Nestle Bonding Plan Moves Forward

The issuance of bonds that would allow Nestle to purchase the ConAgra facilities as well as new equipment for continued operation at the plant moved forward on Monday night as the Trenton City Council approved a resolution officially putting the plan into place.
On a vote of 8-0, the council agreed to move ahead with issuing taxable industrial development revenue bonds – known as Chapter 100 bonds – up to $75 million to finance efforts by Nestle to pay for costs associated with the company’s plan to have a plant in Trenton. In addition to the property purchase, money from the bonds would be used to acquire and improve existing equipment as well as purchase and install new equipment to be used in the manufacturing and distribution of canned food projects. Phil Tate, who worked with the North Central Missouri Development Alliance to negotiate the deal, said the bonds would also allow for some warehousing at the facility that had not been available with the prior tenant.
Under the bonding plan, the city would abate both personal and real property taxes for the company for a period of 10 years. However, Nestle would make a payment in lieu of taxes (PILOT) to the city, which would be distributed to the city’s taxing entities – including the school district, nursing home district, library, etc. During the first five years, Nestle would pay $230,000 in personal property taxes and $86,000 in real property taxes. Nestle would pay $146,100 in personal property taxes and $86,000 in real property taxes during the second five years, which represents about 73 percent of what a full payment would be.
“I think this is a great deal for Trenton and its taxing entities,” Tate said. “While Chapter 100 allows for taxes to be abated, we were able to negotiate an agreement in which local taxing entities would receive their full benefits during the first five years and 73 to 74 percent during the next five years.”
Tate said that Nestle plans to use around $50 million of the bonds in the initial phase of the project, which leaves $25 million for any future expansion that the company may want to do.
“That leaves the door open for Nestle to grow in the future, which means more jobs,” he said.
Nestle plans to employ between 135 and 150 persons initially. Tate said the company hopes to make a seamless transition once ConAgra closes its doors, which is scheduled for the end of May.
“Their plan has always been when ConAgra closes on Friday, they want to be up and going on Monday,” he said, adding that many things remain to be resolved before a transition plan is announced.
Once the bonding plan has been finalized and sent to all taxing entities affected by the agreement, Tate said a 20-day comment period will take place to allow persons to offer their opinions about the plan. Meanwhile, bonding torneys for the city – in this case Gilmore and Bell of Kansas City – will be drafting a document and ordinance on which the city will take official action to finalize the bonding agreement. It is hoped that will take place at the council’s April 23 meeting.
“This is (a) very beneficial (agreement) for the city and its citizens,” Tate said. “Not only are we keeping a very important business in the community, but we are bringing in a world-class company to operate it. It’s a win-win for all involved.”
As part of the agreement, Nestle will be required to employ a minimum of 135 full-time persons during the agreement period (employment base). This number would not include contract or temporary employees. Penalties are outlined in the agreement if those numbers fall below 80 percent of the employment base including increases in the real property PILOT that the company would be required to pay. Certain minimum investment criteria by Nestle is also outlined in the agreement.
The plan to bring in a company to replace ConAgra has been in the works since last year, with Tate and NCMDA Executive Director Micah Landes as well as former Trenton Economic Developer Ralph Boots working on an agreement with Nestle since that time. ConAgra officially announced in March 2016 its plans to close the local plant at the end of May 2018.