Home News Local News Leprino Foods plans new bond issue through city

Leprino Foods plans new bond issue through city

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July public hearing scheduled regarding Leprino’s plan

Roswell’s largest private employer, Leprino Foods Co., plans to benefit from some new industrial revenue bonds to be issued by the city of Roswell by August.

The financing mechanism that the company has used in the past for its Roswell plant enables Leprino to raise money to equip, supply, build, repair or improve its manufacturing business while being exempt from local property taxes.

“Our Roswell plant is over 25 years old,” said Kim DeVigil, Leprino director of communications. “As a result, we have numerous updates and upgrades we are pursuing to ensure that the facility will continue — for a very long time to come — to produce the high-quality products that our customers expect.

“As a result,” De Vigil said, “we have engaged in preliminary discussions with the city of Roswell and Chaves County regarding the first stage of what would be a long-term project to update our facility. We are seeking to use industrial revenue bonds in exactly the same manner as we did when we first acquired the plant. At this time, we are still assessing the scope of any potential project, and we anticipate having more details on the project available by the next City Council meeting.”

DeVigil chose not to disclose the amount of the proposed bond issue. The bonds issued in 1993 and 1994 totaled $110 million for two phases of expansions and improvements to the Roswell facility, according to published legal notices.

While Leprino will realize tax benefits if the bonds are approved by the City Council, the manufacturer of mozzarella cheese and dairy-derived nutrition products will again arrange with local governments and school districts to make payments in lieu of taxes, known as PILOT payments, according to Stan Riggs, Chaves County manager.

“Currently, we have that money in place with Leprino and that money is used by (the Roads Department and Public Service Department),” Riggs said, adding that the county will have to decide which projects would receive funding from the money in the future. “It is a special fund for us but we are going to have to renegotiate that obviously, and the school districts will also be involved with Leprino in PILOT project monies going to them. They are going to be off rolls for another 30 years.”

Although the Leprino plant is located just southeast of the city limits on Omaha Road near East Grand Plains Road, the city can issue the bonds since the location is within 15 miles of the city limits.

Industrial revenue bonds are a common economic development tool in New Mexico that can benefit for-profit and nonprofit commercial and industrial enterprises, according to a January 2018 report issued by the Albuquerque law firm assisting Leprino in its efforts.

If the bond issuance is approved by the City Council following a public hearing now expected to occur July 11, Leprino would deed its property to the city, which would then lease it back to Leprino.

Because the property would be, in effect, government property during the lifetime of the bonds, Leprino would not pay property taxes. In some cases, industrial revenue bonds beneficiaries also can receive exemptions from income taxes. The PILOT payments are not required by law, but often are secured by governments as a condition of issuing the bonds. Leprino has a legal obligation to re-acquire the property once the bonds are paid off, unless additional bonds are issued.

The bond debt payments and any fees related to the bond issuance would be the obligation of Leprino or its investors, not the city, according to the law firm’s report.

Leprino Foods is a global family-owned enterprise with U.S. headquarters near Denver, Colorado. The company came into the Roswell area in 1993, acquiring the Omaha Road plant that was owned by Associated Milk Producers.

The company has expanded several times during the past 25 years so that the facilities now occupy more than 430,000 square feet. In 2018, Leprino received a $200,000 Local Economic Development Act grant from the state of New Mexico for a $15 million expansion of its refrigerator and freezer warehouse space.

The company is the world’s 136th largest privately held firm. It has about 550 employees in Roswell and 4,000 employees worldwide. It grosses an estimated $3.2 billion a year, according to a 2018 online report by Forbes.

Senior Writer Lisa Dunlap can be reached at 575-622-7710, ext. 311, or at reporter02@rdrnews.com.