Letter: Slow this Hormel train down
On Thursday, the Community Development Committee of the Willmar City Council will vote on a city staff recommendation to give Hormel/Jennie-O an exclusive option to purchase a $4 million parcel of Willmar Industrial Park’s most desirable section for 15 years, during which time the city will be forbidden from selling to another buyer, even though Hormel can change its mind if it wants to.
Oh, and Hormel can buy the land for under 20 cents on the dollar.
You heard it right.
The city’s objective is to maximize return on the land. Hormel’s objective is to lock up the land, should it decide to expand its factory. The simplest way to accommodate both objectives is to offer Hormel a “right of first refusal.” The city should continue to aggressively market the land for development. If an offer is received, Hormel can be offered the chance to purchase the land at the offering price, or lose it.
Second is the matter of price. Hormel is an active participant in the derivatives market, where Hormel buys and sells insurance policies to protect the company’s exposure to price fluctuations for food components on world markets. Hormel either charges or pays premiums for this insurance, depending on whether it expects prices to rise or fall.
Presumably, the city is concerned the land’s value will drop. But just a minute — the recommendation already discounts the land over 80 percent.
Conversely, Hormel receives a “buy” option, priced to discount, with no penalty for walking away, eliminating any competition for the land, and the city foregoes using the land to diversify our economy into non-agricultural sectors.
Hormel receives this option free of charge.
Fellow Willmarites, this is the opposite of economic development. What’s more, our “negotiators” are sending the message, loud and clear, that either the land is worthless, our negotiators are incompetent, or something much shadier.
This proposition involves a huge, publicly traded corporation, shareholders, stock options, and confidential information which city and EDC staff acknowledges to have in their possession.
Let’s slow this train down and get it right, OK?