Expansion, TIF approved: Council takes steps to advance Jennie-O expansion

WILLMAR - The Willmar City Council has taken steps to advance development of Jennie-O Turkey Store’s corporate office expansion project.
Jennie-O proposes to construct a 35,000-square-foot, $6-million-to-$7-million addition to the corporate offices. The expansion will primarily house administration, accounting, engineering, sales and logistics functions for the processing operations.
Work is anticipated to begin in June and be completed in 2015.
The council voted Monday night to amend the boundary of a 1989 municipal development district created under state law to assist with economic development in southwest Willmar.
Jennie-O’s Willmar Avenue turkey processing plant and corporate offices are located within that district.
The amendment allows the city to add the former State Highway 40 roadbed and the remnant parcel at the south end of the Public Works Department property to the district where the expansion will take place.
A purchase agreement for the sale of the parcels by the city to Jennie-O has been executed, according to a city official.
In related action, the council approved a tax increment financing (TIF) plan for the expansion. The plan addresses all statutory requirements for presenting the project’s economic and fiscal impacts, said Bruce Peterson, planning and development director.
Under TIF, the estimated $82,542 annual increase in property taxes generated by the project will be paid back to Jennie-O to help cover the company’s cost of new access, parking improvements, lighting, utility extensions and relocation, soil correction, and storm water controls.
Those “non-building’’ costs are estimated at $1 million, said Peterson. The eight-year TIF plan is estimated to make $594,304 in reimbursement available to Jennie-O for those costs.
“The increased taxes from the expansion are available to use for public purpose expenditures,’’ explained Peterson. “Jennie-O Turkey Store pays everything up front and we enter into an agreement such that as they pay the new higher rate of tax, a portion of that will be repaid to them for those eligible costs that state law determined are consistent with municipal development.’’
During public hearings, the council unanimously approved Peterson’s request to amend the development district boundary and to approve the TIF plan. No one from the public spoke during the hearings.
Council member Steve Ahmann asked Peterson about future TIF use and how it affects the city, Kandiyohi County and Willmar School District.
Peterson said the County Board and School Board both supported the plan. He said the city has authority to set the plan and the city is obligated to notify them in advance of the hearing and meet with them if they so choose.
Peterson said the annual increment payments by taxing jurisdictions are estimated at $27,239 for the city, $45,398 for the county, and $9,905 for the school district.
Peterson said Jennie-O will continue to pay current annual taxes of $144,756.
The premise of TIF is that projects won’t occur without TIF. Peterson said if TIF is not used on those projects, the projects are not built and that future tax revenue is never available to the taxing jurisdictions.
Peterson said the city at one time had 16 functioning TIF districts. Now, the city will have one. He said a municipality cannot exceed more than 15 to 20 percent of its total tax capacity in a TIF district. He said Willmar “will have way under 1 percent of our municipal tax capacity’’ in a TIF district.
“The way the city of Willmar has done it is absolutely no burden on the taxpayers,’’ he said. “It’s very careful it does not create any tax advantage for a particular business. It’s strictly a means of stimulating the increase in the tax base and future employment.’’
“What you’re saying is we have a large margin to fill if people come knockin’ on the door and we should be able to meet their needs,’’ said Ahmann.
“Yes. I would welcome the problem,’’ said Peterson.