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VOL. 125 | NO. 205 | Thursday, October 21, 2010

Cargill $72 M PILOT Gets IDB Green Light

Federal Recovery Zone Bond Top Three Get Dramatic Shuffle

By Sarah Baker

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The Industrial Development Board of Memphis and Shelby County has unanimously granted Cargill Inc. a $72 million retention payment-in-lieu-of-taxes (PILOT) to renovate and expand its Presidents Island corn-milling facility.

When Cargill first came to Presidents Island about 35 years ago, it imported 40,000 bushels of corn. The company currently brings in 215,000 – “a lot of raw material to bring in,” facility manager J. J. Zmudzinski said. “There’s not a lot of corn fields in the Mid-South.”

Zmudzinski added Cargill is working on new ways to serve its customers, especially due to the corn-sweetener depletion. In order for the company to begin the process of evaluating how it can become more sustainable and viable, three ducks need to be in a row: reducing manufacturing costs through investments, efficiencies and innovation; improvements to rail infrastructure on the island; and the PILOT.

The eight-year tax break will save Cargill $11.5 million and a total of 370 jobs (250 employees and 120 contracted employees).

Shelby County Mayor Mark Luttrell and Memphis Mayor A C Wharton Jr. were both present at the Wednesday meeting, asking the IDB to allow financial backing for the streamlined process, strengthening Cargill’s stance among competitors.

Wharton addressed the company’s charitable history, calling it “one of our best corporate citizens.”

The discussion proved the issue was not the amount of money needed for Cargill’s expansion, but the amount of money Memphis and Shelby County would lose if the company relocated.

“We want to underscore the critical growing of our economy,” Wharton said. “We want to keep (Cargill) here. We’re on pins and needles working on procedures hoping others don’t go elsewhere.”

In addition, the board decided only one of the three original projects is still in the mix to close on private financing to qualify for federal recovery zone bonds by Dec. 31. There were a total of nine projects seeking a share of the money earlier this year.

Two of the top three withdrew.

Royal Phoenix Development Hotels LLC picked up $3.5 million in Recovery Zone Facility Bonds from Chism Hardy Enterprises LLC in addition to RPD's original amount of $6.97 million.

Poag and McEwen Lifestyle Centers-Memphis LLC received a $6.975 million redistribution of the federal bonds for the Highland Row project next to the University of Memphis campus. It came after Memphis Bioworks Foundation withdrew its Memphis Specialized Laboratory LLC project due to the company's inability to meet the end-of-the-year deadline.

The water bottling plant was one of three projects picked for the $17 million allocation of federal recovery zone facility bonds. It was to get $3.5 million with the Bioworks project and Royal Phoenix Hilton Hotel to get $6.97 million each.

On behalf of Chism Hardy, Carolyn C. Hardy, president and CEO of Hardy Bottling, confirmed a letter to the board, stating the withdrawal of her application for the recovery zone bonds.

“Due to the short time period remaining for the application process, I want to provide as much time as possible for other interested parties with viable projects to utilize these funds,” Hardy said in a letter to Charles Gulotta, IDB executive director.

Hardy’s letter to the IDB comes a week after D.G. Yuengling & Son Inc. announced the Pennsylvania-based company had signed a letter of intent to buy the brewery turned bottling plant in Hickory Hill. Terms of a possible sale are still being negotiated.

Hardy made no reference to Yuengling in her Oct. 4 letter.

PROPERTY SALES 57 280 1,209
MORTGAGES 55 244 916
BUILDING PERMITS 158 699 2,751