Springfield City Council last night forwarded an effort to ensure that a $55 million plant upgrade at Kraft Foods becomes a reality.
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 would pay the city’s legal fees 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 inking a deal with Kraft, which has operated a 780,000-square-foot production facility in east Springfield 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 is planning on purchasing a pasta press and drying equipment and starting a natural cheese project for $18 million; new technology for Kraft Singles for $20 million; and improvements to its existing product line. 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.
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,” Dixon said.
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 said he opposed the plans that he felt amounted to corporate welfare.
Schilling, the only citizen to speak against the bill, said he didn’t understand why a $54 billion company doesn’t have the capital to make improvements on its own and feels a need “to play this 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 at the July 2 meeting.
This installment of Springfield Business Journal’s Architects & Engineers Project Report showcases 26 endeavors by area design and engineering professionals.
