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$1.2 million from general fund could go to Mullican Flooring project

The proposed property at 129 Roweland Drive is across the street from the Kennametal factory.
The proposed property at 129 Roweland Drive is across the street from the Kennametal factory.


Staff Writer

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The Mullican Flooring project might be on the move if the Washington County budget committee pushes forward a resolution that will provide the Washington County Industrial Developmental Board with the $1.2 million that they have requested to make the project more appealing to the company.

The company is considering purchasing a 126,000-square-foot warehouse at 129 Roweland Drive in order to store finished products, while also allowing them to ramp up the volume of their production facility that already exists in Washington County. In all, Mullican would add 200 jobs over a five-year period with those jobs provide an average salary of $40,600 and providing an estimated $8 million in wages over those five years.

The resolution that will be presented to the Budget Committee will have wording that says that the $1.2 million will come from the county’s general fund, which will then be reimbursed through a time period, according to Washington County Mayor Dan Eldridge.

“I think using the general fund as an interim funding source is fine,” he said. “But we do want to do it with the reimbursement provision.”

The county’s general fund for fiscal year 2016 — which will end at the end of June — is projected to be around $16 million, according to Eldridge and Washington County finance Director Mitch Meredith.

Meredith said it wouldn’t come out of the fund balance until fiscal year 2017 and the county would more than likely replenish the fund balance with a later five- or seven-year capital outlay note. That way, when the rent and tax payments are over, then the county will have also paid off its debt.

Washington County is competing with Bowling Green, Kentucky, and Wise, Virginia, for the opportunity. Having the opportunity to keep the business close to their headquarters, however, is a plus, according to Eldridge.

“I know that they are looking at other places, but the fact that they are giving a  shot at this is a strong indication of their interest in staying in this community,” Eldridge said. “It’s just not 200 new jobs, its 200 new jobs that are well paying and have benefits. It’s a company that is headquartered here and has a very proven track record of sustained growth and stability.”

Mullican Flooring has had a facility in Johnson City since 2000.

The $1.2 million from Washington County will go to the IDB to assist Mullican with the expansion of manufacturing facilities in Washington County. Mullican will then be making $7.543 million capital investment over five years, which include $5.493 million of person property investment and $2 million of real property investments at the facility.

IDB leases the property to Mullican with all payments under lease agreement directed to Washington County. Mullican will be able for building insurance, repairs and maintenance.

The 15-year deal would allow Mullican to operate free from rent and property taxes for the first three years and then begin pay a gradually increasing annual rent.

Mullican was presented with two separate proposals, the first with a $0.96 rental rate per square foot, but with a lower annual increase of $6,000. The other has a rental rate per square foot of $0.75, but an incremental increase of $12,000. The two plans would put the county with a return of investment around nine percent at the end of the agreement.

If the budget committee passes the resolution, then the full commission will have a say on the resolution during their regularly scheduled June 27 commission meeting.