Smithfield Foods cleared a public hurdle on Tuesday on the way to approval of a financing plan for a portion of a new $1.3 billion pork processing plant in Northeast Sioux Falls.
The Sioux Falls City Council unanimously agreed to forward a $90 million tax increment financing deal to a final debate and vote at their next meeting on March 17.
The plan attracted only muted public input and council debate at Carnegie Town Hall and company officials said the TIF was a key element of their decision to stay in Sioux Falls.
“We looked at other places to build this plant and were it not for the TIF economic development incentive, we could not make this investment,” Jim Monroe, Smithfield’s vice president of corporate affairs, said during the meeting.
Tax increment financing allows a city to defer a portion of the increased property taxes on a piece of land to help pay the cost of development. In this case, $90 million of the additional property taxes that will come from construction will first go to help pay for a wastewater treatment plant on the site.
The Smithfield move was cast as a
generational opportunity for Sioux Falls
during an announcement event three weeks ago. The current plant near Falls Park opened in 1909 and its departure would add more than 100 acres to the north end of downtown, transforming the industrial birthplace of the city.
Opposition to the move to Foundation Park has come from residents living in the area, particularly the bedroom community of Crooks but residents did not turn out to comment on Tuesday.
Patrick Lalley / Sioux Falls Live
Several city economic and civic leaders spoke briefly in support of the financial incentive, noting Smithfield’s long history in Sioux Falls and the long-term benefits from the 3,000 jobs and markets for pork producers that it creates.
“As you all know, communities compete for businesses like this. So one of the ways that communities compete is through the TIF. And to get up here and say, ‘Oh, they wouldn’t go.’ I guarantee you, there are other communities competing,” Kent Cutler, a Sioux Falls lawyer, told the council. “This is the one time, the one time, we have to do this.”
There has been increasing skepticism around TIFs in South Dakota, including efforts in the state Legislature to limit their use, casting them as an unnecessary gift to corporate interests.
Patrick Lalley / Sioux Falls Live
In short, why would a profitable international corporation like Smithfield need any help?
“They don’t need the money,” said Josh Travers of Sioux Falls. “I want Smithfield to do this. I think it’s important for our community. I don’t think that we need to roll over for them.”
City councilors were supportive of the TIF, but with some notes of caution.
It’s possible that Smithfield would build a new plant here without the incentive, said Councilor David Barranco. But “calling their bluff” comes with a risk.
“Then Smithfield leaves the state and thousands of local workers lose their jobs,” Barranco said. “Thousands of families lose their economic lifeline. That’s devastating. Meanwhile, regional pork producers see their profit margins eroded, perhaps beyond the point of sustainability. It’s a huge risk. That’s why I’m praying for wisdom.”
Patrick Lalley / Sioux Falls Live
The current site north of Falls Park is envisioned as an extension of downtown Sioux Falls. What that may look like is still in the nascent stages, with at least a few years before Smithfield’s new plant is up and running and years more for demolition and remediation.
It is a multi-pronged operation.
Philanthropist and city benefactor has pledged $50 million through the Sioux Falls Area Community Foundation for demolition and clean up the current location. That money will flow through the Sioux Falls Development Foundation, which will carry out the ultimate reimagining of the property along the Big Sioux River.
Monroe said the company recognizes the concerns of residents in the area of the new plant.
“This will be the most modern facility of its kind in the world,” he said. “Please don’t underestimate the opportunity we have to design a brand new facility with high visual appeal, smart traffic patterns and low environmental impact.”
