City outlines initial terms for company

Published 12:00 am Saturday, April 5, 2003

Not much is known publicly about the company interested in building a pork-processing operation and corporate headquarters, but the City of Albert Lea and a representative of the company say no set-in-stone agreement would be penned until the city is confident it won’t get burned.

City officials don’t yet know the identity of the principal owners of the company calling itself Premium Pork, LLC, but that would change before the city enters into a formal development agreement if the company chooses Albert Lea, said City Manager Paul Sparks.

Sparks is now working on a preliminary agreement, which he hopes to present to the city council on April 14, that would outline what the city would expect of the company and vice-versa. If the company likes the terms and picks Albert Lea, much more serious negotiations would begin, and the city would require access to financial information about the company to ensure that the development is on sound fiscal footing.

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The preliminary agreement will stipulate the following, according to Sparks:

–The company will be required to have its corporate headquarters in Albert Lea at least for the life of a tax-increment financing (TIF) district, which is likely to be around 15 years, Sparks said. The TIF district would allow the city to pay for development costs, and that money would be paid back by the company’s taxes over the term of the TIF.

–If the company were to break the terms of the agreement, it would be forced to pay any remaining costs from the TIF financing. In addition, if the tax proceeds are not enough to pay the city back for the development costs, the company would be responsible.

–The company would be required to employ at least 400 people when the plant opens, and at least 1,000 within 18 months.

–The city would require a financial guarantee, and the city wouldn’t build any roads, sewers or other utilities for the company until the company spends a greater amount than the city is going to spend on the project.

–The company won’t get a discount on water or sewer rates.

–The base wage at the plant must be at least what Farmland paid at the time of the fire that put the plant out of commission in July 2001. The base wage there was $10.35 per hour at that time, plus benefits.

The company says it is considering three Midwestern cities, including Albert Lea and Elwood, Kan., for a large pork-operation, corporate headquarters and visitor’s center that could employ 2,000 within seven years. Up to 300 of the jobs would be in management or other white-collar positions.

If both sides can agree on the basic conditions and the company chooses Albert Lea, the city would begin negotiating the more complicated and legally binding development agreement. But until that final agreement is reached, either side would have the ability to back out if they don’t like what is happening, Sparks said.

&uot;Definitely before we commit any money, we would have to have a whole lot more information about their financial and things,&uot; Sparks said.

Because the principals are already working in the industry, they are not divulging their names because if their competitors or people with whom they currently work find out who they are, it could hurt them, said Henry Savelkoul, a local attorney hired by the company.

&uot;It would be severely adversely financially impacting them,&uot; Savelkoul said.

This much is known: The company would be brand-new, and run by a group of people who have background in the production and financial areas of the pork business. They call themselves Premium Pork, LLC for now but will choose a different name when they have established themselves. They are not related to a Canadian company called Premium Pork, nor with a group in Nebraska with a similar name, Sparks said.

Savelkoul said the company wants the community to decide whether it wants the plant based on the proposal alone, not on the personalities of the executives.

&uot;The company wants the community to focus on the plant and the project,&uot; Savelkoul said. &uot;If the people aren’t interested in the project, it’s irrelevant who the people are.

&uot;If they are here, they want to be wanted. They want to be citizens. They want it to be long-term.&uot;