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Leprino Foods Co. is authorized to issue another round of industrial revenue bonds up to $ 60 million to pay for further improvements to its factory on Omaha Road.
The company has also agreed to make payments in lieu of taxes, or PILT payments, to the City of Roswell for this second set of bonds.
Roswell City Council voted unanimously, 10-0, on June 10 for Order 21-06 which approves the sale of Series 2021B bonds.
The vote took place after a public hearing that raised no objection. A letter of support was provided by Roswell-Chaves County Economic Development Corp.
“This bond that we are voting on – which you are voting on today – facilitates further improvements in plant capital,” said Dave Fowler, vice president of taxation and corporate risk management for the global company, which manufactures mozzarella cheese and dairy products. “As you can imagine, the plant is very capital intensive. In other words, there is a lot of equipment out there and it is getting worn out. “
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City attorney Parker Patterson reassured city councilors, as he has done in previous meetings, that the city would never be required to repay the bonds, even if the company does not. Industrial income bonds provide companies with financial benefits by technically having the bond issued by municipalities or counties, but government entities do not have a financial obligation related to the bonds.
“The city is never obligated to repay,” Patterson said. “It’s totally up to the company to do it.”
The company also pays all costs associated with selling the bond.
Leprino is one of the largest private companies in the world, with an estimated annual turnover of around $ 3.2 billion, according to the Forbes magazine website. It has offices in Denver, Colorado, nine factories and manufacturing facilities, and two sales and joint venture offices in Asia. Its Roswell plant, just southeast of the city limits at 5600 Omaha Road, employs around 600 people. The company has been operating at this site for approximately 28 years, with the factory being approximately 30 years old.
In July 2019, Roswell City Council approved two bond sales, Series 2019A up to $ 90 million and Series 2019B up to $ 60 million.
The company and its bond consultants sold the first tranche and used the money to build a new wet whey facility and freezer. Now that most of that work is complete, it is ready for further upgrades, which should include upgrades to its wastewater treatment systems and utilities.
Don Monnheimer of the Rodey law firm in Albuquerque, Leprino’s bond adviser, had indicated at previous city meetings this year that the new ordinance was necessary to ensure compliance with state law, as the previous ordinance did reference to “2019 series” bonds.
The previous agreements Leprino made with Chaves County and the Roswell Independent School District regarding PILT payments will remain in effect. The new PILT agreement with the city will also begin after the sale of the new bonds.
These payments are negotiated because industrial revenue bonds transfer ownership of the plant to the local government until repayment. Although the factory is technically owned by the local government, the company does not pay property taxes and is exempt from certain other taxes as well.
Under the PILT agreements, the company will pay $ 3.06 million to the school district and $ 6.6 million to Chaves County from 2020 to 2049.
The county intends to use the money to maintain county roads used by trucks serving Leprino, with priority given to roads closest to the plant. The school district has indicated that it will use the funds to pay for the annual salary and benefits of a technical education teacher.
City manager Joe Neeb said the city will start receiving PILT payments once the bonds are sold. “Leprino has agreed to provide $ 2 million in LTCP to the City of Roswell as part of IRB Phase 2,” he said.
The city’s LTCP funds will be used for a “Leprino Farmland Experiment” at the Spring River Zoo, Neeb said.
He said the project, which is part of the Spring River Zoo master plan, will involve the design and construction of a barn-like structure that will be used for educational events to teach the importance of animals to closed. An area where visitors could interact with the animals is also planned for the project.
“One of the other exciting aspects for Roswell is the inclusion of an educational component meant to show the cycle of agriculture and its impact on our lives – from growing crops to feeding farm animals and passing them on. by developing products, including cheese, that people use, as well as naturally re-fertilizing the soil to grow more crops, ”Neeb said.
He said the city’s goal is to begin the design phase of the project in the 2021-22 fiscal year.
Lisa Dunlap can be reached at 575-622-7710, ext. 351. or at [email protected]