GENTRY -- The city council in Gentry on Aug. 6, approved a resolution to move forward with plans to give to McKee Foods Corp. up to $160 million in industrial revenue bonds. The council passed a resolution setting a public hearing at 6:30 p.m. on Monday, Sept. 10, immediately prior to the next regular council meeting.
Council member James Furgason called the tax rebate a win-win for Gentry.
Members of Gentry's finance and economic development committees met July 17 to hear a request from McKee Foods and Jill Grimsley, the company's attorney, requesting a tax abatement to facilitate major upgrades to the Gentry facility.
According to documents provided to council members, McKee Foods is asking the city to enter into a payment in lieu of tax agreement with the company providing for 65 percent ad valorem tax abatement on all personal and real property owned or leased by McKee Foods in connection to Gentry operations for a period of 25 years. The company is asking the city to issue bonds in a maximum principal amount of $160 million, with the bonds privately placed with an affiliate of McKee Foods.
Tim Broughton, vice president of McKee Foods, said the company plans to expand its Gentry facilities and increase its production and shipping capabilities with automation projects and possibly add as many as 100 new jobs at the Gentry plant. He said the shipping facility currently under construction at the plant is only about a third of the planned upgrades.
According to materials provided to the council members, McKee Foods is currently paying $1.1 million per year in property taxes. With the abatement, the company would pay $1.44 million in lieu of taxes. Without the abatement, the company would have to pay approximately $1.9 million in property taxes each year if the upgrades are completed.
According to Grimsley, the abatement would cost the city nothing -- all the costs would be paid by McKee Foods. The city would be the owner of the McKee property in Gentry for tax purposes during the term of the agreement since the city does not pay property taxes, but the city could opt out of the agreement at any time McKee Foods failed to meet its obligations under the agreement.
According to information provided by McKee Foods, the request is in line with similar tax abatement agreements with Simmons Foods and the Flint Creek Power Plant. The abatement plan is provided for by the Municipalities and Counties Industrial Development Revenue Bond Law (Arkansas Code 14-164-201 through 224).
Council committee members present viewed granting the request as in the best interest of the city and region because it would allow McKee to expand operations in Gentry and employ more people rather than expanding operations elsewhere.
According to Broughton, the Gentry plant adds about $75 million per year to the local economy. The expansion will increase that number.
Following the public hearing in September, an ordinance would be presented to the council approving the abatement plan. If adopted with rules suspended and on three readings with a single vote and with an emergency clause attached, the agreement could be formally approved as early as the September council meeting.
McKee Foods requested that an agreement would be finalized before the end of the year for tax and budgeting purposes.
McKee Foods anticipates all the upgrades to be complete by June 30, 2023.
Other business
In other business, the council passed an ordinance on three readings with a single vote, and an emergency clause, to transfer retirement savings for eligible members of the Gentry Fire Pension and Relief Fund to the Arkansas Local Police and Fire Retirement System. The ordinance included a 3 percent compound cost of living adjustment.
Kevin Johnston, Gentry's mayor, reported that tentative plans being discussed include using the old court clerk office, formerly the Gentry Public Library, as a possible satellite office for the Benton County Sheriff's Office and the Arkansas State Police, with the possibility that the front part of the office space could be used for the written portion of the driver testing currently being done in the McKee Community Room at the Library.
Johnston also told the council that the city had been awarded a $75,000 tree grant through the Walton Foundation which can be used for trees in the parks, especially the Flint Creek Nature Park, and for a tree giveaway for residents. Johnston estimated that the tree giveaway would be in October. He said the tree purchase would include several larger trees for the city parks, with professional planting.
He told the council the Dawn Hill East bridge project was still moving forward and would really begin to move forward once all the state-required releases were signed.
Johnston said that McClelland Engineering was preparing a digital virtual tour to use to show the amenities planned for city park grounds. The virtual tour will be used to explain why the city wishes to increase its sales and use tax rate from 1.125 percent to 2 percent.
General News on 08/15/2018