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Leprino receives approval for more bonds

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Leprino Foods plans up to $60 million more in improvements to its Omaha Road plant, with the city officially authorizing a second series of industrial revenue bonds. (Lisa Dunlap Photo)

Copyright © 2021 Roswell Daily Record

Leprino Foods Co. is authorized to issue another round of industrial revenue bonds for up to $60 million to pay for more improvements to its plant on Omaha Road.

The company also has agreed to make payments in lieu of taxes, or PILT payments, to the city of Roswell for this second series of bonds.

The Roswell City Council voted unanimously, 10-0, on June 10 for Ordinance 21-06 that approves the sale of the Series 2021B bonds.

The vote occurred after a public hearing that garnered no objections. A letter of support was provided by the Roswell-Chaves County Economic Development Corp.

“This bond that we are voting on — that you guys are voting on today — facilitates more capital improvements on the plant,” said Dave Fowler, vice president of tax and enterprise risk management for the global corporation, which manufactures mozzarella cheese and dairy by-products. “As you can imagine, the plant is very capital intensive. In other words, there is a lot of equipment there and it wears out.”

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City Attorney Parker Patterson reassured city councilors, as he has done in prior meetings, that the city would never be required to repay the bonds, even if the company does not. Industrial revenue bonds give companies financial advantages by having the bond technically issued by municipalities or counties, but the government entities do not have a financial obligation related to the bonds.

“The city is never on the hook to pay it back,” Patterson said. “That is totally up to the company to do that.”

The company also pays all the costs associated with the bond sale.

Leprino is one of the largest privately-owned companies in the world, with annual revenues estimated at about $3.2 billion, according to the website of Forbes Magazine. It has corporate offices in Denver, Colorado, nine plants and manufacturing facilities, and two sales and joint venture offices in Asia. Its Roswell plant just southeast of the city limits on 5600 Omaha Road employs about 600 people. The company has been operating at that site for abut 28 years, with the plant being about 30 years old.

In July 2019, the Roswell City Council approved two bond sales, Series 2019A for up to $90 million and Series 2019B for up to $60 million.

The company and its bond consultants sold the first tranche and used the money to build a new wet whey facility and a freezer. Now that most of that work has been completed, it is ready for additional improvements, which are expected to include upgrades to its wastewater systems and utilities.

Don Monnheimer of Rodey Law Firm in Albuquerque, bond counsel for Leprino, had indicated at prior city meetings this year that the new ordinance was needed to ensure compliance with state law, as the previous ordinance referred to “2019 Series” bonds.

Prior agreements that Leprino made with Chaves County and the Roswell Independent School District regarding PILT payments will remain in effect. The new PILT agreement with the city also will begin after the new bonds are sold.

Those payments are negotiated because industrial revenue bonds transfer the property of the plant to the local government until repayment. While the plant is technically owned by the local government, the company does not pay property taxes and is exempt from certain other taxes as well.

Under the PILT agreements, the company will pay $3.06 million to the school district and $6.6 million to Chaves County from 2020 to 2049.

The county intends to use the money to maintain county roads used by trucks servicing Leprino, with priority given to the roads closest to the plant. The school district indicated that it would use the funds to pay the annual salary and benefits for a technical education teacher.

City Manager Joe Neeb said that the city will start to receive PILT payments once the bonds are sold. “Leprino has agreed to provide $2 million in PILT to the City of Roswell through the Phase 2 IRB,” he said.

The city PILT funds will be used for a “Leprino Farmland Experience” at Spring River Zoo, Neeb said.

He said the project, part of the Spring River Zoo’s master plan, will involve designing and building a barn-like structure that will be used for educational events to teach about the importance of farm animals. An area where visitors could interact with animals is also planned for the project.

“One of the other aspects that is exciting for Roswell is the inclusion of an educational component meant to show the cycle of farming and how it impacts our lives — from the growing of crops to the feeding of the farm animals to the development of products, including cheese, used by people, as well as naturally refertilizing the soil to grow more crops,” Neeb said.

He said the city’s goal is to begin the design phase for the project during the 2021-22 fiscal year.

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.