The Iowa Economic Development Authority board on August 18 approved $11.5 million in state financial incentives to help build a proposed $240 million pork processing plant in Wright County in north central Iowa. Dozens of protesters were on hand to voice opposition to the board’s decision to grant the tax incentive package to Prestage Farms Inc., a North Carolina-based company. The proposed Iowa facility has been formed as Prestage Foods of Iowa LLC, by the parent firm.
Wright County also considering whether to grant local tax breaks
The county board of supervisors in Wright County on August 22 approved the development agreement enabling Prestage Foods to build the plant near Eagle Grove. The county supervisors are now considering whether to approve $8 million in local tax breaks, which added to the state contribution, would bring the total financial incentive package Prestage would receive from Iowa taxpayers to nearly $20 million.
At the special meeting of the IEDA board on August 18 in Des Moines, that board voted 8 to 1 to approve the approximately $11.5 million in state incentives for the plant to be built. The company was awarded tax benefits from Iowa’s High Quality Jobs Program. The proposed project, if it is built, is expected to create 922 jobs, of which 332 are incentivized by paying a qualifying wage of at least $15.54 per hour.
Prestage plans to buy 40% of hogs from independent farmers
Prestage says it plans to buy 40% of the hogs for the new plant from local, independent farmers in addition to boosting the local economy by paying $1.8 million in taxes annually for the first 10 years the plant is in operation. The rest of the hogs for the processing plant would come from hog feeding operations in Iowa which Prestage already owns, or from farmers who have contracts to feed hogs for Prestage.
The $8 million in local tax breaks Wright County is considering providing would be about 30% of Prestage’s $2.7 million annual property tax bill. The state’s $11.5 million in incentives is contingent upon local approval of Wright County’s incentive package.
The meeting last week in Des Moines was the latest in a number of contentious meetings concerning Prestage’s proposed plant. Protestors at these meetings have voiced environmental concerns, particularly regarding air and water quality.
Mason City earlier this year denied incentives for Prestage
Last week’s approval by the IEDA board for $11.5 million in state incentives came after local officials in Mason City earlier this year denied a proposal for Prestage to build the plant there. At the August 18 meeting at IEDA a protestor help up a poster full of fly tape that she said was filled in a matter of days because of large chicken houses at an egg laying operation near her home in Wright County. Her home is about 2.5 miles from Prestage’s proposed hog processing facility. She said existing problems such as flies would only get worse if the pork plant is allowed to be built.
She said she has no qualms about meatpacking. In 1980 her father earned $20 an hour at a Hormel plant. But with wages around $15 an hour, she said the proposed Prestage pork plant would bring more poverty to Wright County. “We need a quality company, not a company that just brings in quantity,” she said.
To be eligible for tax breaks, firms must meet wage requirements
To qualify for state tax incentives in Iowa, companies must generally pay at least 120% of an areas labor wage, computed using a complicated formula that figures the region’s average wage. However, because Wright County is considered economically distressed, companies there must only pay at the wage of $15.54 per hour to qualify for the state’s High Quality Jobs Program.
IEDA board member David Bernstein said the IEDA board’s scope is limited to economic development. “Our board deals with one thing: economic incentives,” he said. Bernstein, of Sioux City, said other agencies are responsible for environmental and construction regulations. The IEDA is only responsible for ensuring the financial incentives go for projects that meet the Iowa Legislature’s established requirements.
Whether the plant should be allowed to be built is local issue
“We are not the Iowa Department of Natural Resources, we are not the local zoning board, we are not the local city council,” said Bernstein. “We are not the county board of supervisors. This is a local issue—whether or not the plant should be allowed to be built. The proposed plant has now made its way to our level as a state economic development board to be approved. All we are allowed to analyze are the jobs it would create, what the jobs pay and whether or not the benefits meet the state’s threshold requirements for these financial incentives.”