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The city now has the green light to issue Chapter 100 industrial revenue bonds of up to $48 million to help fund manufacturing equipment upgrades at the local Kraft Heinz plant.
SBJ file photo
The city now has the green light to issue Chapter 100 industrial revenue bonds of up to $48 million to help fund manufacturing equipment upgrades at the local Kraft Heinz plant.

Council approves Kraft Heinz development plan

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Springfield City Council last night approved the next step in continuing The Kraft Heinz Co.’s (Nasdaq: KHC) investment in the Queen City.

The council-approved ordinance authorizes an industrial development project for the company and will allow the city to issue Chapter 100 industrial revenue bonds of up to $48 million to help fund new manufacturing lines and equipment upgrades at the 1951 E. Meadowmere St. plant.

The agreement between the city and Kraft Heinz exempts 75% of the company’s property taxes for five years on the purchase of the equipment. The city’s adopted policy is typically to grant 50% abatement for 10 years, according to past Springfield Business Journal reporting.

The agreement also maintains at least 950 full-time employees at the local plant. Employees have an average salary of over $45,000, and total annual salaries and wages for the plant are approximately $68 million, according to bill documents.

Council passed the development plan 8-1, with Councilperson Mike Schilling casting the lone opposing vote.

“I know it’s been a value to the community for many years, but I'm having trouble accepting that this multi, multibillion-dollar, international company insists on seeing some of our property tax money used to subsidize the project, especially in a time of a pandemic when the country and communities ... is suffering from an economic downturn,” Schilling said. “I don’t know why this company can't turn some of its profits back into equipment and maintenance.”

This marks Kraft Heinz’s third Chapter 100 bond-financed project in Springfield since 2012. That year, council approved $26 million toward expansion of the plant’s cheese and pasta production, and in 2016, bond-funded equipment purchases totaled up to $36 million.

Other council members echoed the importance of maintaining jobs at the plant.

“Whether it’s Kraft Heinz or Costco… we’re competing with other cities for these well-paying jobs,” said Councilperson Matt Simpson. “It’s important that we have in our arsenal the ability to provide incentive packages like this.”

Councilperson Phyllis Ferguson said the development plan is a “vote of confidence” for Springfield by the international company.

“I look at it as an investment in job security in our community,” Ferguson said. “They’re not investing the dollars that they are investing because they're going to leave.”

Council gave the green light for the city to create a preliminary funding agreement with Kraft Heinz in April after approving a resolution of intent to enter into the agreement. The project was competitive with Kraft Heinz plants in other markets, according to past SBJ reporting.

The Springfield plant – the largest manufacturer in the company’s cheese and dairy network – makes products such as Kraft Singles, Kraft Natural Cheese and Kraft Mac & Cheese.

In a news release from the Springfield Area Chamber of Commerce, Kraft Heinz U.S. operations leader Joao Araujo commented on the company’s continued investment in the Queen City.

“We are thrilled to continue building on the success and growth we’ve experienced in Springfield by further investing in our facility and the community,” Araujo said in the release.

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