Boone County commissioners discuss Kraft Heinz tax incentive agreement
It’s been a little more than a year since the Boone County Commission and taxing entities approved an expansion proposal for international food conglomerate Kraft Heinz through the use of Chapter 100 bonds.
The bonds are a way to give a tax abatement to an entity, said Boone County counsel CJ Dykhouse. Essentially, Kraft and the county agreed that the company would not have to pay full property taxes for seven years and it would lease the equipment and property from the county until it paid off the bonds.
The proposal included a 75 percent tax break for seven years. The original amount was $114 million. 150 jobs were cut
Kraft Heinz had threatened to pull its manufacturing plant from Columbia if the financial incentive was not approved. Taxing entities at the time said they would prefer a tax abatement to the jobs lost should Kraft Heinz pull out. In fact, the food manufacturer is closing its plant in Madison, Wisconsin and cutting almost 600 jobs there.
The incentive agreement meant the plant stayed in Columbia and hot dog production increased. 150 jobs are expected to be cut through retirement and attrition.
Since the agreement, Kraft Heinz has opted not to include real property in the abatement agreement, which means it is expanding its plant without a tax break.
Dykhouse said the plant will pay taxes on the expansion in full and taxing entities like Columbia Public Schools and the Daniel Boone Regional Library would benefit more because they’d be receiving more revenue than originally planned.
The equipment is still under the Chapter 100 bond agreement so the new amount is $93 million just for equipment. The taxing entities that benefit will get the full real property benefits, but Kraft will still only pay 25 percent of the personal property taxes.
Now the commission is looking at the logistics of the agreement and tacking down the technical details. The agreement states that Kraft Heinz must retain at least 300 jobs that are paid at or above the minimum wage decided by the Department of Economic Development. That figure is $17.44, or $36,284 annually.
If the minimum 300 qualifying jobs is not achieved and falls below, the abatement is adjusted. If it drops below 300, the abatement is 50 percent. If it drops below 250, abatement is adjusted to 25 percent. Below 200 qualifying jobs and the abatement is adjusted to zero and the agreement terminates.
Dykhouse said Tuesday the details of this plan stem partly from criticism of the City of Columbia’s deal with IBM. The county wasn’t involved in it.
He said many complained that citizens “didn’t know how many jobs IBM was bringing, it wasn’t transparent about job reports or even reporting to the city.”
To address this the agreement has the job number security, but it also requires Kraft Heinz to make a report on October 31 of each year.
Dana Light Axel Products received a similar tax break from the county earlier this year.
Kraft still needs to sign the agreement. The County Commission will have a public hearing on the agreement Thursday at 1:30 p.m.
