Council Supports Materne Tax Break

The Register Guard | Aug. 14, 2013 6:21 a.m. | Updated: Aug. 14, 2013 1:21 p.m.

Contributed By:

Saul Hubbard

COBURG — The Coburg City Council gave an initial and unanimous nod of approval Tuesday night to the 15-year property tax break that French applesauce producer Materne is seeking to build a new factory on a portion of the former Monaco recreational vehicle site.

The vote followed an unusual joint public hearing with the Lane County Board of Commissioners, which is expected to approve the same general framework next week.

The meat of the negotiations over the key specifics of the deal will come after that, however, and both bodies will need to vote again on a final agreement.

Local leaders had sought to keep the recruitment possibility — dubbed “Project Squeeze” by the state — under wraps, and some of Materne’s plans were revealed officially for the first time Tuesday.

John George, vice president for manufacturing for Materne North America, said the company wants to build a new production facility that, when fully completed, would employ 220 to 240 people. The majority of the jobs would be for machinists operating the plant’s 12 production lines — positions with pay ranging from $12 to $15 an hour, George said.

He added that the company would like to open its new plant next summer and have it operating at full capacity three years later.

George said the company is considering Coburg because of its easy access to the fruits that Materne uses and because of the area’s skilled work force. He added that Materne wants to “partner” with Coburg and is seeking a “reasonable (tax) incentive” to build there.

“We want to make sure that, even with all the positives we find in Coburg … we still have the total package as a business,” he said.

The prospect of landing Materne’s new facility drew significant praise from members of the public who testified Tuesday.

Chris Surbaugh of Coburg described Materne as a potential “terrific get” and “dynamite partner.”

Added Gary Wildish of Santa Clara: “To think about a few (manufacturing) jobs coming back to our county, that’s really exciting.”

Others raised some concerns about the cost to build up the city’s sewer lines to meet Materne’s potential needs and how Materne planned to dispose of its food waste.

Coburg resident Karren Cholewinski said she is concerned about the lack of public information regarding the details of the tax break for Materne and other elements of any final deal.

“There’s some questions that are unanswered,” she said.

The tax break under consideration is Oregon’s Strategic Investment Program, which exempts companies from a significant portion of their annual property tax bills on large capital investments. Businesses pay property taxes only on the first $25 million of property value initially, with the remainder of the company’s property tax bill waived in the first year. Every year thereafter, the taxable portion of a company’s factory grows by 3 percent.

Materne representative George said he couldn’t give the specific amount of the planned investment, but he said it would be “well above (the $25 million threshold) and then some.”

Without an estimate on the investment, the size of the tax break — both yearly and overall — cannot be calculated.

To offset lost property tax revenue under the state program, companies are required to pay an annual “community service fee” to local jurisdictions.

In rural areas, companies must pay $500,000 annually or 25 percent of tax savings, whichever is less, toward those fees.

The state also chips in for strategic investment-designated projects through a wage “gain share.” The state pays local jurisdictions 50 percent of the income taxes generated by the new jobs created by the business benefiting from the investment program.

Part of the final deal will require an agreement from the local jurisdictions on how to split up those two pots of money.

Coburg Mayor Jae Pudewell said the project “would bring significant benefits to the city.”

The site that Materne is eyeing is valued around $11 million, so even with a $25 million cap under the strategic investment program, the city’s tax revenue from the site would more than double, Pudewell said.

And with city residents still paying off the cost of Coburg’s new sewer system, Pudewell said that adding Materne’s facility to the grid could help lessen costs on individual ratepayers.

While he acknowledged that city leaders are “not in a position to provide details” on some aspects of the proposal yet, Pudewell vowed that there would be “many future opportunities for public comment.”

Lane County Commissioner Faye Stewart said the addition of Materne could help lead to a “cluster” of food producers building new facilities in Lane County.

The proposed facility would be Materne’s second and largest in North America, with production 50 percent above that of its other plant in Traverse City, Mich., George said.

Materne has a long history in France but only started selling its applesauce pouches, called GoGo squeeZ, in the United States in 2008. Its pouches are now in Walmart, Target, Costco and Whole Foods, for a total of 40,000 supermarkets nationwide. They are also sold as part of the McDonald’s kids meals, George said, and are available on Alaska Airlines.

George said the company wants to expand the all-organic products it offers, which he said is another reason the Pacific Northwest is a good location for its new plant.

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