Gerber expansion could add 90 jobs in Fort Smith

More jobs are expected to come to Fort Smith thanks to continued expansion at the Gerber plant on the city's north side. In fact, the company, which is currently expanding its operations to add a cereal line in Fort Smith, asked for and was granted by the Fort Smith Board of Directors on Tuesday night (June 4) an amendment to a resolution passed in 2010 providing the company industrial development revenue bonds.

The original bond package totaled $90 million while the project taking place at Gerber has grown so much, the company requested an additional $60 million, bringing the total bonds issued to $150 million.

According to City Administrator Ray Gosack, the city issues the bonds, but will not be on the hook should Gerber, a well established company that has been in Fort Smith for decades, default on their bond payments.

"The bonds are issued by the city of Fort Smith, but the city is not responsible for the city of the bonds. Gerber Products will be solely responsible for repayment of the bonds," Gosack said. "In fact, Gerber will buy the bonds and repay itself."

The purpose of the bonds is not necessarily about financing, he said, though it does still involve saving Gerber money in the long run.

"The advantage of the bonds is not the financing mechanism itself, its that the financing mechanism brings a reduction in property taxes on the value of the plant and the equipment that is financed by the industrial revenue bonds. So the principal purpose of using industrial revenue bonds is to provide an incentive of a property tax reduction to encourage Gerber to make the investment in its Fort Smith plant."

The new cereal line, which was originally supposed to employ a few dozen employees once completed, is now projected to employee as many as 90 workers, Gosack said. And the jobs will not be low-paying.

"They're fairly high-paying jobs for the manufacturing sector," he said, without going into much detail. "They're very skilled jobs in the manufacturing plant, so they tend to pay a little more than the typical manufacturing jobs do."

With the financing now in place, Gosack said construction should be completed within months, allowing the company to quickly staff the new operation and start rolling product out of the plant.

A representative from Gerber was not at Tuesday's meeting and a call to the company was not returned after hours.

The type of bonds issued by the city for Gerber are similar to other projects in town, Gosack said.

"The Board of Directors has always been supportive of issuing industrial revenue bonds for various projects in Fort Smith, so Gerber is not the first project and we have done multiple issuances for Gerber. They did a plant modernization a few years ago and we issued industrial revenue bonds for that plant investment, as well, that was done probably six or eight years ago. And we've also done industrial revenue bonds for Graphic Packaging, for Mars Pet Care and for Mitsubishi."

With the exception of Mitsubishi, which mothballed its planned Chaffee Crossing plant following patent issues, Gosack said the city has had pretty good luck with these types of bond packages.

"It's one of the few economic development incentives that city governments have to offer and it is available under the Arkansas Constitution only for manufacturing facilities in the state. It's an incentive we use to encourage manufacturing investment in our community, but there's obviously other types of economic development that isn't manufacturing and so we have some other incentives that we can use for non-manufacturing investments made in the community."

Other city leaders expressed joy at the continued expansion at Gerber.

"This is really good news. It's a great opportunity for our city," Mayor Sandy Sanders told the Board.

Vice Mayor Kevin Settle echoed those sentiments, saying the bond issuance was a great opportunity for "the city to help companies retain jobs we have here and grow. …It says a lot that they want to invest in our city. This is a great, great thing for our city and I'm very happy that Gerber is investing in our city."

In other business, the Board:
• Approved a resolution affirming the action of the Planning Commission, which denied an appeal of an administrative determination regard Section 27-704-4 of the Unified Development Ordinance. The Commission had previously denied to approve sign permits for RAM Outdoor Advertising at 5700 Rogers Avenue and 7310 Rogers Avenue; and
• Approved an ordinance re-zoning 7700 Chad Colley Boulevard from "not zoned" to Industrial Light (I-1). The address is the location of Umarex and the rezoning would allow the company to expand its present facility; and
• Approved an ordinance re-zoning 8100 Rogers avenue from Transitional (T) to Commercial Heavy (C-5).
• Approved an ordinance amending the 2009 Unified Development Ordinance. The changes were administrative and editorial in nature; and
• Approved a resolution accepting special warranty deeds from Sebastian County for property associated with the aquatics and softball field projects at Ben Geren Regional Park; and
• Approved a resolution authorizing execution of an amendment to the donation agreement associated with Harry E. Kelley Park. The agreement will remove restrictions to the number of days in which the City can lease the park, it will allow for-profit promoters to use the facilities of the park and would allow alcohol sales and consumption at the park; and
• Approved a resolution accepting the project as complete and authorizing final payment to Forsgren, Inc. for the Sunnymede Basic Neighborhood and Ramsey Tributary Sewer Improvements at a cost of $117,987.29 to be paid from budeted 2012 sales and use tax bonds.