Gadsden-Etowah County IDA News

(The following articles appeared in The Gadsden Times and are reproduced with permission.)

Tuesday was a good day for the job market in Gadsden, with an announcement of about 200 new jobs and the retention of another 520 jobs.

After Gadsden city officials were given a briefing before the council meeting concerning “Project Freeze,” an industrial development project officials have been working on for more than a year, the council took action to cement a deal with Keystone Foods and Southern Cold Storage for the companies to locate at the former Cameron planned development property at the intersection of Steele Station Road and Airport Road.

Mayor Sherman Guyton noted Alabama lost the Volkswagen plant to Tennessee on Tuesday but said, “Right here in Gadsden, there are some good things happening.” He said the two projects represent an investment of $127 million in Gadsden.

Keystone Foods is in a 75,000-square-foot facility in East Gadsden and employs 520. With the new 184,000-square-foot, fully cooked further processing facility, Keystone will be doubling its capacity here and adding 150 new jobs. Southern Cold Storage will be building a storage and distribution facility here to service the Keystone plant that will add 40 jobs, Keystone plant general manager Victor Turner said.

City officials have been working on the industrial project for about 18 months.

Mike McCain, executive director of the Gadsden-Etowah Industrial Development Authority, said the project initially involved an expansion of Keystone and Southern Cold Storage locating here to service the plant — hence the name “Project Freeze.” He said after Keystone’s current site proved unsuitable for its expansion and a new site began to be considered, Southern Cold Storage officials said they wanted to locate adjacent to the new Keystone facility.

The new Keystone plant and the Southern Cold Storage facility will be on 98 acres at the intersection of Airport Road and Steele Station Road that the city is selling Keystone. Keystone will invest $118 million in the new facility, then will lease a portion of the property to Southern Cold Storage, which will build a $9 million distribution center.

At Tuesday’s meeting, the city, in addition to selling the property, also approved non-education tax abatements for the project. The city is selling Keystone the property for $538,000, which is half of the appraised value.

Keystone Foods has been in Gadsden for 20 years. It is a privately owned food-processing company with headquarters in West Conshohocken, Pa. The plant here primarily processes chicken and a small amount of beef for the restaurant industry. Keystone operates 55 facilities in North America, Europe, the Middle East, Asia and Australia. Turner said some major customers are McDonald’s, Taco Bell and Pizza Hut.

The company produces more than 1.6 billion pounds of poultry and 388 million pounds of beef annually. It serves more than 30,000 restaurants.

City officials stressed that the Keystone expansion retains those jobs while adding jobs. Turner said there is was “real possibility” that the company could have located the expansion elsewhere. He said the company wanted to stay in Gadsden but also looked at other locations. He said the company has a good relationship with Gadsden.

Turner said the plant here annually processes 70 million pounds of chicken and beef. Capacity at the new plant will increase to 120 million to 140 million pounds.

Construction on the Keystone project will begin this month, with completion expected in the fall of 2009, Turner said.

According to information given to the council, the company plans to use the existing facility as a secondary processing plant or to sell it.

Guyton thanked Rainbow City officials for deannexing a portion of the property owned by Gadsden that was in the Rainbow City limits. Guyton said the step was necessary for the project to go forward.

As part of the package to keep the Keystone facility here, the city of Gadsden will four-lane Airport Road, provide traffic signals and extend utility service to the site and construct a waste-water treatment plant. That will cost an estimated $6 million.

State Sen. Larry Means, D-Attalla, announced at the meeting that Gov. Bob Riley and the Alabama Department of Transportation committed $2 million to the project from industrial access funds. He displayed an oversized check for $2 million signifying the state’s commitment to the project.

“To be able to retain jobs and create new jobs, too, is just great,” Means said.

Officials said the four-laning and utility extension will open up additional property for development, creating potential industrial sites for hundreds of jobs near the airport.

Everybody likes a bargain — even industrial recruiters.

And the announcement Tuesday of an expansion of Keystone Foods and its location along with Southern Cold Storage to a site at Steele Station and Airport roads could be considered a “two-for-one” deal, Mike McCain, executive director of the Gadsden-Etowah Industrial Development Authority, said.

In addition to adding about 200 jobs and retaining 520 jobs with a pay back to the city of Gadsden in revenues in about two years, McCain said the project, which had been given the name “Project Freeze,” gives the city something else — more than 500 acres of land ready to market to industry.

As part of the inducement to get Keystone Foods, which has a facility in East Gadsden, to locate a new 185,000-square-foot fully cooked and further processing facility at the intersection of Steele Station Road and Airport Road, incentives given by the city included discounted land.

McCain said the city sold the 98 acres to Keystone for about half what the city paid for the property, or about $5,000 an acre, because other cities the company was considering were offering land for that price. “We had to do that to maintain parity with competing sites,” McCain said.

The project’s allocated portion of the projected cost of four-laning Airport Road to Steele Station Road, installing traffic signals and extending water and sewer lines to the site give it a price tag of about $1.7 million, city officials said.

The city will pay for the infrastructure improvements with state funds and will seek additional grants as well, Mayor Sherman Guyton said. The city also will use existing revenues to fund the improvements. It has a line of credit that can be used.

Utility work will be bid in 60 to 90 days. The city will pay some of the cost of the sewer and water extension along with the Gadsden Water Works and Sewer Board. Road work will be bid in 90 to 120 days and should be completed by next summer.

Keystone officials said construction of the plant should be completed by next fall.

McCain said during a three-year period, the project will generate about $2.3 million for the city in occupational licenses fees — a 2 percent tax on wages — sales taxes and other taxes related to the project. He said the project will pay for itself after two years, based on revenue projections. “It’s a good pay back period,” he said.

McCain said in recruiting industry a project needs to recoup its investment in three years. He said the revenue projections are conservative and do not include “multiplier” effects or tax revenues the IDA cannot calculate. McCain said the financial return the IDA is projecting does not include what will happen to the existing Keystone plant. Keystone officials said if they decide not to operate the old plant, they will assist the IDA in selling it.

Guyton and Frankie Davis, director of governmental affairs and economic development for Gadsden, said the jobs at the two facilities would pay average salaries of more than $31,000 a year plus benefits, which they said would help improve the city’s and the county’s per capita income.

McCain said the lowest salary at Keystone is $9.75 an hour plus benefits. Keystone is adding 150 jobs, and Southern Cold Storage, which will be adjacent to Keystone, will create 40 jobs. Keystone is investing $118 million, and Southern Cold Storage is building a $9 million facility. “These are not minimum-wage jobs,” McCain said.

In making the announcement, Guyton said it was a “new day” for Gadsden. “We now have some industrial property to develop. We have a big plant going out there, and four-laning that road (Airport Road), that’s going to attract other things,” Guyton said.

McCain said he already started marketing property along Airport Road to potential industries. While he has been able to “promise” improvements, industry prospects now will be able to see the work being done or completed. “That has a whole lot more credibility than a promise,” McCain said.

The biggest cost involved in the project is the four-laning of Airport Road and extending water and sewer to the site, which is projected to cost about $6 million. The company wanted the road four-laned because there will be a lot of truck traffic. “We saw it as an opportunity for us to four-lane it to help develop the other property,” Davis said.

He said Keystone wanting to locate there and having new and retained jobs enabled the city to apply to the state for industrial access funds since it would open up additional land for development.

Guyton said state Sen. Larry Means, D-Gadsden, was instrumental in the city getting $2 million from the state toward the cost of the infrastructure improvements. Only $11 million in funding was available statewide, Davis said.

Guyton said if the city had not gotten the funding, the project would have been difficult to afford. Davis said the project was the “catalyst” for the city getting the road four-laned and water and sewer extended to that area. “It would have been very hard to justify the expense to extend that infrastructure without the grant assistance, and this project provided that opportunity,” McCain said.

The 184,000-square-foot plant at the intersection of Airport Road and Steele Station Road is scheduled to be opened by fall 2009, said Keith Lewis, senior vice president USA for Keystone Foods, which announced the $118 million investment in Gadsden on July 15.

He said the present plant in East Gadsden employs 530 people.

“Keystone has had a great relationship with the citizens and the city of Gadsden so much so that we’ve decided to locate another facility here, so we’re very proud of that and appreciate all the hard work that’s gone into making this project happen,” Lewis told a small crowd, including Gadsden and Rainbow City officials, at the site.

Lewis said at full capacity the new plant will employ 680 people, creating 150 new jobs. He said the project is a “win” for the city with new jobs and a “win” for Keystone with additional capacity. The new plant will double the capacity of the existing plant.

Work on the site has been going on for several weeks.

In an interview, Lewis said Keystone’s business has been strong and the company needs additional capacity.

He said the city of Gadsden and the state of Alabama made it a “very attractive” project.

He said the company has had a great relationship with the city since Keystone came here 20 years ago and wanted to stay in the area.

Lewis said the project was an extension of the existing plant in East Gadsden and will have the possibility of additional items being produced at the new facility.

Keystone’s plant in East Gadsden is 75,000 square feet.

Keystone officials have not said what they plan on doing with that facility. According to information given the city Keystone plans to either operate the plant as a secondary processing plant or sell it.

Keystone provides chicken to industrial clients and restaurants.

Lewis said the plant will be a “fully cooked, poultry-processing operation.”

Lewis said the current plant does a small amount of non-poultry product.

Keystone’s customers include McDonald’s and Taco Bell.

Gadsden Mayor Sherman Guyton said the project would save more than 500 existing jobs and create 150 more jobs at Keystone and 40 jobs at Southern Cold Storage, which is going to build an $11 million distribution center adjacent to the Keystone facility.

Guyton said the four-laning of Airport Road to Steele Station Road would help to open up the area for development for Gadsden and Rainbow City.

He thanked Rainbow City for deannexing part of the property so it could be annexed into Gadsden.

Former state Sen. Gerald Dial, executive director of the Alabama Rural Action Commission, which helped provide $2 million in funding to four-lane Airport Road, thanked Keystone Foods for choosing Alabama for the project.

State Sen. Larry Means, D-Attalla, who helped to secure the road funding, said he was surprised local officials were able to get that amount of money for the road project. The four-laning of Airport Road will open up the area for industrial development, he said.

Keystone Foods has been in Gadsden for 20 years. It is a privately owned, food-processing company with headquarters in West Conshohocken, Pa. Keystone operates 55 facilities in North America, Europe, the Middle East, Asia and Australia.

The company produces more than 1.6 billion pounds of poultry and 388 million pounds of beef annually. It serves more than 30,000 restaurants.