Fort Smith board approves Kraft plan; Movie lounge plan withdrawn

The Fort Smith board of directors unanimously cleared the way Tuesday night for an up to $20 million expansion of the Kraft (Planters Peanuts) operation in Fort Smith.

Although Kraft officials have yet to approve the work, the board unanimously approved three separate ordinances for an industrial revenue bond agreement that would allow Kraft to cut by 50% its property tax bill on the new equipment and addition. The payment in lieu of taxes (PILOT) mechanism would be in place for 12 years, at which time the tax obligation would return to 100%. Kraft is solely responsible for payment of the bonds, but state law requires the governing municipality to approve of the financing option.

Kraft, the world’s second largest food company posted $40.386 billion in revenue in 2009, now employs more than 350 in Fort Smith with an annual payroll of more than $40 million. A 72,000-square-foot warehouse was added at the Fort Smith operation in 2003.

Lisa Grenier, Kraft’s Fort Smith plant manager, said after the board vote that a decision on the expansion from Kraft would likely come within six months.

MOVIE LOUNGE
Board members also learned that a planned movie lounge at 7601 Rogers Ave. (former Circuit City location) has been withdrawn after the investors could not come to an agreement with Dollar Tree.

The withdrawn movie lounge project delays an up to $2.5 million project that would have converted the 44,000-square-foot Circuit City building into a restaurant with three separate movie screens where customers could eat and watch a movie. The project also included a stage area that could hold up to 100 people. Dwight Curry and Lynn Weidman were the investors in the project they hoped to open prior to the 2011 summer.

John Alan Lewis, attorney with the Mitchell Williams firm representing Curry and Weidman, told the board that Dollar Tree would not approve a plan to show movies or operate a restaurant in the adjacent building. All original tenants in the strip mall have the right to reject or approve new tenants.

City Director Cole Goodman questioned Lewis as to why Dollar Tree, which does not sell or rent movies or operate a restaurant, would object. Lewis said he was just the messenger and could not answer for the actions of Dollar Tree. Pushing the point, Goodman asked Lewis if it was reasonable to conclude that Dollar Tree was being unreasonable for not allowing a non-competitive tenant who would draw more traffic to the area.

“That is a fair inference,” Lewis responded.

Lewis told The City Wire that the project is not dead, and Curry and Weidman are looking at other locations.

STATE AMENDMENTS
The board also unanimously approved a resolution supporting Arkansas Constitutional amendment issues No. 2 and No. 3 on the November general election ballot.

Both issues, proposed by the Arkansas Legislature, aim to give the state more weapons in its economic development arsenal, according to this report from Talk Business.

Issue 2 is referred to as the "Interest Rate" amendment. It rolls three concepts into one measure. First, it gives the state legislature permission to change interest rate caps on
government bonds and loans with changing market conditions. Secondly, it eliminates a current below market interest rate cap on consumer loans and sets an interest rate cap of 17% on those loans. And finally, the proposal would allow for energy savings financing. This would allow local government units to float bonds paid back by the savings from energy efficiency.

Deputy City Administrator Ray Gosack said the city staff recommends approval of the resolution. He said the interest rate cap has the real potential of making it harder to sell municipal bonds when investors can buy similar bonds in other states and collect higher interest on their investment.

Issue 3 gives the legislature the authority to determine potential bond issues that might be required if the state has a chance of landing an economic "superproject." The current law mandates that a prospect must invest $500 million and create 500 jobs to use bonding authority. But in the case of Hewlett-Packard, the company wanted to create 1,200 jobs on an investment of $28 million. Economic developers say that other states have an advantage over Arkansas with their recruiting tools and this one is necessary to modernize Arkansas’ chances for success.