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County approves new Leprino payment agreement

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Chaves County will receive more money each year from Leprino if its new bonds are issued through the city. The company says in-lieu payment negotiations are underway with the Roswell school district. (Lisa Dunlap Photo)

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Company confirms payment negotiations with Roswell Independent School District

Leprino Foods Co. has agreed to increase its payments in lieu of taxes to the county by $70,000 a year and is negotiating with the school district about a payment, according to county and company officials.

Chaves County commissioners voted 5-0 Thursday to approve a new agreement with an annual payment starting at $200,000 in January 2020.

“This is an improvement over the one we have in place,” said Commissioner Robert Corn, which another commissioner concurred with, “and I think it is as good as we can probably get.”

Leprino Foods plans to issue new Industrial Revenue Bonds through the city for renovations and improvements to its plant on Omaha Road, just outside the city limits near East Grand Plains Road.

The Roswell City Council voted on June 13 to hold a public hearing to consider the bond issuance. That hearing is expected to occur July 11.

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The company, which previously issued self-funded revenue bonds through the city that are expiring, now intends to have two bond releases: a Series A for up to $90 million and a Series B for up to $60 million. The terms of the bonds would be about 30 years, and an affiliate of Leprino Foods, which has annual revenues of about $3.2 billion a year, is expected to purchase the financial instruments. The multinational company, with headquarters in Denver, Colorado, makes mozzarella cheese and nutritional products derived from dairy.

During the life of the bonds, the Leprino plant will become city property, and thus removed from county property tax rolls. (The city does not have any obligations related to debt payments, and Leprino would be legally obligated to assume ownership of the plant once the bonds matured.) The company also will receive other types of tax relief with Industrial Revenue Bonds, including exemption from gross receipts taxes in certain instances.

For the past few years under its existing agreement for current bonds, Leprino has agreed to pay the county $130,000 a year in payments in lieu of taxes (PILOT). According to Mark Willard, Chaves County assessor, the company would now owe about $440,000 a year on its plant, given current tax rates and property valuations, if it were paying property taxes.

The new “2019 Roads Maintenance Agreement” calls for increasing the $200,000 payment by 5% every five years, which Joe Sedillo, county finance director, said would be a compounded increase.

According to county documents, the company will be paying $210,000 by 2025. By 2030, it will pay $220,500. By 2035, the payment will be $231,525. Leprino will pay $243,101.25 from 2040 to 2044. For the final five years of the bonds, the company will pay $255,256.31.

The new agreement allows the county to use the money for maintenance of any county roads used by dairy trucks, although priority is to be given to roads around the plant. Under the current agreement, the money is designated only for roads around the plant, county officials said.

“Let me just say thanks for everybody who has worked on this,” said Commission Chair Will Cavin. “I know it took a lot when we start talking about the roads that are used by our dairies. Joe (West, Roads Department director) can probably attest there is a lot of damage that gets done to those roads and you guys have to keep up with it. I am glad that Leprino upped their game.”

Chad Cole, assistant superintendent for finance and operations for Roswell Independent School District, acknowledged that there have been discussions with Leprino representatives, but he did not specify if they were about payments.

But Kimberly DeVigil, Leprino communications director, did confirm payment negotiations.

“Leprino Foods is committed to ensuring that the school district receives annual payments-in-lieu-of-taxes associated with its proposal to pursue a new series of Industrial Revenue Bonds from the city of Roswell,” she wrote in an email. “To that end, Leprino has been engaged in productive discussions with officials at the Roswell Independent School District to reach an agreement fixing the annual payment that Leprino will make to the district during the term of the new Industrial Revenue Bonds. The amount in question has not yet been finalized in an agreement, but both Leprino and district officials are working diligently to put forth a proposal that will be presented to the school board for approval at its next regular meeting.”

State law does not require payments to public schools unless the project funded by industrial revenue bonds is an electric-generating facility.

Leprino Foods, the largest private employer in the county with about 580 workers, has said that they intend to use the $150 million to build a new wet whey facility, upgrade the wastewater system and improve, upgrade and re-equip other portions of the plant.

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.