Natures Path gets tax-free expansion
city council voted unanimously to endorse state-issued tax-free
bonds to finance an expansion of the Natures Path
cereal factory on Sweet Road. However, almost half the council
members were not in on the October 14 vote.
Mike Myers was absent from the meeting and both Bonnie Onyon and Dieter Schugt excused themselves from the vote, Schugt as a board member and Onyon as an employee of the company.
Natures Path applied in August to the Washington Economic Development Finance Authority (WEDFA) for $2 million to expand their Blaine plant. Theyve been more successful than anticipated, said WEDFA executive director Jonathan Hayes. Sales are now 30 percent above projected levels. He said the expansion would specifically address growing demand for the companys Optimum cereal line.
With the citys blessing, Hayes said WEDFA hoped to issue the bonds in October. The money would come from GE Capital and, by being funneled through the state, would be available to Natures Path tax-free. Were a conduit issuer, Hayes explained. By running it through us we sprinkle the holy water on it to make it tax-exempt but there is no government money used in repayment. The company is responsible for repaying GE Capital and any interest.
The federal government authorizes WEDFA and a handful of other programs and agencies, including student loans, housing authorities and certain public utilities, to issue tax-exempt bonds, Hayes said. A cap is set at $75 per capita for all the programs, which added up to a potential for $450 million in tax-free capacity this year. WEDFA gets 24 percent of the pie during the first eight months of the year and the whole remainder of the pot is open in the last months of the year, so projects that come in mid-year still have an opportunity, Hayes said.
WEDFAs mandate is to help local industry grow by making tax-free loans available to mid-sized manufacturing and processing businesses. Theres a practical lower limit of $1 million and a maximum project capital of $10 million, Hayes said.
Natures Path, a Canadian company which expanded into the U.S. and built their first plant in Blaine, has financed the entire construction of their plant through WEDFA. We previously gave them $6 million in 1998 to build the plant, Hayes said. Then there were cost overuns and in 1999 they got another $2.3 million. Whats in it for the state? Jobs. Natures Path is anticipating the expansion of their plant will create 19 permanent jobs.. .