DALLAS — The board of directors for the northwest Arkansas city of Fort Smith agreed Nov. 19 to issue up to $150 million in industrial development revenue bonds for an expansion of a Gerber Products Co. plant.
The expansion is expected to add 90 jobs in a city with a 7.6% unemployment rate, according to deputy city administrator Jeff Dingman.
With a final maturity in 2024, the bonds will bear interest at the rate of 5.85%. The law firm of Kutak Rock LLP, acting as bond counsel, will create the preliminary official statement.
The city previously issued $65 million of IDRBs for the plant in 2004.
Gerber Products, part of Nestle USA, plans to use the financing to expand its infant and toddler food manufacturing and packaging.
Gerber's headquarters are in Freemont, Mich. Its Fremont facilities were designated as a Michigan Agricultural Renaissance Zone in 2008, qualifying the company for $43 million in tax breaks over 15 years. Gerber agreed to maintain 1,300 jobs and invest $75 million in the facilities during that period.
With a population of 86,209, Fort Smith is the industrial and commercial hub of a six-county trade region.
Standard & Poor's rates the city's sales-tax supported debt at AA with a stable outlook.
Industrial revenue bonds, known in Arkansas as "Act 9 Bonds," provide manufacturers with competitive financing to purchase land, buildings, and equipment to expand their operations.
Cities and counties are authorized to issue IRBs to benefit private companies because Act 9 IRBs do not obligate cities or counties to make payment except from project income. The bonds must be underwritten on the financial strength of the company or guaranteed by the Arkansas Economic Development Commission or the Arkansas Development Finance Authority.
Businesses using either tax-exempt or taxable industrial revenue bond financing can negotiate with the local community for a payment in lieu of property taxes.