Round Lake OKs tax break
ROUND LAKE — The Round Lake City Council Tuesday night approved a $6,500-per-year, three-year tax abatement request from Ferrara Candy Co., as negotiations between the company and AGCO Jackson Operations continue regarding a potential three-year lease of the former Farley & Sather’s Candy Co. facility in Round Lake. The abated amount is approximately 50 percent of what Illinois-based Ferrara sought to be forgiven.
The city hosted the first of what was to be three tax abatement hearings on the request. Other entities include the Round Lake-Brewster School District and Nobles County. The school district has since opted to not conduct a public hearing, which essentially denies the abatement request, while Nobles County commissioners will discuss the matter at their 3 p.m. meeting next Tuesday.
Less than a dozen community residents gathered for Tuesday night’s public hearing in Round Lake. Many cited concerns about the city’s ability to forfeit the maximum abatement — more than $13,200 per year — yet recognized the impact on the community if jobs were created and utilities purchased.
Councilman Dennis Bucholz said the city was presented with a 100 percent tax abatement because “they’re trying to get the most they can possibly get, and we’re trying to get the most we can without giving anything.”
In a community of 380 residents, the city’s loss of more than $13,000 a year in property taxes for the next three years would have an impact.
“What can we afford? My opinion, we can’t afford to just let it not happen,” Bucholz said, adding that the city could make cuts to streets or parks for the next few years due to the lost property tax revenue.
“But we don’t want to cut ourselves,” Councilwoman Donna Watje said. “I don’t want to shut the door on it because we need the business.”
Mayor Doug Knuth spoke of the losses that have already hit the community since Ferrara Pan shuttered the candy packaging facility, including the closure of the bank and the Round Lake High School.
“I sure don’t want to lose another, bigger building in our town,” Knuth said. “It will help everybody out if we get people back in town.”
Over the years, the Farley’s & Sathers complex has contributed much to the community of Round Lake. Just poring over utility bills Tuesday night, it was mentioned that the facility’s electrical usage for the month of October accounted for 19 percent of the electricity used in the city — and that’s with portions of the building not being utilized.
“Right now, we’re lucky if we turn on lights in the whole building,” Councilman Gary Larson said. Because of his employment by Ferrara Candy Co., he abstained from voting on the tax abatement request.
Representatives from both Ferrara and AGCO-Jackson attended Tuesday’s meeting at the Round Lake City Hall.
To address public concerns about the three-year lease, Scott Berglund, senior project manager for AGCO Jackson, said there is a purchase clause in the lease agreement. He also said the Round Lake facility isn’t the only option AGCO has looked at for future growth of its agricultural equipment manufacturing business.
“There were other options in the pipeline, and they’re still there,” Berglund said.
At the same time, he talked about the opportunity the Round Lake facility had in becoming another campus for AGCO. While initial plans are to create 20 new, full-time jobs at Round Lake, Berglund said the space AGCO is looking at is “barely half” of the overall complex.
“The potential is there. The office structure in this building is beautiful,” he said.
AGCO plans to complete up to $250,000 in renovations to the facility — an expense necessary to make the building useable for its needs.
“Do we plan to do other things in here? I would think so — it’s a crapshoot right now,” Berglund said. “There’s a whole lot of potential in this building. What we plan to do to get you 20 jobs is barely half of the potential.”
Berglund said expanding AGCO’s business to Round Lake will help alleviate a bottleneck at the Jackson AGCO campus that developed from its recent expansions.
“We need something,” he said. “We’re going to get something and then we’re going to just keep right on rolling. Our expansion is in the first year of three and a half years of growth. We need this for a little breathing room.”
If AGCO expands to Round Lake, Berglund said it would have a two-shift operation. If any manufacturing would be created inside the facility, it would require substantial electrical upgrades, which would bring additional revenue to the city through utility costs.
One woman in the audience asked why it was necessary to provide tax abatement to a billion-dollar company.
“You’re right, Ferrara is a billion dollar company,” Worthington Regional Economic Development Corp. Manager Abraham Algadi replied. “They can also afford to leave this building to rot, also. You need to consider all facets of this endeavor.
“By walking away from AGCO, you have a chance of having a building sitting there, empty,” he added. “There are consequences to whatever decision you make. They may not even knock on our door again — that’s the danger.”
Algadi said if the city approved tax abatement, it sends a message that the community is “open for business.”