By CANDACE BEATY GWALTNEY, Daily Journal of Johnson County staff writer
Outdoor retailer Cabela's is one step away from receiving an $18 million loan from Greenwood to build in the city.
The economic development and redevelopment commissions gave their approval to the $18 million loan Monday.
Cabela's plans to build a 125,000-square-foot retail store and a 30,000-square-foot indoor water park with a 164-room lodge on the 102-acre site near the County Line Road interchange on Interstate 65.
Officials would be taking a bigger risk by not helping the outdoor retail store locate in Greenwood than by issuing the $18 million incentive package, redevelopment commission member Lee Money said.
Nothing has developed at the interchange since it was built a decade ago. If the city passed on this deal, the cost of waiting until another opportunity comes would be high, he said.
Greenwood has not seen many potential developments that match Cabela's in scope, Money said.
City council and the commissions must work together to approve the deal, said Lisa Lee, a partner with Ice Miller, the Indianapolis law firm that is arranging the financing of the deal.
Economic development commission members' role is to decide whether or not to recommend the bond. The redevelopment commission's role is to review the bond and decide if it is proper to pledge tax increment financing district money for the project, Lee said.
If the city council approves the loan later this month, Greenwood city government will issue an
$18 million bond that would be purchased by the store's parent company, Cabela's Inc.
The money would be put into a fund administered by a trustee and used to build roads, install utilities and start construction.
Cabela's and other businesses on the 102-acre site will pay an annual property tax. That money would be sent to the redevelopment commission, which oversees the tax-increment financing district, and used to pay off the $18 million debt.
Both commissions unanimously approved the loan after questioning what would happen if the story closed, what protections are built in for the city and what kind of risks are involved.
The city is protected by a pledge from Cabela's not to build another store within 50 miles and not allowing businesses on the site to seek tax abatements, Lee said.
Redevelopment commission member Gail Richards asked what would happen to the bond agreement if Cabela's is bought out or merges with another company.
The new company would still be bound by the agreement made with Cabela's, Lee said.
Members also wanted to know what would happen if the store closed or was not as successful as anticipated.
The $18 million loan will be used to construct the building. Cabela's or any other business that buys the building will have to continue to pay property taxes regardless of success or failure, Lee said.
Repaying the loan with property taxes will require building out the 102 acres, Lee said.
If the project fails or if property taxes do not generate enough money to repay the bond, Cabela's is still responsible for the loan.
Greenwood residents are not responsible for bond repayment and the bonds don't count toward the city's debt, Lee said.
Cabela's can take as long as 20 years from when the business starts generating revenues to pay back the $18 million. The company would have until February 2030 to pay back the loan. Nothing prevents Cabela's from paying back the loan earlier, Lee said.
One commission member asked if Cabela's can sell parts of the land to other developers.
The agreement does not prevent selling land, but it is probably in Cabela's best interest not to sell so they can better guide what is developed on the property, Lee said.
The city is taking little risk on the project. The risk lies with Cabela's, Money said.
The city council, which gave the loan preliminary approval 6-1 last month, will take a final vote July 16.
Since the incentive package is set up so Cabela's takes the risks, the company has reason to make sure the project succeeds, Money said.
Property taxes from anything developed on the 102-acre land will help pay off the loan through a special taxing district. Cabela's will be able to pay off the bond faster by quickly finding successful businesses to build at the site, Money said.
Cabela's expects to create 90 full-time jobs and 130 part-time jobs with an annual average payroll of about $5 million.
Another Greenwood outdoor retailer opposed the incentive because it gives Cabela's an unfair advantage.
Gander Mountain, which has a store near the proposed Cabela's site, questioned why city officials would offer a retailer an incentive.
No one representing Gander Mountain or Cabela's was at the meeting Monday.
A Cabela's representative will be at the city council meeting July 16, but did not attend Monday because of a mix-up, Mayor Charles Henderson said.