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Council to consider bond issue

Thursday, August 28, 2008

Approval would be important step toward Orgill opening doors

SIKESTON -- A significant step toward Orgill opening their doors here in Sikeston -- approval of Chapter 100 bond transactions -- is scheduled to take place during the next regular City Council meeting.

"The City Council at their Sept. 8 meeting will consider the passage of the ordinance for the bond issue to fulfill our obligations to this company," confirmed Ed Dust, director of the Sikeston Department of Economic Development. "This is the most important step in the process in that it puts the financing package together for them to proceed."

Orgill Inc., the world's largest independent distributor of home improvement products, announced in July its plans to build a 795,000-square-foot "Mid-America SuperCenter" on a 70-acre site in the Sikeston Business, Education and Technology Park.

The Chapter 100 bond transactions to be considered Sept. 8 are $29 million for the land and the building and $11 million for equipment.

"Chapter 100 is a mechanism the state of Missouri has to make it more attractive for industry to locate in Missouri," Dust said. "It's just another tool for us to use to recruit industry; it was one of the tools we used to entice them to come to Sikeston."

Chuck Leible, city counselor, described Chapter 100 bonds as "a financing mechanism to allow for no assessment of taxes for a certain period of time."

"The property remains in the name of the city, in this case," he explained. "For a period of time, the city leases the real estate and the personal property back to the company. During that period of time, there are no real estate or personal property taxes assessed against the planned building and equipment."

"The bonds are sold on the credit worthiness of the company not the city and the city is not at any time liable for the debt," Dust said.

In the 13th year of operation, Orgill will pay 50 percent of what the taxes would normally have been to the city as a reimbursement for the cost of land acquisition.

In years 14-20, instead of property taxes, a payment in lieu of taxes equal to half of what the taxes would be is to be collected and split up among political subdivisions that would have received a portion of those taxes, "just as if it was a regular tax payment," Leible said.

"The Sikeston R-6 School District gets the biggest portion of it," Dust noted.

"Then in year 21 they start paying 100 percent taxes just like anyone else," Leible said.

"Construction is scheduled to start the first week of September, and completion of the project will be on or before Sept. 1, 2009," Dust said. "Orgill will be establishing an office in Sikeston around Nov. 1."