Documents obtained by The Daily Tribune News outline the financial details of a memorandum of understanding (MOU) between the Development Authority of Bartow County (DABC) and a Japanese company looking to construct an 87,000-square-foot “state of the art” manufacturing, warehouse and distribution center in Adairsville.
According to the MOU, Nippon Light Metal North America, Inc. and AL8, LLC, anticipate the project — located on 38 acres along Martin Luther King Drive — exceeding more than $60 million in capital expenditures.
The MOU lists two separate projects as part of the proposed development. “The real property project” entails the “acquisition, construction and installation of the land and improvements” for the proposed facility, which falls under the purview of AL8, LLC, a Delaware limited liability company.
“The equipment project” consists of the installation of “certain machinery, equipment and related personal property” to be used in the proposed facility, with Ohio corporation Nippon Light Metal North America, Inc. described as the “equipment company” in the MOU.
The aluminum manufacturer is a subsidiary of Tokyo-based Nippon Light Metal Co., Ltd., a company that reported more than $4.5 billion in revenue last year. The Adairsville project is a joint venture by Nippon Light Metal North America, Inc. — primarily known for products in the automotive sector —and another Tokyo-based company, ITOCHU Metals Corp.
According to the document, the equipment project is expected to cost “in excess of $46 million” while the real property project is anticipated to cost “in excess of $14 million.”
In the case of the former, the MOU indicates Nippon Light Metal wishes to transfer trade fixtures, machinery, furniture and other equipment to the DABC “in consideration for the transfer to the equipment company of the equipment bonds and leased to the equipment company under the terms of a lease agreement.”
Under that lease agreement, Nippon Light Metal would be responsible for acquiring and installing the equipment “and for conveying the same to the authority from time to time by one or more bills of sale.”
AL8, LLC, also intends to acquire real property bonds as part of a similar lease agreement with the DABC.
“However, any costs of the real property project that exceed the available proceeds of the real property bonds shall be paid by the real property company and the authority shall have no liability therefore,” the MOU reads.
Under the MOU, the maximum principal amount of any equipment project bonds issued by the DABC is $46 million, while the maximum principal amount for any real property bonds issued by the authority is $14 million.
The MOU indicates that no public entity — including the DABC or Bartow County — has any obligations or liabilities for repayments of those bonds.
“Without limitation, the bonds shall not be a general obligation of the authority, but shall be a special and limited obligation payable solely from the payments received under the respective leases and other pledged security,” the document reads.
Representing Nippon Light Metal and AL8, LLC, is the Atlanta law firm Gray Pannell and Woodward, LLP, while local attorney H. Boyd Pettit III serves as legal counsel for the authority, Bartow County and the Bartow County Board of Assessors under the MOU.
The MOU does not prevent either companies from entering into other financing agreements for the projects, but it does contain a provision holding the companies accountable for reimbursing “any commercially reasonable out-of-pocket expenses of the authority and its members, directors, officers and agents” specifically identified in the agreement or previously authorized by the companies.
“Absent extraordinary circumstances or litigation, the fees of local counsel relating to the issuance of the bonds shall be $93,750,” the MOU states. “The companies shall also pay to the authority a closing fee payable on the date of closing of the bonds in an amount equal to one-eight of one percent of the maximum principal amount of the bonds.”
The MOU states that the final equipment acquisition of the project will be completed by Dec. 31, 2024.
“Ad valorem property taxes to be paid by the equipment company with respect to its leasehold interest for each phase of the equipment project shall commence in the year following the calendar year in which such capital investments are made,” the document reads.
The MOU indicates the real property project will be completed no later than Dec. 31, 2021.
“There will be no value to the leasehold interest of the real property company in the real property project prior to the completion date,” the document reads. “Thus, there will be no ad valorem real property or personal property taxes on any assets acquired by the authority in connection with the real property project prior to Jan. 1 of the year immediately following the completion date.”
According to the MOU, the anticipated “leasehold interest valuation” for the equipment project is a six-year abatement, with Nippon Light Metal paying nothing on the first year term and then paying an additional 20% of the full lease amount each subsequent year.
The leasehold interest schedule for the real property project is an 11-year abatement, with AL8, LLC paying no “applicable percentage” during the first term year and then paying an additional 10% of the full lease amount each subsequent year.
Under the MOU, both companies agree to make annual payments in lieu of taxes (PILOT payments) in an amount “equal to 100% of the property taxes [that] are normally due for such calendar year,” to the benefit of Bartow County Schools.
The MOU indicates the “community jobs goal” for the project is 110 full-time positions in the timeframe from Jan. 1, 2027, to Dec. 31, 2031. The “community investment goal” stated in the MOU is $57 million in capital investments.
The companies are required to file annual reports calculating the percentage of community job goals and community investment goals reached each year.
“If any annual report shows that the goal percentage is less than 80%, the companies shall be required to make a recovery payment,” the MOU reads. “However, in no event shall the recovery amount exceed the amount of ad valorem taxes that would have been payable if the companies owned all of the property subject to leases in their own name.”