Tipton County turns down Chrysler offer

ken.delabastide@kokomotribune.com

Chrysler LLC offered Tuesday to relinquish $5.5 million in bonds to cover infrastructure costs at the now-canceled joint venture with Getrag Transmissions LLC.

Tipton County officials turned it down.

They say it doesn't go far enough.

Tipton County Commissioner Jane Harper said county officials met Tuesday afternoon to discuss the offer. It was decided more was needed.

"It was a nice gesture," she said. "The value of those bonds are so low to us. Those bonds would be paid off last."

In September, Tipton County sold $11 million in bonds to Chrysler and Getrag Transmissions LLC as part of the financing agreement on a proposed $530 million transmission plant. The money was to cover the purchase of 147 acres at the intersection of U.S. 31 and Ind. 28 and also for improvements to the property in preparation for a $530 million transmission plant expected to employ 1,200 people.

The county is now seeking a return of those investments from both companies.

Harper said county officials want Chrysler to also provide the funding for the county to pay off $3.1 million in bonds purchased by Harris Bank. She said the county was planning to pay off those bonds from property taxes collected on the Getrag site.

Chrysler has until Thursday to make a counter-offer to county officials.

Harper said Chrysler contends the $3.1 million isn't owed to the county because of upgrades to the utilities to the site were at the request of county officials.

"The upgrades we requested were based on a manufacturing plant in operation at the site," she said.

Early Tuesday, Brian Weiss of Indiana Sen. Evan Bayh's office expressed hope for the outcome of the meeting between Chrysler and county officials.

"The senator has worked hard with Chrysler," Weiss said. "Obviously, this is good news for the county."

But, Congressman Dan Burton, R-5th District, called the announcement that Chrysler would release the bonds "a step in the right direction."

"But there is more that needs to be done, and we will continue to fight for it," he said in an interview early Tuesday.

Burton noted there is still $3.1 million the county has spent to make improvements to the factory site and $300,000 spent in Economic Development Income Tax funds for infrastructure improvements.

In a letter to Burton on Tuesday, John Bozzella, Chrysler senior vice president of external affairs, wrote the company understands the desire of Tipton County to have Chrysler relinquish the bonds in order to allow the community the opportunity to pursue a new tenant for the plant.

Bozzella wrote that Chrysler spent $14.5 million for infrastructure improvements at the Tipton site and the company doesn't anticipate asking the county to reimburse those costs.

"Chrysler is agreeable to allowing Tipton County to enjoy the economic benefit of those investments," Bozzella wrote.

According to a commitment agreement signed with the county, Harper said Chrysler agreed to reimburse the county for all expenses associated with the plant should it not be completed.

Burton said he believes Chrysler made the decision to release the bonds because it didn't want any negative publicity before requesting an additional bridge loan from Congress.

"They realized it might hurt Chrysler in its effort to get more federal loans," he said.

With the White House Auto Task Force expected to announce an additional bridge loan of up to $5 billion to Chrysler this week, members of the state's congressional delegation have been urging the company to reach an agreement with Tipton County.

Chrysler and Getrag have filed legal proceedings against each other over the failure to obtain financing to complete the plant. Getrag Transmissions LLC filed for Chapter 11 bankruptcy protection in November and canceled the project.

On Monday, Tipton County filed a $14.1 million claim against Getrag in the Bankruptcy Court for the Eastern District of Michigan. The claim covered the $11 million in bonds to the two companies and $3.1 million in bonds the county sold to Harris Bank to run utilities to the site.