‘Convoluted’ legal description slows Tyson TIF plans

Pork powerhouse in line for tax credits, rebates on $44 million Perry expansion

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Errors in the legal description of the land owned by Tyson Fresh Meats near Perry could slow the financing timeline on the company's $44 million expansion.

A “confusing” and “problematic” legal description of the land owned by Tyson Fresh Meats near Perry put a wrinkle in the company’s expansion timeline last week when the Dallas County Board of Supervisors postponed scheduling a public hearing on its three-handed Economic Devlopment Assistance Contract with Tyson and the Iowa Economic Development Authority (IEDA).

The contract provides state tax credits and county property tax rebates to the pork powerhouse, which is sinking almost $44 million into an expansion of its Perry plant, including about $10 million for building construction, $27.6 million for manufacturing machinery and equipment and $6.2 million for other machinery and equipment.

In a description of the project, Tyson Fresh Meats said it “will expand its existing facility to construct a new chilling facility that drives the internal carcass temperatures down substantially faster than the current system and improves product bacteria log counts, thereby improving meat quality.”

The expansion’s target completion date is May 31, 2021.

With revenues of $40 billion in 2018, Tyson Foods Inc. is the world’s second-largest processor and marketer of meat and is the largest exporter of beef in the U.S. The Tyson Fresh Meats plant near Perry is the second-largest employer in Dallas County after Wells Fargo.

As outlined in the Economic Development Assistance Contract, the IEDA awarded Tyson Fresh Meats about $675,000 in tax credits last May as part of the IEDA’s High Quality Jobs Program (HQJP). Tyson is also eligible to apply for another $375,000 in investment tax credits and to request a refund of about $300,000 in state sales, service and use taxes, according to the contract.

No new jobs will be created in the expansion but in order to qualify for the HQJP tax credits, Tyson is obliged to continue employing its current number of 1,368 workers. At least 86 of those positions — 6 percent of the workforce — will be paid the Qualifying Laborshed Wage of at least $29.82 an hour. The average hourly wage across all 1,368 Tyson Fresh Meats employees is $17.96 an hour.

Among the contract’s numerous covenants, Tyson is bound to “only employ individuals legally authorized to work in this state,” and the IEDA is entitled to “recapture” all or part of its tax credits if Tyson “is found to employ individuals not legally authorized to work in the state of Iowa.”

The Economic Development Assistance Contract also provides for “local financial assistance” from the “Community,” which is represented in the contract by the Dallas County Board of Supervisors. The board voted Jan. 8 to enter into the contact with Tyson Fresh Meats and the IEDA.

Greater Dallas County Development Alliance Executive Director Linda Wunsch helped to guide the supervisors to their Jan. 8 approval of  a contract with Tyson Fresh Meats and the IEDA.

At the county level, the Tyson deal has been facilitated by Greater Dallas County Development Alliance Executive Director Linda Wunsch, who updated the supervisors on the developer agreement several times in recent months.

At the Dec. 8 supervisors meeting, Wunsch and John Danos of the Dorsey and Whitney law firm reviewed the procedures for creating an urban renewal area (URA) and passing a tax increment financing (TIF) ordinance.

As Tyson’s local government partner, Dallas County will use TIF tax rebates as the “Community” investment. Tyson will enjoy a property tax holiday of about $575,000 over five years. The estimated rebate amount is based upon current projections of taxable valuation — for purposes of property taxation — to be added by the new building and equipment.

Tuesday’s trouble arose in the legal description of more than 10 parcels owned by IBP, which will become the URA.

“The TIF will be rejected if this (legal description) is put in,” Dallas County Deputy Auditor Jared Higley told the supervisors. “There’s parcels missing. They cross lines. There’s duplication. We’ve tried to map it, and there’s sections missing. It’s problematic.”

Higley further specified some of the problems with the description, including the omission of a parcel fronting the North Raccoon River.

“It’s more the issue with how the river has changed,” he said, “how the parcels have been cut out of various tracts. This legal description, as you’ve noticed, is copied and pasted from a deed from at least 30 years ago. It’s actually the same legal description repeated twice, but they contradict one another. It does cut through tax parcels. One of them includes a road, and one of them doesn’t.”

Dallas County Auditor Julia Helm supported Higley’s claim.

“This area has been problematic in the past,” Helm said. “You remember a couple of years ago, working on some bike trail stuff for Dallas County, where we had to have an abstracter involved to resolve that. We would always like the URA to be as clean as possible before the TIF happens.”

Apparently puzzled, the supervisors turned their furrowed brows toward Dallas County Attorney Charles Sinnard for counsel.

“I think you would want them to rewrite it,” Sinnard said. “I think you need a cleaner legal description.”

Higley recommended a survey of the property. He noted only attorneys, abstraters and surveyors are authorized to write legal descriptions.

“A URA’s legal description can be terrible all day long, and it doesn’t affect the taxation,” Higley said, “but when a TIF ordinance goes through, and it tells me to divide revenue, it has the follow the parcel lines. It has to follow the lot lines. It can’t do this,” he said, pointing to a problem on the map of the proposed URA. “So since most TIF ordinances follow the boundary of a URA, it’s in our best interest, too, that the URA be correct because if they choose to copy and paste that to the TIF ordinace, it will slow down the process.”

“Are you trying to say they used faulty paste?” Supervisor Kim Chapman quipped before withdrawing his second to Supervisor Brad Golightly’s motion to set a public hearing on the board’s action.

“Couldn’t they just do a portion of the land they own?” said Golightly.

Dallas County Operations Director and interim Human Resources Director Rob Tietz said a smaller URA footprint was one option.

“The project, as you remember, is for an addition of so many square feet,” Tietz said, “and all we are doing is TIFing that addition and leaving that to Tyson on a sliding scale over five years a percentage of the taxes that we collect on the new valuation. There’s no reason to make it — well, you can make a URA as big as you want, but the TIF in and of itself will just be for the building, the addition. So you can get rid of all the other parcels.”

Golightly asked what was “the worst thing that could happen if this went through like that and that river swail was an unknown? What does that really mean?”

Higley’s answer was unambiguous.

“If they copy and paste that legal to a TIF ordinance, I will reject it,” he said. “There’s no way for me to go to divide revenue on a parcel that has been split because I have no idea how many acres are up here versus down here or how the value is assigned.”

“That’s why we’re bringing it up now,” Helm told the supervisors. “We just want to make you aware because it’s happened in the past where then you have to go back and do all your public hearings again. We don’t want this to happen with this project. That’s the only reason we’re bringing it up.”

The expansion is the second large investment in the Perry facility made by Tyson Fresh Meats in recent years. The company completed a $23 million upgrade to the site’s wastewater treatment plant in 2017.

Suresh Kumar, an environmental engineer with the Iowa Department of Natural Resources, said Tyson Fresh Meats was “very proactive” in using “the latest wastewater treatment technology” in the upgrade.

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