By Jason McFarley, Truth Staff
ELKHART -- County officials committed Friday to saving a baked-goods maker some dough.
The Elkhart County Redevelopment Commission hopes the $250,000 incentive will sweeten the pot for Allen Foods Inc. to build a $47 million George Weston Bakeries Inc. plant north of Elkhart. The goal also is to make the project eligible for state government aid.
Specifics of the deal will be worked out early next year, but the savings would likely reach Allen Foods through an elaborate agreement involving a special tax arrangement between the county and local developers of the project.
The commission discussed a deal that would probably work like this:
* The county would slightly extend the boundaries of its northeast-side Tax Incremental Financing district to take in the Remington South Industrial Park site being eyed for the project. In general, a TIF district captures the increases in property taxes that occur from development in a designated area and uses the money for improvements such as landscaping and utilities in that area.
* The county would direct TIF income each year to developer Wagner Land Development until the Elkhart firm has recouped up to $250,000 of the money it put into the project.
* The developer would agree up front to pass along the $250,000 benefit to Allen Foods, likely by reducing the asking price for the land along C.R. 6 in Osolo Township.
The deal, county officials said, would demonstrate the county's interest in a manufacturing plant that may create 100 jobs and would show local government assistance with the project, a pre-requisite for incentives Allen Foods is seeking from state economic officials.
Rob Dunlop of the development company said he would be pleased with the arrangement, and he speculated that Allen Foods officials, who did not attend the Friday meeting, would be as well.
"I think it's a significant attempt on the county's part," he said. "In my opinion, I think it would be well-received" by Allen Foods.
An official with the food distributor did not immediately return a call Friday seeking comment.
Under an agreement begun in 1999 with the county, Wagner Land Development has been receiving TIF income to recoup development costs associated with the northern part of the industrial park. The agreement, which expires at the end of the year, lets the developer recover as much as $800,000 -- the amount it gave the county for infrastructure improvements in that part of the park.
By the end of 2004, the arrangement had only returned about $70,000 to the developer, said Craig Buche, attorney for the redevelopment commission. This year, the developer may get about $30,000, he said.
Dunlop said his company never expected to recoup the full $800,000 at stake in the existing deal. He said money generated by the new deal -- involving the southern part of the park, where the baked-goods plant is proposed -- would pay for improvements such as landscaping and addition of signs.
Early construction of the plant has begun, though that doesn't guarantee the project will proceed here. The county was reluctant to approve a tax abatement but hopes the incentive now on the table will be attractive to project officials.
Jim Hartman, a member of the redevelopment commission and Elkhart County Council, asked whether the incentive would be enough for the project to qualify for state aid.
Attorney Buche said yes, it would be. One state official has told him that $250,000 would be considered a "significant local contribution," Buche said, as long as the state can determine that developers pass along the benefit to the company seeking aid, Allen Foods.
Some county officials want the city of Elkhart to pitch in as well by reducing or eliminating costs for the project to connect to municipal sewer and water utilities. The so-called compact fees amount to 75 percent of what the company would pay in city property taxes.
"It's only fair that all levels of government be supportive and involved in this project," Hartman said, adding that city residents may benefit from the jobs it would create. "I don't think dropping the fees is unreasonable."
For the city's part, Mayor Dave Miller, who did not attend the meeting, said later that he is exploring that step but it would take City Council approval.
Miller said the fees were established to encourage development in the city, rather than around it. He acknowledged that hasn't happened as planned.
"We need to look at that to see whether it's accomplishing what it was intended to accomplish," he said.
County Commissioner Mike Yoder said he would encourage the city to forgo the fees.
"Either they'll support this or they won't," he said of city officials. "If they don't, then that'll affect how we work with them in the future."
County administrator Tom Byers said the city has time to weigh the compact-fee issue or any other incentive it might offer.
"Whether the city comes on board or not, somebody needed to step forward with a package that lets (project officials) deal with the state," Byers said.
If the project proceeds here, developer Dunlop said, Allen Foods expects the plant to be running by fall 2006.