RDA Happenings June 2014
Posted on June 1, 2014 – By Emporia RDA
Recently, City Manager Mark McAnarney, Assistant City Manager Jim Witt and I met with Hostess Brands Executive Vice Presi-dent Mike Cramer and Vice President of Human Resources Matt Hall.
The meeting highlighted what Hostess Brands was able to accomplish in the first year after purchasing and restarting the Hostess Brands cake business. They Emporia plant is the “flag ship” plant with more than 350 full-time workers. It was awarded plant of the year, which meant a bonus check for all the full-time Emporia Hostess Brands employees. In addition, effective June 1st the full-time wages for Hostess employees were increased.
The $30 million Hostess Brands expansion project which includes a 36,000 sq. ft. warehouse and new autobake line will be complet-ed and operational in July or early August.
In early June the Emporia plant started baking coffee cake again. The demand for all the Hostess Brands cake product is increasing, the potential for more capital investment and job growth in Emporia is high.
The highlight of the tour was a box of coffee cake from Hostess Brands that I shared at the Trusler Business Center. Those coffee cakes are good good.
We have been working with Detroit Diesel Remanufacturing (DDR) to retain their presence in Emporia. DDR owns a facility on Overlander in west Emporia, leases space in the Sunset Warehouse & Storage (formerly the Didde Web Press building) south east on Graphic Arts Road and 18th Avenue and leases space at the Kansas Motor Freight building south of DDR.
Most of our local manufacturers – Better Life Technology (BLT), Cargill Pet Food, Hopkins Manufacturing and Simmons Pet Food are growing and need short-term and long-term warehouse space for storage of unfinished and finished goods. As a result of supply and demand, warehouse space in Emporia is at a premium. DDR was given notice their leased spaced needed to be vacated before the end of the year.
DDR has similar operations in Ohio and Utah. Their Utah facility has excess space. DDR management will not build a new ware-house and was only willing to enter into a short-term lease on a building. In order to retain the DDR 118 full-time jobs and nearly $5 million annual payroll we needed to develop a plan to construct a new warehouse building and lease it to DDR. It would either be a private developer or an economic development corporation.
The RDA and Emporia Enterprises the economic development land management company began researching the options utilizing existing sites in Industrial Park II or III, which Emporia Enterprises owns, to construct a warehouse building and lease to DDR.
At the same time we were visiting with local private developers to consider constructing the building and lease it to DDR. We need-ed to be creative in mitigating risk and cost of the building at the same time passing on those cost savings to DDR in a cost-effective lease.
A private developer is willing to commit to constructing a new 80,000 sq. ft. warehouse building on a 24-acre tract across Overland-er Street to the west from the current facility. Emporia Enterprises purchased the property and is selling the property on a land con-tract with minimal payments the first six years and a balloon payment at the end of the seventh year to the developer.
The developer plans to construct and lease the warehouse to DDR. If DDR signs a seven-year triple net lease, the City of Emporia issues taxable Industrial Revenue Bonds (IRB’s) which would provide a ten-year 100% property tax abatement on the new building and a sales tax exemption on the building materials. The tax abatement and sales tax exemption cost savings would be passed on in the 7-year lease.
In addition, the RDA Board of Directors recommended to the Emporia City Commission that if DDR chooses to purchase the ware-house from the developer during the terms of the seven-year lease and provided the employment level is maintained and grown, then the land cost would be forgiven in the cost of the warehouse.
The RDA is focused on retention, expansion and recruitment of quality jobs for our region. We work with those businesses that will bring new dollars into our local economy. We are close to finalizing the warehouse project with a private developer, the City of Em-poria, Emporia Enterprises and the RDA retaining quality jobs.