Tuesday, April 26, 2016

Corporate welfare watch. Arkadelphia lands Chinese pulp mill, 250 jobs

Posted By on Tue, Apr 26, 2016 at 10:33 AM

IN TRANSLATOR: With a translator at hand for Chinese delegation, Gov. Hutchinson announces coming of pulp mill in Clark County.
  • IN TRANSLATOR: With a translator at hand for Chinese delegation, Gov. Hutchinson announces coming of pulp mill in Clark County.

click to enlarge sun-paper-shandong.gif
Gov. Asa Hutchinson has a 10 a.m. news conference today to update progress on discussions with Sun Paper, a Chinese company, on building a $1.3 billion pulp mill in South Arkansas. Hutchinson joined the company in a letter of intent during a trip to Asia last year.

The project has been kicking around since 2012 and the administration of Gov. Mike Beebe.

Questions pend on whether Arkansas is going to provide low-cost financing to Chinese investors to build a plant and whether other direct taxpayer handouts to the Chinese might be part of the deal.

No paper mill ever got located because of corporate welfare. It got located, first, because of the best supply of timber and access to shipping lanes. State giveaways are just gravy, but good gravy. Virginia put together $31 million in potential taxpayer handouts to get a Chinese paper mill there in 2014.

Mississippi is a finalist for the plant, supposedly, but there's been a dearth of interest in the project lately in Mississippi press, if that's any clue.

UPDATE: Good guess. Arkadelphia will land the nearby mill, which will employ 250. Awaiting word on how much tribute Arkansas had to pay to Chinese to get it.

Hutchinson said the project would create work in the timber industry, in addition to mill jobs.

The project will qualify for a variety of tax rebates and some direct spending by the state and Clark County are planned, but it will not be a project seeking state bond financing. It will, however, receive low-cost industrial development bond finance which will exempt the project from the property tax. It might pay a reduced sum in lieu of taxes. Officials decline to put a price tag on the deal when asked directly at the news conference.

Construction is supposed to begin in 2017.

News releases from both the governor and the Economic Development agency make no mention of incentives given the venture.

Jobs are said to pay about $52,000. The deal includes a number of tax breaks and as yet unspecified direct site assistance for both a rail yard and other work. The company will get state-paid training of employees, rebates of sales taxes, an exemption from tax on machinery purchases, payments based on payroll and other consideration.

Here's the deal the state signed.
UPDATE: Here are state incentives only, not local incentives:

Create Rebate – provides a cash rebate equal to five percent of new payroll for ten years

Tax Back – provides sales tax refunds on building materials, taxable machinery and equipment associated with the construction project

Recycling Tax Credit – the company should be eligible if they pursue this incentive. The value is dependent on the total amount of qualifying equipment purchased by the company.

$12.5 Million Grant – this money will be provided through a combination of Community Development Block grant funds and the Governor’s Quick Action Closing Fund. This is for site preparation and equipment.

Training Grant – AEDC will provide up to $3 million in workforce training funds.

$50 Million Fully Collateralized Loan – this will be provided through multiple state sources.

AEDC will partner with Clark County to pursue federal funding for a public Intermodal facility that would be located on the Sun Paper site.

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