Photo courtesy of Lamb Weston
A planned $220 million expansion of Lamb Weston’s french fry making operation in Hermiston will come with a 15-year property tax break.
The Hermiston city council voted unanimously on Monday to offer its first Long Term Rural Enterprise Zone Agreement, in contrast to previous three to five year agreements with DuPont Pioneer Seed, Shearer’s Foods and Eastern Oregon Telecom.
While other enterprise zone agreements have exempted companies from paying anything in property taxes at all, however, the 15 year agreement offered to Lamb Weston includes payments in lieu of property taxes that will equal about 42 percent of what the company would have paid in property taxes. Those payments will total $1 million per year for 15 years, split evenly between the city of Hermiston and Umatilla County.
Assistant city manager Mark Morgan said the city had to work hard to compete with Boardman, Patterson and other regional Lamb Weston facilities for the expansion, which is expected to bring in at least 140 new jobs. The jobs are required to meet or exceed Umatilla County’s average wage — currently about $18 per hour — with a total compensation package worth 130 percent of the average wage.
“It’s safe to say this investment would not occur without the approval of this agreement,” Morgan said.
The Umatilla County Commission has already approved the agreement.
Morgan said the city and county plan to work together to use the $1 million per year from Lamb Weston to invest in a water infrastructure project designed to spur increased housing development in Hermiston, which should in turn create even more jobs in Hermiston as workers previously living in the Tri-Cities instead pay for things like car insurance or doctors’ visits locally. He cited a study done by Washington State University estimating that for every job created in the potato processing industry, 5.4 more jobs are created in the area indirectly.
Councilor John Kirwan said the city has been working for a long time to lay the groundwork for large investments like Lamb Weston’s, and it was exciting to see that work start to pay off.
“We have 140 jobs, but that 140 jobs is not just 140, it’s going to multiply by five,” he said.
Mayor David Drotzmann said the project was an example of how public investment often leads to private investment, and said he was pleased to see that the city and county planned to re-invest the payments by Lamb Weston back into a growth-inducing project instead of just melting it into their general fund.
During the time for public comment on the project, Umatilla County Fire District 1 Chief Scott Stanton congratulated the city on landing such a “big fish” and said he was pleased that the city was growing. However, he said while the city will be getting payments from Lamb Weston in lieu of property taxes, other taxing districts like the fire district will not, creating an added burden for the district without any added revenue.
“There is no funding for public safety in this at all,” he said.
Ric Sherman, who is on the fire board, said the project would create a need for the district to increase staffing of Station 23, nearest Lamb Weston, to 24 hours a day. He and Stanton both urged the city to consider setting aside some of the money paid by Lamb Weston over the next 15 years to help the fire district cover the costs of protecting extra infrastructure and workers.
Drotzmann said those were important points to consider, but overall the agreement was a win for the community.
“These are the things you have to do to stay competitive and over time these things pay off,” he said.