Home News Local News City Council votes for public hearing on Leprino bonds

City Council votes for public hearing on Leprino bonds

“We intend to be in this community for a very, very long time,” says Michael Reidy, Leprino Foods Co. senior vice president, who spoke at the Thursday Roswell City Council meeting. (Lisa Dunlap Photo)

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The Roswell City Council has authorized a resolution to consider acting once again as the issuer of industrial revenue bonds on behalf of Leprino Foods Co., which will bear the financial responsibility for the estimated $150 million debt and repayment.

Following the unanimous 10-0 vote, the City Council is scheduled to hold a public hearing about the matter on July 11 before the ordinance allowing the bonds would be authorized.

Michael Reidy, senior vice president for corporate affairs for Leprino Foods Co., told city councilors at their Thursday meeting that the company’s local plant on Omaha Road just outside the city limits needs upgrades and improvements.

“When we bought this facility in 1993 and essentially renovated it with the first bond in 1994, we essentially had a new plant,” said Reidy. “As you all have experienced in your own homes, things that are 25 years old start to break and fail, and that is essentially where we are at. So what we are embarking on now in the first phase of the project, we are going to essentially rebuild a whole new front end of a whey processing facility and then go back in and demo the existing whey processing facility and start essentially replacing and repairing the rest of the guts of the plant over the next few years.”

He said he wanted to “renew the partnership” with the city that began about 25 years ago and said the plant should last at least 50 years, if not much longer. “We intend to be in this community for a very, very long time,” he said.

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Reidy said the bonds would probably be issued in two releases, or tranches. The first would probably be for about $90 million. An affiliate of Leprino Foods is expected to be the purchaser.

Industrial revenue bonds allow industrial and commercial operations, both for-profit and nonprofit, to raise large amounts of money while being shielded from property taxes and some gross receipts taxes. The property tax exemption comes because the company assigns its property to the issuing agency — in this case, the city — for the life of the bonds. The bonds currently under consideration could be issued for up to 30 years. The company is legally obligated to assume ownership of the property once the bonds expire.

Reidy said he has met with Stan Riggs, Chaves County manager, about annual in-lieu payments, also known as Payments in Lieu of Taxes (PILOT). He also said his company has had some initial discussions with Roswell Independent School District about possible payments. He and other Leprino representatives said Roswell staff will be kept informed about the results of those negotiations.

According to information from Riggs and the Chaves County Assessor’s Office, Leprino now pays the county $130,000 a year, which the county uses to maintain roads in the area. The company would pay about $440,000 a year if it were on the county property tax rolls. While tax valuations and rates vary over the years, that current situation would mean that Leprino saves about $6.2 million in property taxes over a 20-year period.

Councilors Barry Foster and Steve Henderson both expressed their support for Leprino but also said that they want to make sure that the county and schools receive appropriate payments.

Foster said that he was pleased to hear that Leprino had contacted the Roswell Independent School District. Payments to school districts are not required by state law for non-electrical generation projects benefiting from industrial revenue bonds.

“Your kids go to our schools and we need to pay for those schools,” Foster said. “I do think we as a council and as citizens need to reach out to our legislators and look out how the law is written on the books. It should not be y’all doing it as good neighbors. It should be in the actual law that our legislators pass.”

Reidy assured councilors of the company’s intentions to reach satisfactory terms.

“We had a very constructive session with the county this afternoon before we came here,” he said, “and I am confident that we can easily reach an agreement with the county on the roads. And we initiated that conversation with the chief financial officer of the school district, and we will work with Superintendent (Ann) McIlroy and we’ll achieve a similar result there. I am comfortable with that.”

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

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Lisa Dunlap is a general assignment reporter for the Roswell Daily Record.