City Beat: Springfield in running for $40M Kraft investment

Springfield is in the running for a capital project worth tens of millions at a Kraft Foods facility that would add over 100 jobs with an average pay of $48,000 a year.

At the Jan. 11 Springfield City Council meeting, a tax consultant working on behalf of Kraft Heinz Co. (Nasdaq: KHC) said the company’s 60-year-old Springfield plant is among its candidates for eight new manufacturing lines tied to the production of Kraft Macaroni & Cheese and Kraft Singles.

Already employing roughly 900, the new lines could add 100-110 highly skilled jobs paying above average wages at the 2035 E. Bennett St. property, said James Gomochak of Incentis Group, a national tax-credit consultancy.

“The company is looking at a potential new investment of $40 million to the Springfield facility,” he said, adding there could be some physical improvements to the building, but no additions.

Gomochak addressed a pair of bills that would pay the city $47,500 for legal services connected to drafting plans for the issuance of Chapter 100 bonds. Through the bonds issued by the city, Kraft Foods could receive a 50 percent personal property tax exemption for 10 years on the capital expansion. The city also might consider an increased exemption level, where the jobs created or retained pay 150 percent of the Greene County average wage.

According to MissouriEconomy.org, the Greene County average wage in 2014 was $37,996 per year.

Councilman Mike Schilling asked if leaning on the government bonds amounted to corporate welfare.

“You’re trying to extort the most money you can out of the taxpayers of various municipalities to help pay for this. Is that correct?” Schilling asked Gomochak.

“I wouldn’t agree with that,” Gomochak said.

“Why can’t a corporation like this pay for capital improvements out of its own resources?” Schilling countered.

“They are paying for capital improvements out of their own resources. This is a tax issue over a 10-year period,” Gomochak said.

Sarah Kerner, the city’s interim director of economic development, said the preliminary funding agreements allow Kraft Foods to deposit money to cover the cost of preparing legal documents connected with the Chapter 100 development plan and bond issuance.

Council’s vote on the bond plan developed would come later.

She said $7,500 is designated to amend the industrial development plan council approved for Kraft in 2012. Kraft paid the city $50,000 for work tied to a roughly $50 million Chapter 100 bond plan.

More recently, the company announced in 2014 it was investing $100 million in technology and equipment upgrades at its 780,000-square-foot Springfield plant with the help of City Utilities’ Community Economic Development Rider incentive program, which offers discounts on electric payments for an electric load addition of 300 kilowatts per month or more.

Michael Mullen, a spokesman for Kraft Heinz, declined to name the other cities or say how many are involved in the competitive process. He also said a project timeline had yet to be established.

The bills are scheduled to receive a second reading and vote at council’s Jan. 25 meeting.

Zoning moves
Council heard several rezoning measures, including four connected to Mercy Springfield Communities.

Youngblood Auto Group plans to expand east onto Mercy’s property that once housed its fitness center. Over 10 acres at 3410 S. Campbell Ave. and 202 E. Walnut Lawn St. would be rezoned to a highway commercial district with a conditional overlay from a pair of planned development districts.

Springfield Planning and Development Director Mary Lilly Smith said the conditional overlay in the highway commercial district would prohibit garage door openings within 200 feet of a residential district and vehicle repair within 150 feet. She also said a traffic study would be required if development was to generate more traffic than the former fitness center.

Two nearby residents spoke against the plans, citing area traffic problems and concerns about future property owners with the new designation.

Derek Lee of Lee Engineering Inc. said six areas of concern were identified in an earlier neighborhood meeting and each had been addressed in the zoning request. For example, a 25-foot buffer yard with a berm was included to alleviate noise concerns.

“What started all of this, is (Youngblood Kia) does not have the capacity to service all of the vehicles on its lot, so they have a contract to purchase this lot from (Mercy),” Lee said.

On another Mercy lot, next door to the former fitness center, Mercy is requesting nearly 1 acre at 216 E. Walnut Lawn change to an office district from a residential townhouse district.

Mercy also is seeking a change of 3.28 acres at 1329 E. Lark St. – between Fremont and National avenues south of Republic Road – to general retail from a planned development district. Representing Mercy at the meeting, James McDonald of Wilhoit Properties said part of the tract that would be rezoned is under contract.

Just to the north of Lark on Republic Road, John and Rosa Lee Haik are asking to pull out of that same planned development established nearly 30 years ago at 1300-1332 E. Republic St. in favor of a highway commercial district.

Mercy spokeswoman Sonya Kullmann declined to disclose the interested parties of the East Lark and East Walnut Lawn properties.

The bills are slated for a second reading and vote Jan. 25.

Downtown CID
Council unanimously approved a 15-year renewal and expansion of the Downtown Springfield Community Improvement District on Jan. 11.

Introduced at the Dec. 14 meeting, the expanded district – primarily growing to the north and west – adds an estimated $6 million in annual taxable assessed valuation through 2030 for the roughly $39 million district.

The sales tax within the CID would rise to a half-cent per dollar from a quarter-cent, and the redrawn district would allow a special property tax assessment of up to 75 cents per every $100 of assessed value, up from 40 cents.