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story.lead_photo.caption Westside Eagle Observer/RANDY MOLL Expansion is in the owrks at McKee Foods in Gentry and the company has asked the city of Gentry to participate with the corporation in a tax abatement plan to allow up to $160 million in expansion at the Gentry plant.

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.

If the whole council favors the plan, a public hearing will be set and an ordinance 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 approval 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.

General News on 07/25/2018

Print Headline: McKee Foods asks for tax-abatement to make major upgrades to Gentry plant

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