The Hermiston City Council voted Monday night to give Lamb Weston a 15-year property tax break, following the company’s recent announcement that it would expand its Hermiston operations.
The long-term tax break, however, comes with annual fees of $1 million, with half going to the city and half to Umatilla County.
Hermiston Assistant City Manager Mark Morgan said the tax break for Lamb Weston was necessary to get the company to choose Hermiston for its expansion plans. The company was also considering expanding in three other locations – Paterson, Boardman or Richland, Wash.
“Lamb Weston is making this expansion in a globally competitive industry,” Morgan said.
This is the first 15-year tax abatement the city has given to a company. Past tax breaks have been for three or five years. Morgan said those breaks gave companies 100-percent break on their taxes.
The $1 million annual payments to the city and county, said Morgan, will equal about 42 percent of what Lamb Weston would have paid in property taxes during the 15-year period.
The company recently announced an investment to expand operations at its Hermiston processing facility with the construction of a 300 million pound-per-year, state-of-the-art french fry line. The new line will be modeled on the company’s recently operational production line in Richland, Wash., and is expected to be completed in the fourth quarter of fiscal 2019. The new Hermiston line is intended to support growth in North America, as well as exports to Asia where demand growth has been, and is expected to remain, strong. The expansion is expected to add approximately between 140 and 170 full-time positions.
Morgan said the new jobs are expected to be at or above the county’s average wage of about $37,000 per year or $18 per hour.
The city and county are planning to use the annual $1 million payments on infrastructure projects with the goal of increasing housing starts in Hermiston. Morgan said it doesn’t boost the Hermiston economy much if Lamb Weston employees are commuting from the Tri-Cities to Hermiston.
The council action was not without criticism. Both Umatilla County Fire District 1 Chief Scott Stanton and Ric Sherman, who is on the fire district board, both expressed concern that tax dollars would not be available to help fund the fire district. Sherman said the new expansion will bring in more people to the area, meaning more calls for service, but without any additional funding support.
Mayor Dave Drotzmann said he appreciated their concern, but added that economic development is one of the city’s top priorities and that Lamb Weston would eventually come onto the tax rolls.
“This investment could have gone somewhere else,” he said.