June 14, 2008

Incentives Pay Off As Greeley Lands Big Cheese

By Andrew Villegas, Greeley Tribune, Colo.

Jun. 14--After a long battle where city officials dangled everything but the key to city hall as bait, Greeley has finally landed the big cheese.

City officials and Denver-based Leprino Foods -- the world's self-proclaimed largest producer of mozzarella cheese -- signed a development agreement Friday that will bring a large-scale cheese manufacturing plant to Greeley. Greeley was chosen over Garden City, Kan., as the site of the new plant.

"This is a major domino falling in the redevelopment of east Greeley," said City Manager Roy Otto at a Friday afternoon press conference.

Over 20 years, officials hope Greeley, Weld County and Colorado will reap more than $15 billion in economic benefits from the plant.

Officials for Leprino said the primary factor in locating the plant in east Greeley -- at the city's old Western Sugar Cooperative site -- is the quality and availability of milk in Weld County, the state's largest producer of dairy products.

Mike Reidy, senior vice president for Leprino, said the company worked closely and followed the recommendation of the Dairy Farmers of America in choosing Greeley because of the potential for dairy farm growth in northern Colorado.

Reidy said dairy farming near Greeley will have to grow to accommodate the sheer amount of milk the plant will use -- about 7 million pounds per day.

"The availability is sufficient for the market right now," Reidy said. "But we're going to work hard with the (Dairy Farmers of America) to grow it at a pace consistent with our growth needs."

Les Hardesty, a dairy farmer and chairman of the Mountain Area of the Dairy Farmers of America, said family dairies in northern Colorado can provide most all of the milk Leprino needs to sustain its operation, but it's possible that the region would also need to attract new dairies..

Hardesty said Colorado has the highest production of milk per cow in the United States and that Greeley was the natural choice for Leprino.

The $143 million, 847,000 square-foot plant will convert milk into cheese for use primarily on the nation's pizzas. Construction of the plant, which will include the complete destruction of Greeley's old Western Sugar building, should be complete by 2012, according to company officials.

At its inception, Leprino will employ 260 people with 500 total new jobs created when all construction is complete in later building phases.

In all, Leprino will invest more than a quarter of a billion dollars in land, buildings and equipment in the project, which city officials hope will go to mostly area construction and businesses. Besides the $143 million Leprino will use to build the plant, it will spend $122 million on equipment; officials paid more than $5 million for the site itself.

Greeley will receive a direct and immediate boon to its general fund when Leprino gives the city $3.2 million upfront in sales and use tax that the city may use in any way it chooses. The city typically waives these use and sales tax fees for large developments, but Otto said Leprino wanted to help Greeley with its budget problems by giving the city some cash, so it agreed to pay half of the taxes. That money would be returned to Leprino over 20 years, however.

"We talked to them about our need to get some infusion of dollars into the general fund, so they agreed to pay half up front," Otto said.

During the last seven months, Greeley officials have approved several incentives to lure Leprino to the city. The incentives include selling the company water at a reduced rate from the city's water bank, creating a special financing district that will help further improve the area around the plant and helping its own urban renewal authority come to an agreement with Leprino to pay Leprino back for the nearly $4.5 million in development and sales and use tax fees it will give the city. That includes $1.2 million in development fees for construction of city infrastructure at and around the site.

Greeley officials also agreed to give Leprino 211 acre-feet of water to help the company subsidize its needs, which they estimate to be 1,000 acre-feet. Greeley also will give Leprino credit for their processed water they extract from the milk in making cheese. For Greeley to turn that processed water into a useable water right, which it could use to augment the city's water, it must go to water court, Otto said.

For years, officials have been trying to find a way to revitalize Greeley's east side, where the plant will be located. The approval of the special financing district early this year started the process to help revitalize the area, according to officials. Greeley officials hope the new plant also will have a positive impact on property values in the area, which is a mix of residential, industrial and commercial.

-- Tribune reporter Sharon Dunn contributed to this report

Everyone has part of the deal to uphold


--Gave Leprino water at a discounted rate and is waiving half of the city's sales and use tax.


--Will construct a $143 million plant on 100 acres, which may provide up to $15 billion of economic stimulus to Greeley, Weld County and Colorado.

--260 new jobs at inception, 500 at completion.

--Removal of lime and asbestos from site.

--Payment of $1.2 million in development fees and $3.2 million in sales and use tax up front.

--Donate an 8-acre parcel for the city to expand its water treatment facility or another city use.

Greeley Urban Renewal Authority:

--Reimbursement of site development fees, personal property taxes on site development costs and sales and use taxes thanks to special financing district.

--Reimbursement for removal of lime and asbestos.


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