City to consider $32M in bonds for new Andy’s Frozen Custard campus

Springfield City Council will consider issuing $32 million in bonds to Andy’s Frozen Custard for a relocation project.

A resolution to issue the bonds appears on the council agenda for June 22. City spokesperson Cora Scott said the measure will be eligible for a vote that night.

Andy’s Frozen Custard requested the $32 million in industrial development revenue bonds, authorized by Chapter 100 of the Revised Statutes of Missouri, the explanation of the council bill states.

Andy’s Frozen Custard CEO Andy Kuntz said earlier this month he was mulling a move outside of the city because of increasing costs of construction since he first began planning a new headquarters three years ago.

The explanation adds that the project is competitive with other prospective sites throughout the state and region, and the incentive is necessary for the project to remain in Springfield.

Through the project, Andy’s Frozen Custard is planning to relocate its headquarters to the northeast corner of East Division Street and North LeCompte Road, according to the council bill. Since 2016, the company headquarters has been in rented property at 211 E. Water St. in downtown Springfield. That building is owned by Clan MacQuarrie LLC.

The council bill explains that the project is a new headquarters campus with 43,200 square feet of office space spread among three buildings and a 9,600-square-foot industrial warehouse.

The project would be completed in two phases, starting with the first two office buildings, to be completed in 2028, and followed by the third office building and the industrial warehouse building, according to the council bill.

“Depending on the project timing, the bonds may be requested either all at once as a single transaction or individually for each phase,” the council bill explanation states, noting the total project cost is nearly $32 million.

The explanation states the investment will create 16 new jobs with an annual starting wage of $94,766, approximately 1.66 times the Greene County average wage, with an anticipated annual payroll addition of more than $1.5 million.

The Chapter 100 real property tax exemption is requested for 25 years for each phase, set at 90% exemption for the first 10 years, 75% for years 11-15, 60% for years 16-20 and 50% for years 21-25.

The explanation states that the requested incentive structure exceeds the standard parameters outlined in the city’s policies for economic incentives, but it offers a list of reasons to consider the enhanced level of support:

• Headquarters retention and band growth for a prominent national brand, with prestige associated with the national headquarters remaining rooted in Springfield
• Job retention and high-wage creation
• Capital investment with payments in lieu of taxes structured to preserve the existing tax base and provide financial benefits to affected taxing districts
• Comparability to existing programs, including Chapter 353 tax abatement
• Competitive landscape, with other locations outside of Springfield vying for the project
• Limited impact of sales tax exemption on building materials – a one-time benefit that will have limited impact on city revenues, with most required building materials purchased outside the city

According to past Springfield Business Journal reporting, the company filed a building project permit with the city to build a $12 million headquarters at 3837 E. Division St., but CEO Andy Kuntz said the project was turning out to be more expensive than anticipated when planning began three years ago.

Kuntz told SBJ that building a headquarters in Springfield was the company’s preference, but increasing construction costs had prompted him to weigh three other options: a move to Kansas City, a purchase of an existing building in Republic or another community, or relocating to an existing building elsewhere in the Queen City.

He expressed a preference in past reporting for a unique space, like the downtown location the company has outgrown. The new facility would include a test kitchen, he said.

Chapter 100 revenue bonds allow the city to extend its tax-exempt status to the purchase and ownership of real property, construction materials and tangible personal property, according to an explanation by the Missouri Department of Economic Development.

The Springfield Department of Workforce & Economic Vitality offers an explanation page for Chapter 100 bonds on its website. Benefits include real or personal property tax abatement, through which the property is owned by the city during the bond term and thus is exempt from taxes. A payment in lieu of taxes agreement may be required to modify the level of abatement, the page spates. The tool also offers sales tax exemption for equipment purchases.

Chapter 100 bonds may be tax exempt, making it possible to issue them at a lower interest rate compared to conventional financing, the website states.

When Chapter 100 bonds are issued, the company transfers ownership of the site or equipment to the city, the website explains.

“The bond proceeds are then used to fund the construction of the development project,” it states. “The company buys the bonds and repays them over a set time period. Once the bonds are completely repaid, the local government conveys title of the site and/or equipment back to the company.”

For real property tax exemption through Chapter 100, certain criteria must be met. Among these are an investment of $5 million or more or the creation or retention of at least 100 jobs at the county’s average wage or greater; this job creation or retention component may be waived if council determines there is an overriding public benefit, the website explains.

Andy’s has more than 170 locations in 15 states, according to past reporting.

Neither city officials nor Kurtz returned a phone call in time for this report.