Tipton County commits to Getrag and up to 1,200 jobs

As earth work continues on the site of a proposed DaimlerChrysler-Getrag transmission plant and Tipton Municipal Utilities go on with plans to provide services to the area, details of the agreement between Tipton County and the companies came to light Tuesday.

Monday, Tipton County commissioners became the first of five groups involved to sign the commitment agreement. It still needs the approval of Tipton County Council, Tipton Economic Development Foundation, DaimlerChrysler and Getrag Corporate Group.

Much of the six-page agreement details the reimbursement of expenses for DaimlerChrysler and Getrag as well as economic development issues.

"The agreement is between the local community, Chrysler and Getrag," Commissioner Tom Dolezal said Tuesday night. "It was written as both legal parties, Tipton and Chrysler-Getrag, [sought]."

Expenses that Getrag and Chrysler are incurring in purchasing property and land and infrastructure development will be reimbursed by Tipton County following the sale of bonds it plans to issue.

"The immediate impact is the estimation of 1,200 new jobs in Tipton County, and I think, other growth we may experience related to Getrag-Chrysler coming to Tipton," Dolezal said.

According to the agreement, the bonds will pay for the costs of their issuance; reimburse Getrag and DaimlerChrysler for land and infrastructure development; pay infrastructure costs and land purchases made after undertaken after the bonds are issued; and other expenditures agreed on by the entities "to the extent of available bond proceeds."

It also notes that any excess bond proceeds will be "used to redeem a portion of the outstanding bonds." The county will have "no obligation to pay the costs of the infrastructure other than from the proceeds of the bonds."

Getrag completed its purchase of the property near U.S. 31 and Ind. 28 in May.

Until the time the bonds are sold, DaimlerChrysler is providing the funds, up to $1,600,000, to pay costs for Tipton County or Tipton Municipal Utilities "to develop and construct water and sewer facilities designed solely to support the project."

It is also paying for the county's legal and financial services the agreement requires.

The agreement requires the county to supply DaimlerChrysler "on a weekly basis all invoices, billings and other documentation" to support the payments. DaimlerChrysler is supplying the needed funds to Tipton County within 14 days of the end of the month.

One Tipton resident called the Kokomo Tribune Tuesday with the concern that the project - previously believed to be in the range of $560 million - is for only $455 million in the agreement.

Dave Elshoff, Chrysler Group spokesman for North American Business Operations Communications, said the company will be revealing details of its investment planning in the next few weeks.

"These agreements are an important part of the due-diligence process to move our plans forward and more details regarding our plans will come shortly," Elshoff said.

As part of the economic development incentives, Tipton County, including the commissioners, county council, Redevelopment Commission, Plan Commission and Economic Development Foundation, agrees to "use its best efforts to cause the county entities:"

• Approve tax abatements for Getrag and DaimlerChrysler up to the maximum amounts and time permitted by law;

• To finance the project through tax increment financing through the issuance of 25-year bonds;

• To reimburse Getrag for the purchase price of the land prior to the issuance of the bonds;

• To reimburse DaimlerChrysler for expenditures for utility, county road and other infrastructure improvements.

The county also agreed not to "pledge any tax revenues or other funds" to pay principal or interest on the bonds other than income raised by the project for 25 years.

Dolezal said the county will likely issue the bonds later this summer.

"Our expectation is an August or September date," he said.

As far as the abatements, those may be approved before the equipment is installed.

"With the number of prospective jobs being brought in, I would expect it will be enough to cover the full 10-year abatement," he said. "Still, a lot of those details are being ironed out. It's not a finalized deal."

By using a tax increment financing district to pay for land and site development, the bonds will be repaid by the additional tax revenues generated by the improvements to the property.

Other government entities, such as schools, continue to receive the revenues generated by the property at its value before the improvements were made. The project won't provide additional tax revenues to Tipton County until the bonds have been paid.

An agreement between DaimlerChrysler and the United Auto Workers says the initial employees of the plant would come from volunteers at Kokomo Transmission Plant. After that, "the lowest seniority laid-off/protected status employees in the Indiana Labor Market Area would be placed."

Nearly all of those people would come from Kokomo and Indianapolis facilities leading to the question of how many people might move to Tipton County to work.

"I'd hesitate to guess on that honestly," Dolezal said. "The real benefit to Tipton is the 1,200 good-paying jobs that will stay in the community."