DALLAS – The Arkansas Senate made quick work Tuesday of a bill providing $125 million of state general obligation bonds for a $1.1 billion steel mill project in northeast Arkansas.
The GO bonds for the Big River Steel LLC project in Mississippi County would be the first debt authorized under a state constitutional amendment approved by voters in 2004 and revised in 2010.
Senate Bill 820 was approved by the Senate committee on a voice vote and by the full Senate without debate in a process lasting less than three hours.
The House’s identical version of the steel mill bond bill was approved Wednesday morning by the Agriculture, Forestry, and Economic Development Committee. House Bill 1870 is sponsored by Rep. Monte Hodges, D-Blytheville.
Gov. Mike Beebe asked lawmakers for the $125 million of GO debt in early February after announcing the steel mill project at a news conference in Little Rock on Jan. 29.
The $125 million of bond proceeds would fund a $50 million, five-year loan to the steelmaker, $50 million for site preparation, $20 million for subsurface pilings to stabilize the site along the Mississippi River, and $5 million for issuance costs.
The bonds would be issued by Arkansas Development Finance Authority under Amendment 82, which caps state - issued GO bonds for large industrial projects at 5% of state general fund revenues in the most recent fiscal year.
Arkansas’s outstanding GO debt is rated Aa1 by Moody’s Investors Service and AA by Standard & Poor’s.
Senate Bill 430, an appropriations measure that includes $20 million for debt service on the GO bonds, was approved Feb. 28 by the Senate and is on the House calendar.
The constitutional limit would allow the state to issue up to $235 million of the economic development GO bonds in fiscal 2013, said Grant Tennille, director of the Arkansas Economic Development Commission.
“We’d still have another $100 million available,” Tennille said at Wednesday’s House hearing.
The bond legislation was opposed at both hearings by Sam Commella, vice president and general manager for Nucor Steel Arkansas.
The company has two mills in the same county as the Big River Steel project, he said, and the new plant could result the deferral of planned upgrades at the Nucor mills and the loss of some of their 1,600 jobs.
“We are not afraid to compete against another private company,” Commella said. “However, I am telling you unequivocally that the proposed Big River steel mill will have a negative impact on the mills currently in Arkansas.”
Commella contended that bonds for the start-up steel mill would be a misuse of Amendment 82.
“It was never intended to support new, fledgling enterprises that are only a couple of months old,” he said.
John Correnti, chairman and CEO of Big River Steel, said the high-tech steel mill would provide hundreds of well-paying jobs and produce competitively priced steel.
“This is a great deal for Mississippi County, a very good deal for northeast Arkansas, and a good deal for the entire state,” Correnti said. “We’ll have the highest-paid steel workers in the world, and the lowest labor cost per ton of steel in the world.”