Friday, April 19, 2024

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Mebane gives cookie maker incentives it sought for expansion

Mebane’s city council gave a Belgian cookie manufacturer the sweet deal it had sought: $600,000 in new incentives in exchange for a $60 million expansion of the company’s Mebane production facility, the company’s only manufacturing plant in the U.S.

Mebane’s decision may help overcome Lotus Bakeries’ surprise and disappointment when the county’s commissioners last month deadlocked 2-2 over a comparable incentives package from the county, thus rejecting the $600,000 county contribution to the company’s proposed expansion.  It marked the first time that the commissioners had turned down, or failed to approve, an incentives package for an industry relocating to, or expanding in, Alamance County.

Ironically, perhaps, one of the “selling points” to Mebane’s council that may have swayed one or more councilmen to support the incentives was the fact that the company has not actually fulfilled all of the financial investment it had promised from the first two incentives packages granted by the county and city.

On the one hand, the new investment was portrayed as representing more than an 80 percent expansion in the value of the plant – and its tax value for both the county and the city of Mebane, based on the $72.7 originally-estimated value of the plant.  It’s also a 80 percent or more expansion in size, from 118,400 square feet by an additional 103,000 square feet.

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In 2016 and 2018, the company had asked for a total of $1.7 million each from both Mebane and the county to locate its first U.S. manufacturing plant in Mebane and, before it was even completed, to expand the plant. The total of $72.7 million for the original ($55.3 million) investment and the subsequent expansion (valued at $17.4 million) drew $1.7 million in incentives from the county and another $1.7 million from Mebane.

However, during a public hearing on the newest proposal, for a $60 million plant expansion, it was noted that the assessed value of the company’s Mebane plant was well below the $72.7 million projected for the current facility when incentives were granted.  City manager Chris Rollins estimated that the $44.4 million value on the plant meant that the company had fulfilled about 61 percent of its stated investment.

Rollins stressed the county’s calculation for tax value is not based on the expense for building the structure, but rather the value of the finished facility.

While the employment promise of new jobs (60) had been met from the earlier incentives packages, Rollins said, the taxable value of the new plant and equipment ($72.7 million) had not.

As a result, Mebane’s $1.7 million package of incentives over five years (from 2016 and 2018 incentives packages) will, instead, tally to about $1.037 million, more than $600,000 below the stated value.

Thus, some councilmen said after the discussion, they regarded the new $600,000 as no real net cost to the city from what they had anticipated spending.

In fact, having a company fall short of its investment targets in incentives agreements is not unusual, Rollins told his council members.  “We’ve never paid a full incentive” he told his council members who have approved more than a dozen such economic incentives package over the past decade or so.

Council members voted unanimously, 5-0, for the new $600,000 incentives package.

They also agreed to sponsor a second dimension of incentives for the company by agreeing to provide a 5 percent match ($25,000) of a $500,000 state grant that the company is seeking under a “building re-use” grant program.  Rollins noted that even though the “re-use” terminology might seem to imply that grants would apply only to existing structures, the state grant program actually allows grants for new construction, as well.

The proposed 103,000 square foot building expansion would be on the back side of the company’s current footprint in Mebane. (See red outlined portion on graphic.)

Rollins also noted that the city’s $600,000 incentives package for the new expansion will count as the city’s “match” for the state grant, thereby causing no additional out-of-pocket expense to the city.

That vote was also 5-0.

Meanwhile, the city also agreed to waive as much as $100,000 in building permit and inspection fees for the expanded construction at the Lotus plant.

The company is probably best known for its “Biscoff” carmelized cookies, often served on airlines.

During Monday night’s presentation, Bart Vanterwyngen, the head of the company’s Mebane plant, said the company’s U.S. expansion will allow the production of some additional product lines that the company has launched: Biscoff sandwich cookies (with chocolate or vanilla filling), as well as Biscoff-flavored ice cream, and also a fruit roll.

Among Lotus Bakeries’ new offerings, which might be made in Mebane in the expanded production facility, according to the company, are sandwich cookies with various flavors; ice cream; and Bear brand fruit rolls.

Vanterwyngen noted that the company’s board of directors is deciding between whether to establish the additional production facility in the U.S. or back home in Belgium.  Significant “financial downsides” to the U.S choice, Vanterwyngen outlined, are higher sugar prices in the U.S. vs. Europe (as on ongoing production consideration), as well as the high price of steel in the U.S. vs. using concrete supports in Europe for construction.

According to county officials, the company also plans to expand its workforce in Mebane by 86 full-time employees with an average salary of $43,510 a year.

Additional – thus far unspecified – incentives from the state are also expected for the company’s newest expansion.

Read earlier Alamance News coverage of the county commissioners’ consideration of the same incentives package:

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