by Dave Taylor

The long, often anxious debate over the merits of bringing a foreign trade zone to Hancock County is finally over, with the county school board voting at last week’s board meeting to send a letter

to the state signifying that they don’t object to the formation of an FTZ at the Kinder Morgan terminal in Hawesville.

Kinder Morgan, which is a riverside storage and loading terminal, had applied for FTZ status after Domtar had built their own unloading facility, eliminating the need to pay Kinder Morgan for hauling wood chips to their mill. Becoming an FTZ would allow them to stay in business, the company said.

A foreign trade zone is an area, either land or building space, where commercial commodities can be stored and be exempt from ad valorem taxes, which is meant to encourage movement of goods to and from other countries without the burden of paying property taxes on goods stored while awaiting shipment. The four taxing districts in the county, the library, the fiscal court, the health department and the school board, are all funded by ad valorem taxes so all had to state in writing that they did not oppose the FTZ for the project to move forward. The other three had sent

their letters late last year.

Now with all four taxing districts sending letters saying they are not opposed to the FTZ, Kinder Morgan is free to pursue the status with the government, which is a process that can take months.

A representative from Kinder Morgan told the Clarion that the company is very pleased that the board decided to not oppose the change, but that since the process is long and is just now restarting, the company is not making any public statements regarding the FTZ at this time.

The process started about ten months ago, said school superintendent Kyle Estes.

“There was a lot of question as to what a foreign trade zone was at that time and a lot of research was done in a short term,” he said. “The board’s hesitation, in my opinion, has been they didn’t want to pass anything until they had the best information available so that they could assess what the impact would be for local taxpayers. They didn’t want to pass anything that’s going to cause

local taxpayers to have to chip in extra out of their own pockets to basically subsidize a foreign trade zone here in the county.”

In months following Kinder Morgan’s announcement, many in the county debated whether the area industries would use the foreign trade zone to the point that tax revenues would decrease significantly, underfunding the taxing districts and raising taxes on the citizens.

Some didn’t want to approve an FTZ and implicitly give up tax revenue. Some argued that with FTZs already in Owensboro and being established other places nearby, industries would have the ability to move their goods to an FTZ regardless if they were to decide to do that.

“Most recently, approximately what we discovered is there’s about $14 million out there in assessments that’s could potentially be affected, which would amount to 60 some odd thousand dollars in school tax,” said Estes. “So that was still kind of in question, OK, are we going to lose this $60,000 in revenue, if we do, where is it going to come from, so that was kind of debated.”

But, the nail biting and math computations were rendered nearly moot when Estes received new information regarding income that will be coming from the nearly completed hydroelectric dam located on the east end of Hawesville.

“Recently we received some of the information regarding the assessment for the hydroelectric dam and it’s a pretty large sum,” he said, “so basically when you compared that assessment coming onto to the tax roll and even if we lost the tax revenue from the foreign trade zone, the $14 million assessment there, it was more than going to offset so it allowed a situation where I felt like I could recommend to the board to approve the no objection letter to the foreign trade zone and there would be no impact to local taxpayers because of that offset that would occur with the large assessment with the hydroelectric dam.”

The hydroelectric plant’s tax assessments will come in at around $50 million, he said, so the worry over the taxes from the $14 million in assets that might have been moved to a tax-free zone is not much of a worry.

At that point it was simply a matter of giving the board the numbers and seeing what they thought.

“Once they saw the numbers and I was able to explain kind of what we’re looking at I think they had the same thought that it looked like hey, this is something we can do and hopefully it’ll benefit

the community down the road by having a foreign trade zone,” he said. “The board was never against having the foreign trade zone. They were all for the idea of growth and development and being progressive here in the county, they just didn’t want to be negligent in representing their constituents and possibly make those constituents have to pay more out of their pocket to subsidize a foreign trade zone.”

Proponents have sung the praises of FTZs and what they can bring to the county, and Estes said he hopes that the county does in fact reap those benefits.

“I’m hopeful that some of the ideas and the thoughts on what that could become, I hope we get to see that come true,” he said. “I’m all for Hancock County growing and producing more jobs and I’m hopeful that we see that happen there.”