Home News Local News Planned bond sale to continue Leprino plant upgrades

Planned bond sale to continue Leprino plant upgrades

The Roswell plant for Leprino Foods is planning for its second release of previously approved industrial revenue bonds issued through the city of Roswell. (Lisa Dunlap Photo)

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Leprino Foods Co. is preparing to release its second series of industrial revenue bonds that will be used to continue upgrades and improvements to its manufacturing plant on Omaha Road.

The Roswell City Council will consider holding a public hearing about the issuance of up to $60 million in bonds for the benefit of the global food company. Leprino has been manufacturing cheese and dairy by-products at the plant just outside the city limits for about 28 years.

The item came before the Roswell City Council Legal Committee Thursday. The group voted 3-0 to forward the matter to the entire city council for its consideration at its May meeting.

The public hearing, which would occur June 10 at the earliest, has to be held before the city council could approve an ordinance authorizing the sale of the 30-year bonds.

The action is basically one to ensure compliance with state laws, said Don Monnheimer, bond counsel for the company.

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The city council previously held a public hearing and approved an ordinance in July 2019 allowing the company to make two bond sales, 2019 Series A for up to $90 million and 2019 Series B for up to $60 million.

While the Series A sale occurred and Leprino began its work on the plant, the company is now ready to use the funds from Series B, what company officials refer to as the second tranche of bond funds.

“To make sure the bonds for 2021 Series B are fully authorized, we need to come back under state law to have an ordinance that specifically authorize these Series 2021 B bonds,” said Monnheimer of the Rodey Law Firm based in Albuquerque.

Industrial revenue bonds are meant to spur economic development. Companies transfer their property to local governments, which are the issuers of the bonds. The businesses are then free from property taxes and certain other types of taxes while they are repaying the bonds. Companies then lease back the property from the local governments, with those funds used to repay the bonds and interest.

Because governmental entities are then out some funds while the property is off the tax rolls, companies often make payments in lieu of taxes, PILT or PILOT payments.

Leprino previously made agreements with the Roswell Independent School District and Chaves County to pay $9.86 million over 30 years.

A school district administrator indicated that the district would use its $3.06 million to pay the annual salary and benefits for a technical education teacher. County officials said its $6.8 million would be used to maintain county roads that are used by trucks servicing Leprino, with priority given to the roads close to the plant at 5600 Omaha Road.

Monnheimer said that negotiations are still occurring regarding the payments for the Series B bonds, and he noted that some of the plant property that was taken off the tax rolls in 2019 will now be coming back onto the property tax roles.

Leprino used the Series A funds to build a new wet whey facility and a freezer. It had indicated previously that it intended for the other funds to be used for many different improvements to the facility, including upgrades of its wastewater systems and utilities.

“The facility they have currently is getting close to 30 years in age,” Monnheimer said. “There is a lot of work they are doing to update and keep the facility current and competitive within their markets.”

Monnheimer and City Attorney Parker Patterson both stressed that, by state law, the city would not be obligated to repay the bonds or interest due even if Leprino does not pay.

Leprino Foods is ranked as the 132nd largest privately held company in the United States by Forbes Media, which put its 2019 revenues at about $3.2 billion. It has corporate offices in Denver, Colorado, nine plants and manufacturing facilities, and two sales and joint venture offices in Asia. Its Roswell plant employs about 600 people.

Lisa Dunlap can be reached at 575-622-7710, ext. 351, or at reporter02@rdrnews.com.

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