By approving the issuance of $33 million worth of industrial revenue bonds for a new rocket fuel plant in Utah, the Legislature this week did not do anything surprising. The action sought by Gov. Norm Bangerter was pretty much cut and dried before the special session began. After all, who is going to oppose new industry and jobs?
Whether the bonds actually result in a new facility remains to be seen.Pacific Engineering and Production Co. (PEPCON) is rushing to build a new rocket fuel plant to replace the one that exploded in Henderson, Nev., May 4, killing two people. PEPCON has 4,800 acres 15 miles northwest of Cedar City that it is considering - one of three possible sites. The company also is looking at two alternative sites in Nevada.
The great hurry is due to the fact that PEPCON is one of only two manufacturers in the U.S. to produce ammonium perchlorate, a critical ingredient of solid rocket fuel. The company, while it still hasn't decided on a new site, wants to begin construction by Aug. 1 and be back in production by early next February.
In approving the bonds, the Legislature improves the chances of the facility being built in Utah, with as many as 200 jobs, although some of those will be filled by employees from Nevada. Cedar City badly needs such a boost to its economy, which has been stagnant or worse for years. Many stores have closed along the town's Main Street this past year.
Industrial revenue bonds involves the state lending its credit rating to PEPCON, but there seems to be little risk involved. The company already has a solid agreement worked out with NASA and Morton Thiokol to repay the bonds by means of a surcharge on rocket fuel.
While the proposal seems justified in this instance, there can be abuses of such bonding practices in the rush to attract new business. There are questions of liability. And what is done for one firm can be seen as an invitation to others to seek such help.
A California company that builds mopeds, adult tricycles, and utility tractors says it wants to open a plant in Spanish Fork and wants that community to provide $10 million worth of industrial revenue bonds.
Any such bonding by any level of government ought to be approached very cautiously - and be the rare exception, rather than the rule.