The Nevada Commission on Economic Development on Tuesday approved two controversial sales-and-use tax abatement requests from companies looking to develop in Clark County.
In unanimous votes, the commission approved abatements for CC Landfill Energy LLC, working with DCO Energy LLC, and for Illinois-based TH Foods Inc.
CC Landfill Energy and DCO Energy, which plan to build an 11-megawatt gas-fueled electric power generation plant at the Apex Regional Landfill, were approved for a sales tax abatement of $1.2 million. Commission analysts estimated the plant would generate economic impact of $7.6 million over 10 years and $2.7 million in new taxes over that time.
TH Foods won approval of sales-tax abatements of $964,746, but the company hasn’t reached a decision on whether it will build in Southern Nevada. If it does, its new snack food manufacturing plant would create an estimated economic impact of $174.9 million over 10 years and new taxes of $3.8 million over that time and provide 51 new jobs initially and 69 more after expansion in four years.
The decisions to approve the incentives were controversial for separate reasons.
The CC Landfill request met two of three statutory requirements to be eligible for incentives, but the requirement it didn’t meet raised questions. The planned biomass energy production plant would only generate two permanent jobs, well below the statutory requirement of 75 for a facility of its size.
But commissioners agreed that the encouragement of a production facility that would generate electricity that would count toward the state’s alternative energy portfolio would benefit the state and possibly encourage more alternative energy companies.
The state’s renewable energy portfolio standard calls for 15 percent of electricity generated in Nevada to be “green power” by 2013 and 25 percent by 2025.
CC Landfill project executive Don Butler said the companies would tap methane gas formed beneath the landfill to fuel the power plant. Commissioners also noted that the project would generate 30 construction jobs on the site for several months, and the capital investment of $19.9 million would generate additional tax revenue for the state and the county.
After the incentive package was approved, Lt. Gov. Brian Krolicki, who heads the commission, said he was disappointed that Clark County commissioners and the Clark County School Board didn’t give the proposal their endorsement.
“I am troubled that local governments won’t go on record in support of an economic incentive package that is before this commission,” Krolicki said near the close of the meeting.
Krolicki said the county and School Board apparently were upset that the sales-tax abatement would take money that would have been directed to their coffers.
Commissioner Tony Dazzio noted that the additional tax revenue generated by the plant would hit a break-even point in one year and, after that, the plant would generate additional tax revenue for them.
During public comments, Nevada Development Authority President and CEO Somer Hollingsworth cautioned Krolicki not to be too critical of the county and the School Board over their lack of support for the incentives because he doesn’t want that to turn into opposition that would scare away prospective companies being recruited to Southern Nevada.
Krolicki said a policy discussion on the matter would be scheduled at a future meeting.
The controversy over TH Foods — besides the fact that its management hasn’t decided whether to build here — is that its application fails to meet two of the three criteria making it eligible for incentives. But statutes allow commissioners to consider a request if there are extraordinary circumstances, and the prospect of 120 new manufacturing jobs led to consideration.
TH Foods’ majority shareholder is Japan’s Mitsubishi Corp. Group, and the company manufactures rice crackers and cookies under the Crunchmaster brand. The company plans to lease a 150,000-square-foot facility to service West Coast customers within 12 to 14 months, developing three production lines within four years. The company’s Loves Park, Ill., facility houses 205,000 square feet on 10 acres.
Commissioners were encouraged that TH Foods would invest $15.8 million for a plant, well over the $1 million statutory requirement. While the company’s average wage of $15.18 an hour is 23 percent below the statutory requirement for incentive consideration, commissioners liked the fact that the company offers an excellent benefits package, including a “bottom-up” bonus system that awards the lowest-paid workers with bonuses before top executives if production goals are met.
Terry Jessen, president and chief operating officer of TH Foods, said the company has been profitable and bonuses paid in each of the 15 years that the benefit has been in place, and employees have received 9 to 15 percent of their annual salaries as a bonus.
Jessen said TH Foods management would decide where to locate its West Coast operation by June. He said Southern Nevada is one of three sites under consideration, but he wouldn’t disclose the other locations.