ConAgra Could Owe Tax Breaks Back To State If Workers Leave MI

Posted at 8:08 PM, Jan 30, 2014
and last updated 2014-01-30 22:21:38-05

KENTWOOD, Mich. — The state of Michigan is looking to see if ConAgra will owe back any tax breaks that were given to the company after they announced they will be closing up shop in Kentwood.

The MEGA Agreement that was created between ConAgra and the MEGA Board on May 18, 2010 outlines what is expected of the company in order to receive the state tax credits.

It includes job creation mandates and a time frame in which the company must remain in the state.

The Agreement states, “The MEGA Board authorizes a Tax Credit for ConAgra Foods Packaged Foods, LLC of 100 percent for five consecutive years, beginning no later than the company’s tax year ending May 31, 2011, providing that the company creates and maintains a minimum of 50 Qualified New Jobs at the Project… the Tax Credits are awarded for a maximum of 205 qualified new jobs.”

Karla Campbell, the Fund Manager for the Michigan Strategic Fund, says ConAgra had reached those job creation benchmarks.

She said they had created 73 positions in Kentwood the first year and 165 the next.

They also maintained the 533 workers required as a benchmark throughout the state of Michigan before their announcement that they were closing the Kentwood Facility on 44th street.

“They met the criteria to collect on the credit over the last, in 2011 and in 2012, so what that means is they created a minimum of 50 jobs and they also maintained their base employment,” said Campbell.

However, with 260 being let go at the Kentwood energy bar production facility, they are under their five year timeline.

That means repayment of any tax credits hinges on what happens to the workers.

The agreement spells it out, saying, “..includes a repayment requirement of all or a portion of the Tax Credits received… if the Company moves Qualified New Jobs outside of Michigan….”

“If they are going to be relocated to another state,” said Campbell. “We will look to seek repayment because that is part of the agreement.”

If the employees are simply laid off or are rehired by the company in Michigan, she says ConAgra keeps its tax credits from the state.

Over the next few days, Campbell says the state will be sending out a letter, requesting more information from ConAgra on what may be happening to the workers.

The Right Place, the economic development organization that helped to broker the deal with ConAgra says staff there will be working to find the employees new positions with Michigan Works! and they will look to market the building to a new company.

Birgit Klohs, President and CEO of the Right Place, says, “If there is a silver lining, and I always look at the glass as half-full rather than half-empty, the company invested over 100-million dollars in a food processing facility, food processing is a growing industry in our West Michigan region.

She also adds that there are 260 skilled workers that will be seeking employment in a market where skilled labor is highly sought after at this time.