The Huntingburg Economic Development Commission approved the issuance of $3.5 million in tax increment finance backed bonds for Farbest Foods renovation plans.
The bonds were issued from two tax increment finance districts; the one Farbest is located in and one designated as the OFS TIF district that encompasses farmland Farbest purchased from the company.
Farbest Foods will purchase the bonds which will be paid from the property and real tax increment increase in the two TIF districts due to the improvements Farbest is making. Since Farbest will own the bonds, the company is incorporating all the risk if the increment is not enough to pay off the bonds. The City of Huntingburg is not on the hook if that occurs, according to City Attorney Phil Schneider.
With the improvements, the Farbest or 400 West TIF district is expected to increase between $10.2 million and $12.5 and the OFS district between $405,000 and $1.5 million.
The bonds will be paid off by 2034.
Tonight, the Huntingburg Economic Development Commission will hear a request from Farbest Foods for $3.5 million in tax increment finance backed bonds to support their planned $21.7 million expansion.
The bonds will cover about $2.6 million for the new construction and will incorporate the remaining $900,000 from a bond issued for the company in 2007. Farbest plans on purchasing the $3.5 million in bonds, which won’t be tax exempt, to assist in reducing their cost in the new addition to the Huntingburg plant.
The increased property tax increment that will occur with the improvements to the Farbest plant will be used to pay the bonds back.
Tax increment finance districts have a lifespan of 25 years before they have to be reassessed to establish a new assessed value rate. According to Mayor Denny Spinner, although the redevelopment commission and council could extend the life of the TIF district with the issuance of the new bonds, they will not have to since they will be paid off before the TIF district expires.
Tonight, the Huntingburg Common Council wil be in attendance to hear the presentation and recommendation from the redevelopment commission. The meeting will start at 7 p.m. at Huntingburg City Hall, 508 E. Fourth St. A public hearing will also be held.
According to Farbest Foods president Ted Seger, the updates will modernize and automate several processes at the plant.
The changes in Huntingburg come about five years after the company opened a state-of-the-art $75 million plant in Knox County. Seger stated the Knox County plant is the most automated and modern turkey plant in the world and the success the company has had with the facility encouraged them to do the same in Huntingburg.
He explained the company is updating and automating about a third of the Huntingburg plant—built in 1969 and last updated ten years ago—over two phases. The first phase, which is already underway, will update the controlled-atmosphere stun system. The system is where the birds are rendered unconscious before going through processing.
This portion should be done by the middle of 2018.
The second phase of the project will update the boiling process for the turkey production plant and will be completed in late 2018.
With the improvements, the company will have two of the most automated processing plants in the world and poised to take on demands in the future Seger said.
Farbest currently holds about 10 percent of the turkey market in the U.S. and is the fourth largest producer in the country. According to Seger, the company hopes that with the improvements, they will be able to capture more of that share as the market continues to grow.
According to Seger the company has about 1,300 employees of which 1,200 are Indiana residents.
The new processes will hopefully allow the company to slow down employee turnover at the plant by providing a safer, cleaner workspace. But the automated systems will only reduce the company’s employment positions by 13. “We’re not letting anyone go. It’s just 13 less we have to hire,” Seger said. “It is very difficult to find labor in Dubois County. If someone could magically drop 100 people in Dubois County that would want good jobs, at our facility, we could put them to work tomorrow.”
Along with the updates in the plant processes, Farbest is moving its headquarters out of the plant to Jasper.
Seger explained that although the company has never had an official headquarters, since he has had an office at the Huntingburg plant for 35 years, that could be considered the headquarters.
The company also has administrative offices at 402 E 13th Street in Huntingburg and on 41st Street in Jasper.
Renovations are underway on the former Kimball showroom on 12th Avenue in Jasper though and that location will bring all those offices, about 50 people, together under one roof.
The move will open up office space in the plant for human resources and safety to be housed there.