City Beat: Kraft seeks tax abatement for $55M upgrade

Kraft Foods has big plans for its east Springfield facility, and the city is prepared to offer tax incentives to ensure that a $55 million plant upgrade becomes a reality.

On June 18, Springfield City Council unanimously passed a resolution to issue Industrial Development Revenue Bonds not to exceed $55 million for Kraft Foods’ project.

The governing body also introduced a bill that establishes a preliminary funding agreement that says Kraft would pay the city’s legal fees – up to $50,000 – for establishing an incentives package. The city plans to offer the manufacturer at least 50 percent tax abatement on plant improvements for 10 years and a pass on sales taxes for new equipment purchases. The moves are part of its economic development incentives policy, which council adopted in February 2011.

The resolution allows city economic development staff to begin the process of closing a deal with Kraft, which has operated a 780,000-square-foot production facility, 2035 E. Bennett St., for roughly 75 years. Officials said plant upgrades would help the manufacturer gain new product lines, and could bring jobs to town, though Springfield Plant Manager Todd Sherman said no immediate hiring was planned.

Kraft intends 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. The Springfield plant annually produces 600 million pounds of product such as Philadelphia Cream Cheese, Velveeta and Cheese Whiz. Kraft employs 975 workers in Springfield, and the property tax abatement is a possibility since the company has an average salary of around $40,000 – more than $5,000 above the Greene County average, a requirement of the program.

Sherman said plants in Illinois and Minnesota would be next in line to compete for production facility improvements should an incentives agreement not be reached in Springfield.

“This puts us in a much greater position for the long-term viability of the facility,” Sherman told council at the meeting.

Rob Dixon, vice president of business assistance for the Springfield Area Chamber of Commerce, spoke in favor of the plans and said it was important to support the city’s economic development incentives policy.

“In terms of economic development, this is as good as it gets,” he said.

Several council members applauded the plans and suggested the incentives were a good idea prior to their votes on the resolution.

“I’m glad to see you are using what we asked you to,” Councilman Scott Bailes said to city staff of the incentives package. “Kraft is one of those companies, under any circumstances, we don’t want to lose them to another community.”

Councilman Tom Bieker suggested the incentives may not be enough, and noted that state law allows the city to offer up to 100 percent tax abatement on new property or improvements for up to 25 years.

Springfield resident Mike Schilling, the only member of the public to speak out against the plans, said he felt the city’s incentives amounted to corporate welfare.

Schilling said he didn’t understand why a $54 billion company doesn’t have the capital to make improvements on its own, and he called the move a “cynical game of pitting communities against each other.”

According to city staff, a finalized incentives package could be delivered to council for approval as soon as late July. A second reading on the bill related to the legal fees agreement is scheduled for a vote July 2.

Hauling fees delayed
Council voted to delay an 8 percent increase in trash-hauling fees for local solid-waste companies by four months.

As part of the unanimously approved fee adjustments for city services, trash-hauling fees will increase beginning Jan. 1 instead of Sept. 1. During the June 4 council meeting, representatives from several solid-waste companies said the originally proposed schedule didn’t allow enough time to budget for the fee changes.

The increase in landfill rates is one of 138 rate increases in the city’s fiscal 2013 fee schedule for services. The fee schedule includes 22 declines in rates and 15 unchanged service fees.

Notable changes included 26 fee increases associated with zoning and subdivision case reviews ranging from 2.8 percent to 23.5 percent and a 23 percent increase in building plan review minimum costs to $163. At the June 4 meeting, only the trash-hauling fees garnered objections from the public.

The ordinance raises the landfill tipping fee to $30.94 per ton from $28.65 per ton, according to documents submitted to council. By comparison, Springfield Business Journal research discovered landfill tipping fees are $34.55 per ton in St. Louis, $28.17 per ton to $34.78 per ton in Kansas City, and $56 per ton in Maryville.

Fisk on board
Businesswoman Jan Fisk was sworn in as the council member for General Seat A after being voted in by her peers during a special City Council meeting June 12.

Fisk, who is co-owner of J. Howard Fisk Limousines, competed for the vacant seat against finalists Michael Carroll, controller at Andy’s Frozen Custard, and Arthur Hodge, a Springfield substitute teacher who is retired from the U.S. Army and Springfield Public Schools.

The council seat became available in May when Jim O’Neal resigned as mayor and Bob Stephens moved from his general council seat into the mayor’s post.

In her June 12 interview before the full council, Fisk emphasized her business experience as chief financial officer of her and her husband Howard’s limousine company that they started when she was 25 years old. She told council creating jobs to grow the local economy would be a priority.

Fisk, a 37-year resident of Springfield and graduate of Missouri State University, ran for the Zone 2 seat in 2011, but lost to Councilwoman Cindy Rushefsky. Fisk has been involved with several local nonprofits, including Junior League of Springfield, Boys and Girls Club, and American Cancer Society.[[In-content Ad]]