MUSCATINE, Iowa — Muscatine's City Council gave its stamp of approval for H.J. Heinz Co.'s efforts to seek state tax benefits and assistance as part of the company's efforts to expand its existing operations in the city.
The council gave unanimous approval, with council member Mark LeRette absent, for Heinz's application for the High Quality Jobs Program of the Iowa Economic Development Authority at its in-depth meeting Thursday night. As part of this action, they also agreed to provide a local match to any state funding Heinz receives through the state from Tax Increment Finacing (TIF) revenues. The Iowa Economic Development Authority program can provide businesses with tax benefits and direct financial assistance for relocation, expansion and updating facilities.
"I think it's a wonderful, wonderful project," said Phil Fitzgerald, 1st Ward council member.
"Whether it's Heinz or any corporation here in the community that expands or invests in our city, it's a win-win situation for the company as well as the community as a whole," said At Large Council Member Osama Shihadeh.
The local match would last for five years on a sliding scale from 75 percent of funding in the first year to 15 percent in the final year. However, Mandsager noted that if there is not a increase in property taxes, the local matching funding would be waived by the state. He also said the TIF funding made the most sense to city staff, due to the fact that the factory already is part of a TIF district.
In his presentation to the council, City Administrator Gregg Mandsager said Heinz hopes to invest $24.5 million in its existing plant at 1357 N. Isett Ave. Of that, $21.5 million will be in the form of new equipment, while the remainder will be for building construction and remodeling. According to a memo to the council from Mandsager, the expansion is intended to help the existing plant be able to take over the production of various Heinz products from Ohio, New Jersey, and Ontario, Canada.
This expansion, Mandsager said, would create 106 new jobs at the plant. 100 would be hourly positions with a $11.56 per hour starting wage, that could increase to $15.06 after 36 months. The remaining jobs would be salaried positions with a $70,000-per-year average wage.
According to Mandsager's memo, work on the Heinz project could begin as early as this month, and the company hopes to complete its work within a year. According the Greater Muscatine Chamber of Commerce and Industry website, Heinz is among the top employers in Muscatine, with approximately 305 employees.
It was Nov. 15 when Heinz announced a series of moves involving plant closings and expansions at existing facilities. The company laid off 1,350 workers as it closed manufacturing plants in North America. However, the company at the time said it planned to add 470 positions at other existing facilities.
The restructuring has been ongoing throughout the company since Warren Buffett's company, Berkshire Hathaway, and 3G Capital finalized purchasing the company for $23.3 billion in June. Berkshire and 3G installed new managers for the company and implemented several cost-cutting measures, including the job losses.
Mandsager said the application would go before the state next week