City Beat: Council approves preliminary funding agreement with Kraft

Springfield City Council voted unanimously July 2 to approve a preliminary funding agreement as part of its plan to offer Kraft Foods incentives for a proposed upgrade of its roughly 780,000-square-foot plant in east Springfield.

However, Councilman Doug Burlison called for a review of the city’s year-old incentives policy and expressed concern about the possibility that Kraft and others could receive incentives but are not required to maintain current staffing levels.

The plan establishes that Kraft would pay up to $50,000 in attorneys’ fees to Kansas City-based Gilmore & Bell PC – a step toward securing up to $55 million in Chapter 100 redevelopment bonds.

At the June 18 meeting, council unanimously approved a resolution for the city to work with Kraft to develop a specific incentives package consistent with Springfield’s economic development policy, which was adopted in February 2011. The city is expected to offer the manufacturer at least 50 percent tax abatement on plant improvements for 10 years and eliminate sales taxes for new equipment purchases.

Prior to voting last week to approve the funding agreement, Burlison said he thought council should examine its incentives offerings to ensure that those companies that have access to bonds or tax breaks are creating jobs.

 “This particular bill I have no problem supporting. I’d like to see this project come around,” Burlison said. “As far as the subsequent action we’ll be looking at when it’s ready, I have concerns the policy we have in place could enable some substantial downsizing of the Kraft work force.”

Following the meeting, Burlison said he had no knowledge of Kraft having plans to cut jobs after equipment and facility upgrades, but he said he’s troubled by the fact that the city’s economic development policies currently allow companies to reduce their staffs by up to 25 percent and still qualify for tax credits. With Kraft employing 975 people at its Springfield facility, that means the company could reduce its work force by nearly 250 employees and still qualify for incentives.

“When you install equipment that is going to make for a more efficient operation, there is going to be that economic pressure to downsize,” Burlison said. “I did not get elected to maybe lose some jobs. I’m there to help create the environment that’s going to create jobs. I do realize, that should this come about, there would be a huge amount of temporary jobs, construction jobs and equipment installation, but if there is going to be a tradeoff of some permanent jobs for a lot of temporary jobs, I would just as soon Kraft make that call on their own without any incentives from us.”

 At the July 18 meeting, Springfield Kraft Plant Manager Todd Sherman told council that no immediate staff additions were planned but that the upgrades would help ensure the continued viability of the facility, which opened in 1939.

Joyce Hodel, a corporate spokeswoman for Kraft Foods, said via e-mail that the manufacturer has no plans to reduce its work force at this time.

Councilman Jeff Seifried said he would support a review of the city’s economic development policy, but not before council works with Kraft.

“There’s an appropriate time to look at this ... but we need to move completely though our policy with Kraft, which I fully intend to support,” Seifried said at the July 2 meeting.

The preliminary funding agreement requires Kraft to deposit an initial $10,000 with the city, allowing it to move forward with the Kansas City law firm. Further deposits of $10,000 and $30,000 would be required to cover legal expenses if needed.

Kraft Foods expects to spend $18 million to purchase a pasta press and drying equipment and start a natural cheese project; $20 million for new technology producing Kraft Singles; and up to $17 million for improvements to its existing product lines, according to information provided to council. The Springfield plant currently produces 600 million pounds of product per year such as Philadelphia Cream Cheese, Velveeta and Cheese Whiz.

Sherman has said Kraft would use the bond proceeds to perform facility and equipment upgrades to gain new product lines. He said Kraft plants in Illinois and Minnesota would be next in line to gain facility improvements should the company not secure incentives in Springfield.

At the June 18 meeting, Springfield Economic Development Director Mary Lilly Smith said the plan should be available for council review by the end of July.

Up in lights
Bass Pro Shops is asking that city officials paint traffic signal poles green at four intersections near the retailer’s roughly 400,000-square-foot Outdoor World location on South Campbell Avenue. A bill introduced at the July 2 meeting asks council to approve a cost-share agreement between Bass Pro and the city, whereby Bass Pro Shops would pay $20,500 to make the lights match the color of the utility and light poles on its campus.

Traffic Engineer Jason Haynes said the city painted poles at four intersections at Bass Pro’s request roughly 10 years ago, but the poles are now degrading and need to be replaced.

He said Bass Pro would foot the bill, under the cost-share agreement, for paint and a special coating process that would hold the rain forest green color for 30 years.

The four signals scheduled to be replaced each offer access to Springfield’s Outdoor World campus: Sunshine Street and Grant Avenue, Campbell Avenue and Sunshine Street, Campbell Avenue and Bass Pro Drive, and Campbell Avenue and McGee Street.

The city estimates total cost of the project would be $97,000, but actual project costs are unknown until the city accepts bids on the signal pole replacements.

No members of the project spoke on the measure at the July 2 meeting. The bill’s second reading and vote are expected to take place at the July 16 council meeting.

[[In-content Ad]]