Springfield City Council last night unanimously passed a resolution forwarding plans by St. Paul, Minn.-based 3M Co. (Nasdaq: MMM) to invest $40 million to expand Springfield operations and create over 90 new jobs.
Three bills were introduced last night that together would give 3M a 75 percent property tax abatement over 10 years on improvements to its Springfield plants along U.S. Highway 65 north of Chestnut Expressway. The bills also create an industrial revenue bond plan to fund up to $15 million in new equipment.
Sarah Kerner, Springfield’s interim economic development director, said the resolution advances the city's process to hire attorneys to draft the industrial revenue bonds. The other two bills establish a preliminary funding agreement – 3M will pay for the bond plan to be written – and increase the normal 50 percent tax abatement to 75 percent within its existing Enhanced Enterprise Zone.
“In general terms, (3M would) install additional manufacturing equipment and prepare additional manufacturing space,” Kerner told council.
She said the expected 92 new jobs will add $5.3 million to 3M’s local annual payroll. Salaries at 3M in Springfield average $58,000 a year, plus benefits, for its 335 area workers. Springfield payroll for 3M currently exceeds $30 million, and the average employee term is 12 years, according to Kerner.
“These are high-quality, long-term, good-paying jobs,” she said.
Frederick James, 3M’s Springfield plant manager, said operations in the Queen City support the global company's industrial business group. Local efforts are focused on a variety of adhesive-based products including sealants and sprays, as well as structural adhesives for the aerospace industry.
“The facility just to the north of us – we own that property. Most recently it was used to produce industrial HVAC systems,” he told council during the public hearing. “The desire for us is to expand into that building, and it requires significant upgrades for chemical manufacturing, which is what we do.”
Four other speakers supported the investments and associated tax break.
Larry Spilker, Buckhorn Inc. plant manager in Springfield, said the city would be wise to approve 3M's investment.
“I think that was $5 million a year [in payroll] and a 10-year abatement, so that's $50 million for a 10-year abatement,” he said, pointing out property taxes would go up after 10 years.
Industrial bond financing, aka Chapter 100 bonds, allows the city to buy manufacturing equipment with a manufacturing company’s money. In this case, 3M will rent the equipment from the city for 10 years and cover payments in lieu of taxes for 25 percent of the value of new improvements. After 10 years, ownership of the equipment will be transferred to 3M and the property will be taxed accordingly.
Kerner said many details of 3M’s plans are still being drafted.
She said next steps include a tax analysis to determine their impact on local taxing jurisdictions. In March, when The Kraft Heinz Co. (Nasdaq: KHC) sought $33.2 million in industrial revenue bonds, the estimated abatement over 10 years was $750,000, according to
Springfield Business Journal reporting.
Final plans for 3M are expected to return to council for approval in January, Kerner said.
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