonds to ProEnergy Services.
Chris Stratton, ProEnergy chief financial officer, said the company can use the bonds to “secure lower interest financing on longer terms,” which will be used to fund construction of an industrial turbine repair shop, an office and a warehouse, all to be located on 52 acres of expansion property the company bought last year.
The project, which is expected to be completed by Spring 2011, should bring at least 100 new jobs to the area, Stratton said.
The bonds are Recovery Zone Facility Bonds created by the American Recovery and Reinvestment Act, more commonly known as the stimulus bill, and are tax-exempt bonds issued for private activity in areas designated as Federal Recovery Zones.
The Pettis County Commission declared the county a recovery zone in August 2009 based on reduced tax receipts and high unemployment.
ProEnergy may then borrow capital against the bonds, which will be sold by the lender, to fund the project.
Stratton said the stimulus money was helpful because banks are still showing reluctance to offer commercial credit.
“It would have been much more difficult for us to move forward on this project because the banking environment is still in a sad state. This allows us to attain financing at lower rates and for a longer period of time. It is definitely a plus for us to have access to this type of funding,” Stratton said.
According to Linda Christle, executive director of Economic Development Sedalia-Pettis County, approval was needed from both the Pettis County Commission and Sedalia City Council because of the location of the project, and the IDA will issue the bonds.
The IDA — a seven-member panel that acts as a pass-through agent for low-interest loans and other government funding — is overseen by EDSPC with appointments made by the Pettis County Commission. New members were appointed to the group in April, and Christle has since been named the executive director of the IDA.
Presiding Commissioner Rusty Kahrs stressed that neither the county nor the city holds any obligation for repayment of the bonds. The county originally was allocated $1.79 million in facility bonds, but it received no applications for the program.
Under ARRA rules, unused money is reclaimed by the state and re-allocated — in this case adding authority for an additional $20 million in bonds for the county.
“This is a good program,” Kahrs said. “It is a a federal program that meets state guidelines, but most of the components are private enterprise-driven. The interest you earn as an investor when you buy the bonds is tax-exempt.”
Kahrs said the bond requirements made it difficult for some companies to qualify for the program, but he credited ProEnergy with being ready to move on expansion projects that will “help create jobs and stimulate the economy.”
With city and county approval in place, the IDA is expected to give the final green light to the project during a public meeting at 3:30 p.m. today on the third floor of the EDSPC office at 3615 Broadway Blvd. The meeting is open to the public. For more information on the meeting, contact Christle at 827-0884.
-Dennis Rich, Sedalia Democrat
