Rules set for state grants to plant

The Hero Group/Beech-Nut will have to spend $4 million on ingredients, products and produce made in

The Hero Group/Beech-Nut will have to spend $4 million on ingredients, products and produce made in New York state in order to receive a $4 million grant from the state’s Empire State Development Corp.

Beech-Nut incentives

To read the entire state incentive plan for the proposed Beech-Nut baby food plant in the town of Florida, click here.

The local purchases requirement, employment goals and construction milestones are among requirements outlined in a state incentive plan for the $124 million project to build a new baby food manufacturing facility in the Florida Business Park.

The New York State Urban Development Corp., doing business as the Empire State Development Corp., has set a June 25 public hearing on the plan that was approved by the corporation’s board of directors in May.

The Hero Group is building a 550,000-square-foot facility for its subsidiary Beech-Nut Nutrition Corp. in a project expected to keep 356 jobs in Montgomery County.

Empire State Development’s incentives, totaling up to $35,067,000, are the subject of the public hearing.

Other incentives provided to the company include a 20-year payment in lieu of taxes agreement and $2.5 million the state provided the company to relocate its headquarters from Missouri to offices the company rents in Latham.

Several conditions, including the requirement that job retention and creation goals are met, must be met before the state releases grant money, according to the plan.

The Hero Group/Beech-Nut will have to demonstrate that there’s been no adverse change in its financial condition, contribute at least 10 percent in equity toward the project and employ at least 356 people at the new plant in order to receive grant money.

A total of $4 million out of a $10 million Economic Development Fund working capital grant will be distributed once the company is finished with construction and can prove it spent $4 million on New York state ingredients, produce and products, according to the plan.

Ken Tompkins, regional director for Empire State Development’s Mohawk Valley Region, said Wednesday that the incentives are geared toward improving the local economy and other areas of the state as well.

“We are also trying to make sure that the tax dollars that are used to provide incentives to create jobs and businesses are creating more benefits for New Yorkers in general,” Tompkins said.

“In this deal in particular, it’s important that Beech-Nut stayed in the state and it’s important that the people who worked for Beech-Nut still will, and it’s important to increase employment,” Tompkins said.

“They’re going to use New York state agricultural products and produce in putting together their products, and that helps the agricultural community and, of course, the businesses that depend on the agricultural community,” Tompkins said.

Beech-Nut already buys local items to make baby food, but the state’s incentive agreement makes it a requirement for receiving grant money.

“It can be an extremely positive effect for all the growers,” Montgomery County Economic Development Director Ken Rose said.

The remaining $6 million of that working capital grant will be paid to the company on a quarterly basis once production has started. The company is required to document utility bills for the preceding quarter in order to get that money.

Other requirements spelled out in the project plan show that The Hero Group/Beech-Nut will have to spend money to get money from the state.

Empire State Development is offering the company up to $5 million as an Economic Development Fund grant in two increments, according to the plan.

Half of that money will be disbursed once the company purchases new boilers, relocates its existing boilers and provides documentation of installation costs, according to the plan.

The rest of that money will be issued once the project is finished and the company can document project costs of about $124 million.

“It’s not a blank check by any means. A lot of it is reimbursable expenses,” Rose said.

Other grants and their requirements spelled out in the plan are as follows:

* $12,567,000 JOBS Now capital grant paid out in three installments: $9,283,500 when the facility is built and 356 full-time positions are verified, $1,641,750 once 424 full-time jobs are verified and another $1,641,750 once 491 full-time positions are documented.

* $7.5 million JOBS Now working capital grant paid out in two installments: $5 million at the start of construction and $2.5 million 10 years after construction.

Empire State Development also includes a “recapture” clause requiring the company to pay back a percentage of the grant funding if job creation falls below 85 percent of set goals.

The public hearing is scheduled for 11 a.m. to noon on Wednesday, June 25, at Florida Town Hall, 167 Fort Hunter Road.

Categories: Schenectady County

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