Council considers financing for 3M upgrade

Saturday, October 18, 2014

Nevada Daily Mail

The Nevada City Council will consider adopting a resolution during its meeting Monday night at 7 p.m., in the council chambers in the Public Safety Building, 120 S. Ash St., to issue up to $50,070,000 in Chapter 100 industrial development revenue bonds to help 3M upgrade equipment in its Nevada plant.

Nevada City Manager JD Kehrman said Friday that the issue of these bonds does not make the city or the state responsible for the repayment of the bonds. That is the total responsibility of 3M.

"The bonds are payable solely out of payments, revenues and receipts derived from the lease of the project by the city to 3M," Kehrman said in an email Friday.

"A payment in lieu of taxes (PILOT) is made to the taxing jurisdictions. These payments represent 25 percent of the unabated value of the investment. No existing tax revenues are impacted, these are future revenues that would otherwise not exist should the global firm find more competitive locations to invest in the U.S. or overseas," he said.

Kehrman said that the city and 3M have a 40-year history of using this mechanism to cover the cost of expansion and improvements at the Nevada plant and reduce the company's personal property tax on the new equipment by 75 percent during a 14 year period, providing 3M makes a minimum investment of $35 million in a five year time period.

"The intent is to attract additional investment and guarantee that 3M retains the modernized equipment necessary to keep the jobs that exist currently," he said.

Kehrman said this agreement, unlike the last Chapter 100 bond agreement that expired in 2010, has a minimum investment requirement for 3M during the five-year period or the property tax abatement expires.

Other items on the agenda include hearing a report on the Camp Clark Joint Land Use Study, as well as the first and second readings of an emergency ordinance approving a settlement agreement with CenturyLink for the payment of back taxes and the first reading of a special ordinance approving the pre-paying of the final payment on the 2009 certificates of participation that financed the construction of the Franklin P. Norman City/County Community Center to save interest on the debt.

The council will also consider resolutions to approve two package liquor licenses for Pete's of Erie Inc., which has recently purchased convenience stores at 402 W. Austin and 1811 N. Ash streets, and to approve the streets to be improved in 2015 with the transportation sales tax.

Other items under consideration include the second readings of ordinances approving the application for federal funding for part of the cost of the city's taxi coupon program; an ordinance authorizing the filing of a Lis Pendens and quiet title suit related to the acquisition of the old First Baptist Church building and an ordinance amending the city code to change the way the number of package liquor licenses is calculated.

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