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THE CITY REBORN FROM THE ASHES OF AMERICA'S MOST DISASTROUS FOREST FIRE
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County Board To Vote On Marinette Marine Loan

Issue Date: March 22, 2018

Marinette County Board will face many important decisions at its meeting on Tuesday, March 27, but a resolution seeking authority to impose an additional half a percent sales tax will not be among them. That resolution had been on the tentative agenda but has been removed.

Among items that are expected to come up for action are the first steps toward providing a $50 million loan to Fincantieri Marinette Marine to help finance expansion at the shipyard and creation of 400 new jobs, possible elimination of the elected County Coroner position in favor of a hired county medical examiner, and a number of significant changes in County Board rules and procedures.

The March 27 meeting will be the last regular board meeting for supervisors Fred Meintz, Joe Policello, Cheryl Wruk, Joe Banaszak, and Don Phillips, all of whom chose not to return to the board when their terms end after the elections on Tuesday, April 3. The procedure and rule changes would take effect after the new board is seated in April. All 30 supervisors will begin new 2-year terms at that time. Reorganization will include election of board chair and vice chair, and appointment of supervisors to serve on various committees in a totally revamped committee structure.

The sales tax resolution had been discussed in depth at a special County Board meeting on Tuesday, March 20, and separate meetings of the board's Executive, Finance and Economic Development and Tourism committees earlier this month, with the understanding that it would be slated for action at the March 27 regular meeting. The resolution, if it is eventually approved, will ask Wisconsin state legislators to pass legislation allowing counties to add up to an extra half a percent sales tax for economic development purposes if they chose. This could not happen until after the new legislative session starts in January, and then would have required separate County Board action to become a reality.

Tuesday's regular County Board meeting will start at 9 a.m. with the public hearing on the READI Grant application to be filed by NEWCAP Inc. on behalf of Florence, Marinette and Oconto counties seeking Community Development Block Grant (CDBG) funds from the state for Entrepreneurial Development, Job Training, and Housing Activities within the three counties. Residents of Marinette County are encouraged to provide input, especially those with low to moderate incomes.

Economic development issues were the focus of an intense morning for supervisors at the special meeting on Tuesday, March 20. They absorbed and discussed information from several sources on economic development in general, impact of the proposed loan to Fincantieri Marinette Marine, one of the county's largest employers, on the ship builder and the county itself in terms of credit ratings, development and employment opportunities, and the sales tax proposal that has been suggested as a funding mechanism for future community and economic development.

AT County Board's January meeting, Fincantieri Marinette Marine President, CEO and General Manager Jan Allman had asked for a local contribution of $15 to $20 million to demonstrate community support and make it possible for her firm to bid on two large new ship building contracts. The opportunity Allman spoke of involved the possibility that Fincantieri Marinette Marine will be chosen to construct four newly designed warships that will go to Saudi Arabia over a seven-year period through a contract with the United States Navy, and an opportunity to gain an exclusive contract to produce 20 "FREM Variant" ship for the Navy via contracts expected to span 15 years.

County Board Chair Mark Anderson has been an opponent of county borrowing, but also has been a strong proponent of promoting economic development for the county.

In a prepared statement at the start of the March 20 meeting Anderson told Allman, "I would like to both congratulate and thank Fincantieri Marinette Marine".both the company and the employees " for developing and constructing the world class vessels that are being constructed at our shipyard here in Marinette County".And Thank You for putting yourself in a position to receive additional contract awards to both maintain and grow the workforce here in Marinette County."

Turning his attention to County Board, Anderson said the day's meeting was intended to provide information in regard to Fincantieri Marinette Marine's request for financial assistance in their quest to grow their company and both retain and grow their current workforce, and the proposed loan or other assistance to do that.

"While I understand Marinette County has never had a request of this type before," Anderson said in regard to the proposed $50 million loan, "We need to understand this is not uncommon to what is happening in the economic development world today. I would ask you all to please have an open mind as we discuss and learn about what is happening in the economic development world today and what is being requested of Marinette County by one of our largest employers in the County."

"Today we will hear from Fond du Lac County Administrator Allen Beuchel in regard to how Fond du Lac County has handled these requests," Anderson said.We will also hear from MCABI in regards to what the economic impact Fincantieri Marinette Marine has on Marinette County's economy.

"Then we will hear Fincantieri Marinette Marine to better clarify what is being requested.

"Then our administrator will present options and recommendations as to how Marinette County may respond.

"In closing I would like to say what is before us today should be reviewed as positive and exciting for our communities, it is not often that a company has the ability to add 400 plus living wage jobs let alone retain the over 1500 employees they currently have.

"We should all be grateful that we are having this conversation, for the alternate conversation would be quite sobering. Such as the conversation Outagamie County Executive Tom Nelson is having in regards to Kimberly Clark announcing the closing of their mills in the Fox Valley and the subsequent loss of 600 jobs," Anderson concluded.

Business of the meeting began with a telephone conference with Fond du Lac County Executive Allen J. Buechel on the benefits his county has reaped from providing financing for business investments in his county, particularly the financing for Mercury Marine. His county provided not only the loan for the project, but included incentives through which parts of the loan will be forgiven as job creation and other goals are met. Now they are actively funding other industrial expansions.

Outgoing Marinette County Association for Business and Industry (MCABI) Administrator Ann Hartnell introduced her successor, Robert Pontius, and both spoke on the tremendous impact Marinette Marine has on the local economy, and the added revenue the 400 new jobs would bring, in addition to business for sub contractors and suppliers for the ship builders. Marinette Marine has added 700 new jobs since Fincantieri became the owner in 2009, and $440 million has been paid to Wisconsin supplier since then.

"This (the Marinette Marine project)will have a huge impact not only on Marinette and Menominee counties, but on the whole region, state and nation," Hartnell declared. She said Marinette County is one of the lowest earning areas in the northern tier of Wisconsin, and this new contract could change that. She said it will benefit people from Niagara, Iron Mountain, and farther, and many of them do drive to Marinette to work. The current 4.4 percent unemployment rate is the lowest since 2000.

Supervisor Tricia Grebin said she had done the research, and learned that people from Dunbar, Niagara and other points north do indeed work at Marinette Marine.

Gail Wanek, a candidate for Marinette County Board to replace Supervisor Don Phillips in April, said new jobs and new employees in the area will further increase other costs, including rent. A 3-bedroom home now rents for $800 a month, far beyond what the typical $13 to $15 per hour wage earner can afford.

Hartnell said there is subsidized housing available, and Wanek countered that not everyone wants to take welfare.

Anderson said housing is a free market system, but the county is looking at the whole picture and is in the process of having a housing study done.

John Guarisco and Julie Vertz, both contending to become the Supervisor from District 9, were also present. Guarisco had questions regarding the proposed sales tax.

Supervisor Robert Holley said they were talking about losing jobs if the loan is not approved, but that is not known for sure.

Jan Allman said approximately 2,500 people come through the Marinette Marine gates every day, from Navy personnel to employees to contractors and more. She said there was only one LCS contract awarded in 2017, and two more remaining between 2018 ad 2019. She said they need two ships a year to maintain their current number of employees. She said the Marinette facility is now playing "in the major leagues," as one of the eight largest shipyards in the nation.

She referred to the $50 million as a "bridge loan," for investment capital. The loan will only go forward if they get the Saudi contract.

Jeff Belonga, financial advisor for Marinette County since 1981, explained there will be safeguards built into any loan that is approved. There will be a developer's agreement, and money will be given at various stages of construction in the shipyard. "We're not going to just hand over $50 million," he declared. He said this type of loan is not new, but is fairly new to Wisconsin.

"Make sure you have an open mind," Belonga urged. "This is your community and Marinette Marine is a major employer!"

He felt the loan can go forward without a negative effect on the county's bond rating. He said Marinette County Administrator John LeFebvre has been excellent at asking the right questions.

LeFebvre said the loan is to be repaid within seven years, and repeated it will only go forward if Marinette Marine gets the seven-year Saudi contract. He cited growth in sales tax receipts from the added payroll in the area, plus added lproertyo tax the shipyard will pay once the improvements are made. The improvements to the launch facilities and the river channel will enable the shipyard to build larger ships after that contract is finished, which is a continuing benefit to the area.

"Be careful what you wish for," warned Supervisor Don Pazynski . He said there are costs associated with growth, including increased education and infrastructure expenses.

In a prepared statement at the March 16 Finance Committee meeting, had spoken strongly against the $50 million loan, prefacing his comments by expressing support for economic development, but declaring, "This proposal of lending $50 million dollars to a multi-national corporation that itself is worth billions of dollars and is associated with another firm (Lockheed) worth even more billions  - is highly suspect. To proceed would be an unneeded, careless and financially irresponsible allocation of County resources - all in the name of Economic Development."

He cited lack of a master plan outlining goals and the means of accomplishing  them, ""responding - not planning. "

"We have made such mistakes in the past - demonstrating such a lack of proper planning," Pazynski said. HE again objected to the lost interest each year for the county with its loan to the City of Marinette for the Convention/Recreation Center, the tourism director post not filled, "and now  $50 million in corporate welfare."

"We have to ask what would happen if there were a change of administration in Washington and a subsequent reduction in the nation's defense budget.  If the Navy were to reduce the contract with Fincantieri there would be no hesitation to reduce their work force and perhaps to curtail production entirely leaving the County at risk." He said he could not and would not proceed with any further action in this regard.

The meeting continued with discussion of the proposed resolution supporting state legislation for the added half a percent sales tax and what that money could be used for if it were to become a reality.


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