Special financing by city could help local business expand
Bond by city provides benefits for city and business
LA CROSSE, Wis. (WKBT) — S&S Cycle is looking to grow its operations in the La Crosse area, and is looking at ways to finance the project.
The city of La Crosse is considering an unusual proposal to help that both sides say is a win for everyone.
Under the proposal, S&S Cycle, a motorcycle parts manufacturer based in Viola with operations also in La Crosse, will be allowed to use city bonds to complete an expansion project here in La Crosse and Viola. Due to the nature of the bond, however, the city wouldn’t owe anything.
With businesses booming in La Crosse, S&S Cycle has their eye on expansion.
“When the economy slowed down in ’08, ’09, we contracted as a company,” said David Zemla, Vice President of Market for S&S Cycle. “As the economy has come back, we realize that’s a great space and a great town.”
To finance portions of the project, the company is looking for over $8.1 million in what’s called industrial development revenue bonds provided through the city.
“A bond is just a smart way to leverage money, so it costs us less to borrow money,” said Zemla.
“It’s a tool that can be used by businesses to issue bonds at a tax exempt rate, which saves them fairly significant money,” said Audrey Kader, La Crosse city council member.
The bond’s tax exempt status means S&S Cycle would receive lower interest rates and a longer payback period.
“It appears on the surface to be a too-good-to-be-true deal, but anything that we can do to increase quality employment in the city,” said Kader.
This rarely used method of payment also provides additional protection for the city.
“What’s really unusual about it is that there is no liability to the city at all,” said Kader.
No liability means that if S&S Cycle were unable to pay its debt, the city is not will not lose money.
With a deal that works for both parties, both sides appear ready to move forward.
“The more people that are gainfully employed in the city (that) takes the pressure off so many other aspects of the functioning of the city,” said Kader.
“It’s very exciting for us to feel the impact of that, and be able to expand,” said Zemla.
Over a three year period, S&S Cycle is expected to create 38 new jobs here in La Crosse, as well as 57 positions in Viola.
The final approval of the plan by the city will be addressed at Thursday’s common council meeting.