Members of the newly created Industrial Development Bond board got a better understanding of their responsibilities and how the board will operate.
David Wolf, an attorney with Adams and Reese LLC, explained the history of how the IDB came about and the economic incentives the board will be able to offer applicants.
“Industrial development boards were authorized in the 1960s to take over this business of financing projects for private businesses without risking the city’s credit,” he said. “In the early 1980s, the legislature began to restrict what kinds of businesses could receive tax exempt bonds. By 1986, the only businesses that were left that could receive tax exempt bonds were small manufacturing businesses, 501c3’s for buildings and facilities and a few categories that were quasi-public, such as airports.”
He explained the board will be able to offer these tax exempt bonds, as well as revenue bonds and Payment In Lieu of Taxes, all incentives to offer ways for businesses to expand or locate in Minden.
“The kinds of bonds you can issue now are pretty limited in scope,” he said.
“More than likely what you will see is small manufacturing businesses, some 501c3’s, or some of these low to moderate income multi-family residential facilities. If it qualifies, the interest rate saving could be significant enough to them to make the project feasible.”
He talked about the PILOT, which is an amount a business pays instead of paying property taxes. For instance, if a company builds their facility using IDB bonds, that property is tax exempt because it is owned by the municipality. To keep the city from entirely losing revenue from property taxes that business would otherwise have to pay, the business would enter into an agreement with the city to pay a certain amount below or equal to projected property tax revenue for that year.
Minden Economic Development Director James Graham cautioned the board of directors because of its enormous responsibility.
“These three planks – due diligence, transparency and accountability – are crucial in terms of how we move forward,” he said. “Good incentives don’t make a bad deal better. It just doesn’t work. Our guidelines are designed to make sure that we don’t get involved in situations where we have to try to save someone. We’re going to require the developer to have skin in the game.”
He went through some other things that will be discussed in more detail at the next meeting, namely a more in depth discussion on the administration of the incentives.
The board also did a little housekeeping by electing its officers, appointing an executive director and adopting bylaws.
Mahala Hutto will serve as the president of the board of directors, Jean Davis will serve as vice president and Greg Jones will serve as secretary treasurer. Graham will serve as the executive director.
The Minden Press-Herald will serve as its official journal and all minutes and records will be kept at Minden City Hall.
The meetings will be the last Tuesday of each month at 6 p.m. at Minden City Hall.