AGCO hopes for tax abatement in Round Lake
ROUND LAKE — AGCO Jackson Operations will seek a three-year partial tax abatement from the city of Round Lake, the Round Lake-Brewster School District and Nobles County as it moves forward in talks with Ferrara Candy Co. to lease the former Farley’s & Sathers warehouse in Round Lake.
If AGCO and Ferrara can work out a lease agreement, AGCO plans to create 20 new full-time jobs at the Round Lake facility, including 15 warehousing positions and five low- to mid-level supervisors, according to Worthington Regional Economic Development Corp. Manager Abraham Algadi.
The packaging and warehousing departments that were once home to roughly 175 employees who packaged everything from gummy worms to circus peanuts have sat mostly unused since January 2010, when Farley’s & Sathers shifted its packaging operations to Mexico. Algadi said finding a tenant for the facility has been one of his top priorities since taking the helm of the WREDC.
Algadi has been in talks with AGCO since mid-summer regarding the potential to transform the warehouse facility into a workable area for AGCO. According to a letter he received from Ferrara, the Jackson business is interested in using the site as a warehouse facility with some potential additional uses that benefit AGCO’s manufacturing operations. Neither officials with AGCO Jackson Operations nor Ferrara Pan returned phone messages left by the Daily Globe on Monday.
“It’s exciting anytime you see a world-class manufacturing operation like AGCO interested in having a foothold, or a presence, in Nobles County,” Algadi said. “I think it will demonstrate to the rest of the neighborhood — definitely the region — the viability of small towns and the fact that small towns can play a very important role in contributing to economic development in the region.”
With the creation of 20 new jobs, the hope is that some of those new employees would reside in Round Lake and their children would attend a local school district. That would help that community, which was hit hard by the loss of Farley’s & Sathers.
“Long-term, the hope is that we have a permanent presence for AGCO in Nobles County,” Algadi said.
The tax abatement being requested by AGCO would essentially forgive taxes on the property for three years. During that time AGCO — the manufacturer of Challenger and Massey Ferguson farm implements — would put $200,000 to $250,000 of remodeling work into the buildings, such as installing larger doors and docks to meet its needs, Algadi said.
The facility’s taxes are currently $48,000 annually, with approximately $18,000 of that going to the city of Round Lake; $9,500 to Nobles County and approximately $5,600 to the Round Lake-Brewster School District.
Tax abatement is provided under Minnesota state statue as an option to offer businesses in exchange for job creation, which makes AGCO eligible for the program.
Algadi was quick to point out that the impact to the city, county and school district annually does not equal the total annual taxes on the property. That’s because the state will continue to collect its share of taxes.
“About $13,500 is collected by the state of Minnesota on that building,” Algadi said. “Here we have a state … collecting, regardless of the tax abatement decisions on the local jurisdiction … even though the state says to everybody that we are a proponent of economic development.
“If they really are a proponent of economic development, there should be some trigger somewhere to allow the state to abate its taxes as well, because economic development ends up being a local burden,” he added. “When a city, especially a city the size of Round Lake, agrees to be on the forefront of economic development, the state should follow.”
The Round Lake City Council will be the first to conduct a tax abatement hearing, which is planned for 6:30 p.m. Nov. 26.
Mayor Doug Knuth has talked about the abatement issue briefly with the council, but hesitated to say too much about the talks. He’s more interested, at this time, in hearing from the people of Round Lake and what they want.
Still, seeing the Farley’s & Sathers complex occupied once again is certainly good news.
“I’d be real happy,” Knuth said. “Hopefully (AGCO) ends up buying it, but that’s up to them. It’s just good to have it going again.”
With homes available for purchase in Round Lake, and former employees of Farley’s & Sathers who still haven’t found full-time work since the facility closed, Knuth said if AGCO moves in, “it will be good for the town — it will be good for southwest Minnesota and northwest Iowa again.”
The Nobles County Board of Commissioners will address the tax abatement request at a public hearing at 3 p.m. Dec. 3 in the board room, located on the third floor of the Nobles County Government Center in Worthington.
Administrator Tom Johnson said he briefed commissioners on the request, but the board has not had any discussion on the matter.
“I just hope we can make something happen,” Johnson said. “That building being empty is not good for anyone.”
Johnson has some initial concerns regarding the abatement, such as whether the county may be asked in the future to provide the same for other businesses interested in locating in the county.
“It’s a tough decision that the board is going to have to make,” he said.
Meanwhile, the Round Lake-Brewster School Board will also need to conduct a public hearing. The board planned to set a hearing date at its Monday night meeting, according to school superintendent Ray Hassing. Tentatively, the plan is to conduct the hearing on Dec. 2.
“We hope this project is fully supported by all three jurisdictions because there are benefits, tangible and intangible, to bringing a world-class manufacturer into our midst,” Algadi said.