Van Buren utility revenue hurt by Allens loss

The loss of Allens Canning Company in Van Buren is not only going to leave scores of locals unemployed, it will also cause a sizable dent in the budget of Van Buren Municipal Utilities, according to the utility's director Steve Dufresne.

Allens is the utility's largest customer, consuming about 900,000 gallons of water per day, he said.

"(Their business) is up to $1 million per year," Dufresne added.

The large amount of water usage amounts for nearly 15% of the utility's business each year, he said.

The company announced Feb. 28 that Van Buren production would be consolidated with an Allens canning operation in Siloam Springs. The move resulted in the loss of 150 jobs in Van Buren.

Losing such a large customer is unlikely to affect projects already in the works for the next few years, such as replacing 115-year-old waterlines in older sections of the city, Dufresne said.

"Those projects have certain amounts of money reserved for (the waterline replacement) already in that sales tax," he said.

The waterline replacement has been a priority of the city, he said, which is why it is likely to move forward, Dufresne said.

"But what it will affect is other projects. That's really the bottom line right now, is it's too early to look at potential rate increases,” he said.

Any potential budgetary impacts will likely take place beginning with the 2014 municipal utilities budget, he added.

The city of Van Buren is likely to face a double-whammy with regards to the closing of Allens, according to Mayor Bob Freeman. Not only will the city's utility take a big hit, but the city itself will take in less taxes.

But while the utility is able to estimate a worst-case scenario, Freeman said the city has been unable to calculate accurate figures.

"That's because when those numbers go in, a lot of it's confidential as far as what their piece is," he said, explaining that the city is not privileged to Allens' specific franchise tax payments. "We can't say there's going to be an impact on franchise fees."

The only bright side, if there is one, for the city is that Allens does not plan to sell or disassemble its Van Buren facility, Freeman said.

"The indications were when they originally talked to us is to leave (the factory) there, mothball it," he said.

By leaving a fully-intact facility in place, the appraised value of the property may maintain its value, thereby not reducing the company's property tax obligations to the city. But Freeman said there are still too many questions and not enough answers.

"I don't know on the property tax what that impact is. There's still a value attached to it," he said.

Dufresne said the impact to the utility and the city will become more clear in the coming months.

"Right now, there's so much that is potential," he said. "But I do know if the scenario I'm looking at (for) 2014, if I take their usage out of the picture, (that is) what I'm going to start budgeting."