How a tax incentive could bring sustainable packaging to Oscar Mayer's Columbia plant

As Kraft-Heinz works to close out its first Chapter 100 tax abatement project, it is preparing for another.

Kraft-Heinz first sought Chapter 100 bonds in 2015 for facility expansion. This next project is more focused on equipment upgrades, a statement from a Kraft-Heinz spokesperson notes.

"At Kraft Heinz, we aim to make all our packaging globally recyclable, reusable, or compostable by 2025," the statement read, expressing that while most of the company's packaging is sustainable, some still use rigid plastic or plastic films. "We need to convert this remaining portion of our portfolio to more sustainable options, including evaluating new materials for Oscar Mayer Hot Dogs packaging."

The Kraft-Heinz plant in Columbia creates and packages Oscar Mayer products, including hot dogs. Chapter 100 bonds is one incentive program under exploration by Kraft-Heinz to offset the large investment costs to upgrade the Columbia plant, the statement notes.

"As is standard in this process, we’re meeting with local taxing jurisdictions for further discussions and consideration," a spokesperson said in the statement.

Kraft-Heinz already has made presentations to the Columbia City Council, Columbia Public Schools, Boone County Family Resources, Daniel Boone Regional Library board, and is being assisted by Regional Economic Development Inc. throughout the Chapter 100 process. It likely will be sometime in early June when Kraft-Heinz makes a presentation to the Boone County Commission.

Kraft-Heinz is expected to finish its 2015 facility expansion Chapter 100 bond process by the end of the year, meaning a return to 100% property tax payments in 2025. The equipment upgrade bonds likely will not go into effect until sometime in 2025, so there will not be an overlap of property tax abatements, said Matt Williams, Simmons Bank market president and REDI board member. Property tax abatements can apply to both real estate (facilities) and personal property (the equipment inside facilities) at industrial and manufacturing sites.

"I really don't think (the abatements) will overlap. I have a hard time believing we would get all the process done with the performance agreement and the bond council this year," Williams said about equipment upgrade project. "... We view this as good opportunity. It's a need initiative by the company and Kraft-Heinz is a really good corporate citizen.

"They do a lot of their hiring with City of Refuge. They have a real diverse workforce and they do a lot of things in the community. We want to do everything we can to keep them here."

Chapter 100 was critical in the Kraft-Heinz plant expansion from 2015 and Chapter 100 is critical in much the same way for equipment upgrades, Williams said.

"They are evaluating whether or not they should do this with one of their copackers that already has the sustainability materials," he said, noting a Wall Street Journal article of Kraft-Heinz's interest in selling the Oscar Mayer brand. "That article underscores why it is important for us to do everything we can (in providing incentives), not just local, but state and federal that are a part of this too to keep the jobs here."

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The proposed 75% tax abatement is for a period of 10 years and if certain requirements are not met in a performance agreement with the county, that abatement could be reduced to 50%, 25% or canceled altogether. One aspect of performance agreements generally include employment numbers.

There are other factors which could cancel the abatement, Williams said. If Kraft-Heinz does end up selling Oscar Mayer, the hope is the plant still would remain in Columbia, he added.

"If they were to cease operations in Columbia, the abatement ends (in the year they close) and everything goes back on full tax rolls," Williams said.

From 2022: These companies received Boone County Chapter 100 tax breaks. EquipmentShare could be next

Charles Dunlap covers local government, community stories and other general subjects for the Tribune. You can reach him at cdunlap@columbiatribune.com or @CD_CDT on Twitter. Subscribe to support vital local journalism.

This article originally appeared on Columbia Daily Tribune: Tax incentive could bring new equipment to Columbia Kraft-Heinz plant