Wabash approves $200,000 in bonds to cover loan to startup 10X Engineering
By Andrew Christman for the Wabash Plain Dealer | Indiana Economic Digest
The Wabash City Plan Commission on Wednesday approved the first of four steps needed to issue bonds to cover a $200,000 loan that will be given to 10X Engineered Materials, the clean-tech startup which recently broke ground at the old Spiece Warehouse in Wabash.
If approved, the bonds will be repaid by 10X through tax increment financing (TIF).
The City Redevelopment Commission has already approved the loan and 10X’s inclusion in the TIF district established when Cinergy MetroNet was laying fiber optic cables, set to expire in 2035. By modifying the established TIF district, the Redevelopment Commission will be capturing the taxes of any increased property value for the company to pay off the loan, which was offered as an alternative incentive to the traditional 10-year tax abatement.
Plan Commission Attorney Doug Lehman said the captured funds can then be used for further development costs. He said the loan will have a 4 percent interest rate. Modifying the district will add the parcel 10X Engineered Materials occupies to the overall development area, and the building enhancements have been approved by the Board of Zoning Appeals.
Lehman said the bond is should be paid off within six to seven years.
The TIF district will capture taxes from 10X Engineered Materials once the increased values of the property are assessed in 2019. But the Redevelopment Commission will not begin to see real growth in revenue from the company until the project is completed and assessed in 2021, due to taxes being one year behind, according to Lehman.
James Higgins of LWG said existing taxed items on the parcel in question make up the base assessment the improvements will be determined from. According to Higgins, once the TIF district has run its course the incremental taxes that have been captured by the Redevelopment Commission will be released into the base value and increase the assessed values of the city, county and schools.
“Because of the way taxes work in Indiana, if you grow your tax base, your levies are controlled and tax rates will drop,” Higgins said.
Higgins said if there is no growth on the parcel, citing the example of 10X’s building burning down and the company choosing not to rebuild or leave, there will be less revenue for the Redevelopment Commission, which is why the parcel is part of a large redevelopment area.
Plan Commission member Karl Rider said he voted in support of the modification because he believes it will encourage economic development and growth for the city.
“10X (Engineered), from what I read, is looking at bringing about 30 high-pay, good engineering jobs and other kinds of employment,” Rider said. “The more people you have employed, the better it is for everybody.”
The resolution will now go to the Economic Development Commission. If it is approved there, the City Council will hold a public meeting and the resolution will go back to the Redevelopment Commission, and once approved the City Council will have the final say in the matter.
Lehman said the reason for doing so is to have multiple bodies looking at the resolution before it is passed.