Café Valley deal OKed by Marion City Council to bring up 100 jobs initially

City and company officials had hoped the council last week would suspend the rules and pass the deal on its second reading, but the measure failed to get the necessary two-thirds majority vote.

The council called a special meeting Monday and voted in favor of the deal on its third and final reading. Council members Joselyn Whitticker and Fred Troxell were the only two members to vote it down, while member Paul Thompson Jr. abstained, saying he didn’t have enough information.

Café Valley hopes to build a 250,000-square-foot facility on about 20 acres of the southern one-third of the former Thomson campus. The company initially plans to hire 100 employees, and it projects employing 500 within the first five years.

The deal that passed included two bond packages — an up to $14.5 million Series A and an up to $12 million Series B — that would incentivize the project as well as help the Grant County Economic Growth Council acquire the former Thomson plant for redevelopment.

Café Valley’s own property taxes are expected to go toward most of the Series A bonds. The project’s taxes are expected to pay 110 percent of debt service on the bonds, and if that doesn’t happen, the company has agreed to make up the difference. The city has pledged county economic development income tax (CEDIT) funds and general obligations after that point.

If the company were to expand beyond its initial plans, the Series B bonds would cycle property taxes generated by that new development back to the project.

About $2 million of the Series A bonds consists of a refinancing of CEDIT that banks required to help sell them. The city used CEDIT to back a bank loan to Earthbound Recreational Vehicles and would still be responsible for paying the debt over 25 years.

Café Valley hopes to get federal New Markets Tax Credits, and it has lined up to $5.8 million in state community revitalization enhancement district tax credits.

Officials with the company previously said Café Valley already has $20 million in old New Markets Tax Credits lined up and is seeking up to $30 million from the new allocation approved in the federal government’s “fiscal cliff” deal.

City Development Director Darren Reese said after the meeting that he was excited about moving onto the next phase of the project, which entails committing to the deal on paper and turning the bonds into money.

“We’re not releasing the funds until the project is ready to go,” he said.

Reese said city officials also are still working with Amvets Post 5, 841 E. 38th St., to help find the organization a new location. Though there is a deal in place, he said he couldn’t disclose details of it yet.

Now that the deal has passed the council, Reese said he hopes the project — including getting the New Markets credits and continuing with the Thomson demolition — can move forward at a faster pace. Café Valley hopes to be in Marion next year, which is a “remarkable turnaround,” Reese said.

He said he appreciated questions raised by some city council members during recent meetings.

Whitticker said during Monday’s meeting that she felt the decision should be tabled. She submitted 10 questions to city and company officials that she had regarding the deal. Though she received answers, she said she still had questions about the city’s liability in the deal.

During the meeting she also brought up concerns she had about Larry Polhill, Café Valley’s principal partner and board member. Information recently surfaced regarding Polhill and some of his prior business dealings.

The businessman has been accused of fraudulent and dishonest acts in connection to other companies.

Reese before the meeting on Monday said city officials were aware of Polhill’s past. He called the Café Valley board member a “very prolific entrepreneur” who has had some deals work out and others not.

He doesn’t believe Polhill’s past will negatively affect the Café Valley project in Marion, and he has “full confidence” in the company and project.

“Nothing against Larry, but it’s not Larry’s creditworthiness that’s going to drive this,” he said after the meeting.

Polhill was unable to attend the meeting on Monday due to another commitment, but he apologized on Friday for a comment he made after the contentious city council meeting last week.

After showing frustration while answering questions from Troxell and Whitticker during last week’s meeting, he said there was a “very significant lack of sophistication” on the council.

On Friday, Polhill said Café Valley would continue to provide information as requested.

“We think this is an excellent project for the city,” he said. “Café Valley taxes are entirely paying for the project and also helping the city with cash flow issues from other projects. We’ve been trying to be a good corporate citizen.”

Other council members also voiced concerns during the meeting about the project, though they said they were in favor of bringing more jobs to the city.

“Every one of us around this council knows at the beginning of this year we were broke. … We cannot as a city continue to give any incentives,” Troxell said.

Thompson said he abstained from voting because he didn’t have the information he should have.

He said when he went to Reese with questions about the deal, he was met with resistance.

“If looks could kill, I wouldn’t be here,” he said.

Though Reese earlier in the meeting apologized to Thompson, and the councilman said he accepted the apology, Thompson said that’s not any way to do business.

“We’re all under a lot of pressure with this,” he said. “We are all in favor of jobs … but I still have questions.”

Though he initially came into the talks with the intention of supporting the project, he said he just didn’t have all the answers he wanted.

“I still have questions, and to open this meeting with a motion is about the craziest thing we can do,” he said. “I do feel like if we table this it can be worked out.”

He added that he felt bad about not passing it.

“I feel very guilty to sit here and have that attitude because I wonder what the future is if we continue to say no,” he said. “We cannot continue to say no because we cannot continue to get ourselves in deeper than what we are. Unfortunately, we are in the position that we’re in, and it’s because we rushed into too many things.”

After the meeting, Whitticker said she had expected the deal to pass the council.

“I just hope the taxpayers are not the ones who will continue to pay for misguided deals,” she said.

While some are leery of the deal, about 50 members of the Marion-Grant County Chamber of Commerce attended Monday’s meeting in support of Café Valley coming to Marion and offering more jobs. Many carried signs or erected them on city hall’s property to show the group’s accord for the project.

Before the meeting began, Cory Matchette, vice president of community relations for the chamber, said the organization on Friday sent emails asking members to attend the meeting.