No proceeds from $125 million of state general obligation bonds will be disbursed to a proposed steel mill in northeast Arkansas until the steelmaker spends $250 million for construction of the project, the state’s top economic development official told lawmakers last week.
Grant Tennille, executive director of Arkansas Economic Development Commission, said the bonds would not be issued until Big River Steel LLC establishes a $300 million escrow account and obtains $700 million of financing for the $1.1 billion facility.
“Your approval is not the starting gun, nor is it the green light,” Tennille said to House members. “There is a mountain of things that have to happen before these bonds will ever be sold.”
Tennille and Gov. Mike Beebe answered questions on the project in a special House session Feb. 4 and from senators two days later.
Beebe has asked the General Assembly for $125 million of state GO bonds for the project to be built along the Mississippi River near Osceola. The total includes a $50 million, five-year loan to the steelmaker.
The Legislature must act within 20 days after it receives a report on the project from Tennille’s agency. Legislative leaders said they would also hire their own experts to review the proposal.
Beebe asked lawmakers to examine the proposal rigorously, A “very healthy, very in depth” review is needed before a decision can be made, he said.
“You satisfy yourself that this is good or it’s not good, and act accordingly,” the governor said during the three-hour House session.
Debt service on the 20-year bonds will be about $9 million a year, according to Tennille.
If authorized by the Legislature, the steel mill bonds would be the first under a constitutional amendment passed in 2004 that allows the state to sell GO bonds for large economic development projects.