The Kokomo Redevelopment Commission is issuing more than $33 million in bonds to pay for infrastructure improvements related to the joint venture EV battery plant.
The redevelopment commission Wednesday unanimously approved two resolutions to issue two bonds — one not to exceed $18,640,000 and one not to exceed $15 million — to pay for infrastructure improvements and property acquisition at the site of the joint venture development between Stellantis and Samsung SDI named StarPlus Energy.
Specifically, the improvements include all stormwater, water and sanitary for the plant and general area and the westward extension of 250 North, which will run across the southern portion of the project area.
According to the resolutions, the bond’s interest rates are not to exceed 7% and will mature 22 years after the first issuance. Tax increment financing revenues are pledged to pay off the bond, though city officials say they do not intend to use much, if any, TIF revenue to pay it off.
That’s because StarPlus Energy will, according to the development agreement struck between the company and the city, pay the city $1.75 million a year over 20 years for a total of $35 million as a form of payment in lieu of taxes (PILOT) since both of the project’s real and personal property taxes are 100% abated for 20 and 10 years, respectively. The payments begin May 1, 2024, and are to be paid on or before May 1 every year thereafter.
“We anticipate using those proceeds to pay off these bonds,” City Attorney TJ Rethlake said of the PILOT payments.
REDEVELOPMENT COMMISSION EXPANDS TIF
Late last year, the redevelopment commission and City Council both approved putting the original 143 acres bought for a city industrial park into a TIF district. Now, the city is expanding the TIF district to include the whole Star-Plus Energy project area and surrounding land, including the Kokomo Engine Plant and the Indiana Transmission Plant.
A TIF district is a popular but controversial type of economic tool where property tax revenue on increased assessed value is captured to pay for reinvestment in the TIF area, such as new infrastructure and new development that would not have happened otherwise, for the life of the TIF district, which is capped at 30 years by state law.
According to the resolution passed by the redevelopment commission Wednesday, the TIF expansion is needed to help pay for future infrastructure needs since the city expects the EV battery plant to spur additional growth around it and to continue economic development at the Engine Plant and ITP.
“... the Amendments enable the use of land in the Project Fusion Allocation Area and the Industrial Park East Allocation Area and provide the required incentives which are necessary for economic and industrial development,” the resolution reads. “Further, the Engine Plant Allocation Area requires additional infrastructure and improvements to support municipal services in order to attract continued investment.”
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