Ace Bayou gets go-ahead

Friday, January 14, 2011

More than 100 additional jobs are anticipated at Ace Bayou factories in Lewisburg, according to a report to city councilmen Tuesday when they unanimously voted for property tax breaks for the growing business.

"They've had a presence in Marshall County for 15 years," Industrial Development Director Greg Lowe said. "They've recently purchased the Sanford property and have high expectations that the figure of 100 more jobs will grow and grow."

In Lewisburg, Ace Bayou makes pet furniture, with places for cats to hide and carpeted surfaces to claw, beanbag chairs and game chairs used as seating when players compete in video games. In Chapel Hill, the company makes radiation protection products. Its owners live at New Orleans. Company offices are in Minneapolis.

Lewisburg's Industrial Development Board unanimously voted on Jan. 3 to recommend a PILOT (Payment In Lieu Of Taxes) Agreement between Ace Bayou and the city council so during five years the business can make payments increasing by one fifth of its annual property tax obligations to ease into full production.

Councilman Odie Whitehead Jr. seconded Councilman Ronald McRady's motion to proceed with the recommended agreement.

"We need the jobs," Councilman Quinn Brandon Stewart said.

Marshall County's unemployment rate has been the highest, or second highest in the state for a year.

"Most of those new jobs will come for Lewisburg and Marshall County residents, I hope," Councilman Robin Minor said to Lowe and some representatives of the company and IDB Chairman Eddie Wiles in the audience.

"I can't see it any other way," Lowe replied.

Speaking up from the audience, Ace Bayou General Manager Greg Hykes added, "There's no reason why we wouldn't unless there's a technical reason... All the workers will be local."

Lowe verified for councilmen that the PILOT Agreement will have an annual calculation of the new plant's property tax liability so that a calculation may be made as follows. In the first year, no payment in lieu of taxes would be made. The second year, the payment made instead of a tax bill would be 20 percent, or one fifth of what would normally be paid if property taxes were charged.

In the third year, 40 percent of the amount of what would otherwise be a tax payment would be made on the land, building and equipment planned for operation where the old Sanford pencil factory was recently demolished. In the fourth year of the PILOT Agreement, the amount paid would be 60 percent of what would have been a property tax obligation and in the fifth year the payment would be at a rate of 80 percent. Thereafter, the real estate and personal property tax bills would be paid as normally charged.

The agreements are not unusual. They've been justified locally as worthwhile because without them, there may not be any development that increases the tax base, or jobs at the businesses in the agreements.

That agreement was unanimously approved and Lowe continued his report about Ace Bayou.

More than a decade ago, the federal government issued an Urban Development Action Grant to the city so it could loan that money to a manufacturer of auto parts. That amount has since been repaid and it's in a city account available as a revolving loan fund that's commonly called the UDAG account, although it is no longer federal money or constrained by the rules set forth by the original UDAG contract.

Ace Bayou is one of a number of other businesses that have benefited from the low interest loans made to help develop local industry, according to Lowe who said, "They've taken part of this previously."

Verifying repayment and closure to the previous loan to Ace Bayou was Stewart who asked, "They've paid that back like they were supposed to?"

Lowe said yes and McRady seconded Whitehead's motion to authorize the loan from the revolving pool of money that was originally provided by the federal government.

"They requested $100,000," Lowe explained Thursday morning when discussing the so-called UDAG loan that carries an interest rate of one percent.

A purchase contract for the Sanford property has been signed by Ace Bayou officials, Lowe said. Closing will be in the spring.

Leaders of Ace Bayou are hoping the business will be creating 200 jobs, but Lowe cautioned, "That's the hope. This is all in expectation on how well this goes."

Lowe based his comments on conversations with Murray Valene of New Orleans, a co-owner of the business.

Attending the council meeting with Hykes and Plant Manager Will Wilson was Eddie Wiles, chairman of the city's IDB.

Wiles anticipates that Wal-Mart and Target stores will be selling Ace Bayou products made here. The company has been getting what it sells from suppliers in China, Wiles said.

"This is a really good opportunity for Marshall County," Wiles said a few days after the IDB meeting attended by McRady and Whitehead.

Construction of a 160,000-square-foot building at the old Sanford site is anticipated this year.