Somerset City Council approved a resolution Monday night authorizing a Memorandum of Agreement with Horse Soldier Bourbon, stating the city will facilitate the distillery's quest to obtain industrial revenue bonds.
The resolution was approved despite the misgivings of one council member over the city’s liability in the matter.
The resolution passed with 11 council members voting yes and Councilor Jerry Wheeldon passing on the vote.
Before the reading of the resolution, Somerest Mayor Keck pointed out wording within it that stated the city is assuming “zero liability” in the matter, meaning that should Horse Soldier Bourbon not be able to pay back any loans, the city would not be held accountable.
The resolution is simply an economic development tool, he said, that would give Horse Soldier leverage while talking with financial institutions, showing that Somerset City Council and the city as a whole approves of the project.
However, Wheeldon asked whether it wouldn’t benefit the council to have an independent bond lawyer look over the wording and explain it to the council before it’s approved.
“I know it says on the paper that we won’t be responsible, but if they falter, we don’t have a financial statement on them. We don’t have nothing to show that they’ve got any background to go on. And, bless their heart, I hoping for the best in the world, but we need something… to know that we’re doing the right thing.”
While Keck said that Wheeldon’s points were valid, he reiterated that the resolution was only intended to help Horse Soldier talk to banking institutions that might be interested in providing money.
City Attorney John Adams added that the resolution would entice investors with the idea they may get “preferential tax treatment” – not necessarily a tax-free rate – on any interest made on those bonds.
That led to a discussion on whether the city would be getting any tax revenues on the project at all, with Keck saying, “Absolutely. Twenty percent of the occupational tax of 400-500 jobs, plus 20% of the increase in property tax, plus the obtainable taxes. This is a massive net win for the city.”
Plus, he pointed out, that Horse Soldier has spent almost $5 million on the project already.
“There’s a lot of chatter about whether this thing can happen or not. If we finish the deal here, and then with the TIF (Tax Increment Financing district), it’s going to happen and it’s going to happen in a big, big way.”