Municipal bonds that will cover a $3.642 million incentive to Ascend Elements won’t cost as much in interest payments as city officials had anticipated, said Hopkinsville’s chief financial officer, Robert Martin.
Seven firms bid on the bonds Wednesday, creating a competitive process that Martin saw as an advantage.
“As far as I remember, that is the highest number of bidders we have ever had,” he said.
The low bid of 4.066% from the firm StoneX was roughly three-fourths of a percentage point less than the rate that financial advisers predicted to the city last month, Martin told Hoptown Chronicle on Thursday. As a result, the city will save approximately $14,000 annually in interest — or $280,000 over the life of the 20-year bond.
Hopkinsville City Council gave final approval Tuesday for incentives to Ascend Elements, the company that will develop a lithium-ion battery plant in the new Commerce Park II off Pembroke Road.
The privately held company has a patented process called Hyrdo-to-Cathode that relies on recycled lithium-ion battery materials, according to its website. (A cathode is a metallic electrode — and through it, a current flows out in a polarized electrical device.)
The city will use $2.642 million to purchase 67 acres from the Hopkinsville Industrial Foundation for Ascend Elements, and the remaining $1 million will be a cash grant the company will use to develop the land. Ascend is purchasing an additional 78 acres for the site it will call Apex 1, said industrial foundation board chairman John Crenshaw.
Two farming families, the Garnetts and Luttrulls, sold 600 acres on John Rivers Road to the Hopkinsville Industrial Foundation to develop Commerce Park II. The industrial foundation is selling land to the city and Ascend Elements for approximately $39,400 an acre.
Crenshaw said the CSX rail spur runs between the two parcels Ascend Elements is acquiring. Access to a rail line was crucial to local efforts to recruit the company to Christian County.
It’s estimated Ascend Elements will invest $1 billion in the project, making it the largest ever industrial development in Western Kentucky, Gov. Andy Beshear said at a ceremony to break ground for the plant on Oct. 20. The plant will produce lithium-ion materials for electric-vehicle batteries.
The day before the ceremony, the U.S. Department of Energy announced that the project would receive a $480 million grant from the $1.2 trillion Infrastructure Investment and Jobs Act.
The company is expected to employ more than 250 workers in the first phase of development and potentially 200 or more additional workers in the second phase.
Martin said local officials have projected that payroll tax revenue generated by the employees hired in the first phase will cover the city’s debt for the incentive package. The federal grant means Ascend Elements will be able to move more quickly into the second phase, producing more payroll tax revenue for the city, he said.
The city’s debt payment on the bonds will be approximately $280,000 annually for 20 years, based on the 4.066% interest rate. If the rate had been 4.8%, as city officials anticipated, the payment would have been $294,000 a year.
Investment firms that purchase government bonds in turn sell the bonds in smaller increments to investors. The investment firm Baird conducted the bidding process for the city. U.S. Bank will serve as the pay agent. The city doesn’t pay interest to those bond holders. The bank that serves as the pay agent does that, Martin explained.
Jennifer P. Brown is co-founder, publisher and editor of Hoptown Chronicle. You can reach her at editor@hoptownchronicle.org. She spent 30 years as a reporter and editor at the Kentucky New Era. She is a co-chair of the national advisory board to the Institute for Rural Journalism and Community Issues, governing board president for the Kentucky Historical Society, and co-founder of the Kentucky Open Government Coalition.
