City approves bonds for new cheese storage facility

by Emmitt B. Feldner of The Review staff

PLYMOUTH – The City Council Tuesday cleared the way for another cheese storage facility to be build in the city’s southeast industrial park.

The council approved a final resolution for up to $10 million in industrial revenue bonds for OCS Plymouth Inc.

The city will serve as a conduit for the low-interest bonds, which are not an indebtedness of the city and will be repaid by OCS Plymouth.

The company plans to build a 220,000-square foot cold storage facility on County PP.

The council also approved an adjustment to the revolving loan to GTS for their cold storage facility at County PP and Willow Road.

City Administrator Brian Yerges explained that the city will subordinate their loan to additional financing secured by GTS to finance an 86,000-square foot expansion of the plant, which opened about two years ago.

The expansion will double the size of the plant, Yerges said, and bring it closer to the eventual planned 400,000-square foot facility.

The council gave the city’s blessing to plans by American Transmission Co. to create a separate holding company for future expansion outside the Midwest.

Plymouth Utilities is one of more than a dozen Wisconsin municipal utilities that hold a minority position in ATC, which was formed about 10 years to build and manage electric transmission lines in the upper Midwest.

Yerges noted that Plymouth Utilities’ share of ownership in ATC is less than one percent.

Investor-owned utilities, which own the major share of ATC, are looking for expansion opportunities in other areas of the country to increase the company’s profitability, Yerges said.

To achieve that, the plan is to create a separate holding company that would conduct operations and do projects in other parts of the country.

“If they’re swinging for the fences and looking to do billion-dollar projects, over time it’s going to take more and more funds to put into that investment,” Yerges noted. “No municipal-owned utility feels it is possible to make this jump to a holding company.”

Even given Plymouth Utilities small share of ownership in ATC, providing its share of the cost of such a billion-dollar project – or several of them – would take more of an annual investment than is currently required, according to Yerges. It would also stretch the city’s borrowing beyond state limits if it had to borrow for that kind of investment.

Plymouth Utilities, and the other municipal utilities, will continue to hold their ownership share of what would become the ATC parent company, and continue to receive the dividends that they currently do from that investment.

But they would be shielded, Yerges said, from any risks involved in major projects or ventures that would be undertaken by the new ATC holding company. That would all fall on the major investor-owned utilities.

To achieve that, the council adopted a resolution stated that city “does not exchange its current ownership position in ATC LLC and ATC Management Inc. to a restructured company designed to expand the company’s investment in transmission outside ATC LLC’s current footprint.”

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