by David Anderson
The members of the Kinston City Council unanimously approved an agreement Monday which would require the city to share the financial liability for any unfilled jobs at the Smithfield Packing Co.’s expanded Kinston plant.
The city would have to reimburse Smithfield for any of the 330 promised jobs it does not fill as part of a larger agreement to obtain grants to expand the sewer capacity of the U.S. 70 West Industrial Park.
“The sewer line is a direct benefit to the city,” City Manager Tony Sears told the council.
The City Council held a special meeting Monday to vote on the agreement after city leaders decided during their Aug. 20 meeting they did not have enough information to make a decision then.
Rhonda Barwick, Public Services director, said the expansion — which is estimated to cost $4.3 million — would add 1.5 million gallons per day of sewer capacity to serve the needs of Smithfield and any future tenants of the industrial park.
“We would have a site that was ready to go with water and sewer capabilities,” Sears said.
Councilman Sammy Aiken raised concerns the agreement with Smithfield would be similar to the surprise city and county officials got in early 2010 when it was announced they would have the shoulder the cost of building an extra natural gas line to serve Sanderson Farms’ processing plant, also part of the U.S. 70 West Industrial Park.
That project ultimately cost $4.13 million, with grants covering $2.5 million of the price tag — the city and county picked up $1.5 million and Sanderson and Piedmont Natural Gas, the gas provider, covered the remainder.
The city and county had agreed to provide utilities to Sanderson as part of their incentive agreements with the company.
Sears said the agreement with Smithfield was not similar, in that “this is a utility the city of Kinston owns and operates.”
Kinston officials have discussed expanding the sewer capacity for the industrial park since 2004, but it has been difficult to obtain grants until now.
City staffers have identified grants from the N.C. Rural Center, the N.C. Department of Commerce Industrial Development Fund and the Golden LEAF Foundation, with a combined value of $2.75 million.
Lenoir County Economic Development Director Mark Pope is helping the city find more grants – the city and county would share any remaining cost not covered by grants.
The grants already identified are tied to the company meeting its job commitments, and Smithfield has asked the city to share the financial risk if it does not.
Sears said the full cost to the city, if Smithfield does not fill any jobs, would be $2.75 million.
“You have to remember, these incentives that we give are performance based,” said Councilwoman Kelly Jarman.
Councilman Bobby Merritt, who has been working with Smithfield through his position as director of industry training at Lenoir Community College, said he felt “very comfortable” that Smithfield would meet its job commitments — he noted 700 people have applied for the jobs since training began earlier this month through the JobLink center at LCC.
“I don’t have a crystal ball, but I feel pretty good about the whole situation,” Merritt said.
Mayor B.J. Murphy said the issue Monday was less about whether the council should approve the agreement, but “more about the incentives industry as a whole.”
He also thanked Sears “and his staff for getting us more than enough information to make ultimately what was the right decision.”
David Anderson can be reached at 252-559-1077 or David.Anderson@Kinston.com. Follow him on Twitter at DavidFreePress.