Creative Chapter 100 bond financing will help with expanding the Kraft Heinz Columbia plant.

It’s official: Columbia will continue to be the Oscar Mayer hot dog capital of the world. 

More specifically, the Kraft Heinz Company will use Chapter 100 revenue bond financing for a roughly $93 million expansion of its Columbia plant, which produces around one million Oscar Mayer hot dogs — every day. 

“We are on track for the investment as planned,” Alex Abraham, the company’s vice president of global corporate communications, said in an email reply to COMO Business Times on September 18. 

Boone County’s Chapter 100 policy, adopted by the Boone County Commission in 2005, is administered in conjunction with Regional Economic Development Inc. (REDI), Columbia city officials, and representatives of each property tax-supported entity. The policy is so named because of its connection to a law in Chapter 100 of the Missouri state statutes that authorizes political subdivisions to offer up to 75 percent tax abatements — for as many as ten years — on purchases of real estate or property, as an incentive for attracting new businesses or to retain existing businesses. 

Kraft Heinz was seeking 75 percent property tax abatement on new equipment, but not on any of the facility and infrastructure. The county commission approved Kraft Heinz-Columbia’s Chapter 100 application in late May. 

While most of the county’s nine projects approved for Chapter 100 bond financing have created jobs, the Kraft Heinz financing application pointed out that the financing was needed to upgrade equipment and to retain jobs. 

Job Creation and Job Retention 

Retaining those jobs and the Kraft Heinz footprint on Waco Road in north Columbia is significant for the local economy. In its Chapter 100 application, the company noted that the hot dog plant averaged 433 full-time employees for the preceding twelve months, and the average employee wage of $63,655 is based on an average hourly wage of $30.60. In total, that’s an annual payroll of roughly $28 million. 

The Columbia plant is the single source supplier for retail Oscar Meyer Hot Dogs and produces more than 143 million pounds of products each year. 

The project is expected to be phased in over three years, with an estimated investment of $92.15 million, which includes: new facility construction costs, $35.59 million; machinery and equipment, $39.36 million; and other costs, $17.2 million. 

Abraham’s email stated that the first saran line of equipment has already been ordered for the manufacturing expansion. The application documents described that part of the project as modernizing production lines “with a sustainable material that enables a higher threshold of recyclability in packaging.” The full scope of the expansion is “decarbonization,” which is a method of climate change mitigation to significantly reduce or eliminate carbon dioxide (CO2) and other greenhouse gas (GHG) emissions from the atmosphere. The project’s decarbonization would entail “electrifying assets and completely overhauling the utilities at the facility.” 

That part of the expansion plan is not yet final. 

“The decarbonization project is still being negotiated with the Department of Energy, but once we have the final contract in place, we will prioritize Columbia in the first wave of implementation,” Abraham said in the email response to questions about the status of the Chapter 100 financing. According to application documents, the company is working toward a goal of achieving net zero carbon emissions by 2050. 

‘Project Lightyear’ 

The decision to move forward with the plant expansion and equipment upgrades helped allay worries that Kraft Heinz might leave Columbia. The expansion was known among local and state economic development officials as “Project Lightyear.” The REDI project summary, presented to the Boone County Commission and authored by Bernie Andrews, REDI’s executive vice president, emphasized that the project “would further stabilize the Columbia, MO plant as a core location within Kraft Heinz’ operational footprint.” 

The summary added, “The Columbia plant is under review due to lower profitability relative to other Kraft Heinz production sites … alternative options are being explored, which include moving a portion or the entirely of existing operations to another state/country.” 

The summary spelled out the potential negative consequences of turning down the revenue bond financing. 

“Further investment in the facility would strengthen the long term retention of the facility’s current employee base, but is only achievable through a strong public/private partnership,” Andrews wrote. The report noted that state incentives, “such as retention withholdings/tax credits,” would be factored into the company’s decision “to both move forward with Project Lightyear and keep Oscar Mayer hot dog production at the Columbia, MO facility.” 

Providing a Seat at the Table

Boone County’s Chapter 100 policy established a process for taxing entities to review the project information and tax abatement impacts, and the review panel votes whether to recommend the project to the county commission for approval. 

Matt Williams, regional president of Simmons Bank, emphasized that in the case of property tax abatement, only the new equipment, not the existing, receives the incentive. 

The taxing entities affected by the Kraft Heinz tax abatement request are the Columbia/Boone County Library District, Boone County Family Resources, the city of Columbia, Boone County government, and Columbia Public Schools (CPS). The taxing entity representatives who signed off on forwarding the 75 percent tax abatement application to the county commission for approval were: Patricia Powell, library trustee, Columbia/Boone County Library District; Mayor Barbara Buffaloe, city of Columbia; Brian McCollum, Boone County collector; and Suzette Waters, president of the CPS Board of Education. 

 Those entities would benefit from additional, new property tax revenue — they do not get financial support from sales taxes — but tax abatement means the additional revenue, though new, would be less than the full amount they could expect. Economic development officials point out, however, that there would be no stream of new revenue if a Chapter 100 applicant is not approved and the applicant either does not come to Columbia or moves its business. 

And with an existing business — like Kraft Heinz — those taxing entities could stand to lose existing tax revenue if the business pulls up stakes and relocates to another city and county. CPS stands to have the most to gain — or lose, depending on the perspective — from a successful or unsuccessful Chapter 100 application. CPS earns roughly eighty cents of every one dollar of property tax in Columbia. 

Not a Revenue ‘Loss’ 

According to a REDI analysis, even with a 75 percent abatement, or tax forgiveness, CPS would still receive $1.1 million in new tax revenue from the plant, with the city of Columbia receiving around $76,000. 

“We don’t ‘lose’ anything, because the investment would not have happened if not for Chapter 100,” Williams added. “As (former city manager) Bill Watkins used to say, ‘You can have a bite of a little bit of the apple, or none of the apple.’” 

This is the second time Kratz Heinz has successfully applied for Chapter 100 revenue bond financing. The original Kraft Heinz Columbia plant was built in 1985, with its first expansion in 1991 to implement new machinery that allowed the plant to produce bun-length hot dogs. In 1998, it was expanded for a second time for the purpose of adding “jumbo”-sized hot dogs to factory production. In 2016, with the use of Chapter 100 financing, the plant replaced its processing systems with a new production line. 

The county commission adopted its Chapter 100 Revenue Bond Policy in 2005. The following year, ABC Laboratories became the first tenant at the Discovery Ridge Research Park, as well as the first company to file a Chapter 100 bond financing application.  

Kraft Heinz was approved for Chapter 100 revenue bonds for a plant expansion in 2015. Next up on the Chapter 100 approval list was Dana Light Axel, American Outdoor Brands (two projects), Aurora Organic Dairy, Swift Prepared Foods (now Principe Italia), and EquipmentShare. 

How it Began Here 

The Chapter 100 story began in Boone County with considerable cheerleading from former county commissioner and all-around economic development champion Dave Griggs — of the namesake Dave Griggs Flooring America store on the Business Loop. Griggs, also a long-time REDI investor, was a major advocate for an incentive plan that would attract new companies to the city and county, and that the incentive be different enough from other counties and cities that were competing for the same businesses and expansions. 

In 2005, Chapter 100 tax abatements became the new and unique economic development tool. The Chapter 100 history is chronicled in REDI’s 2023 annual report, “Building Our Future Together: 35 Years of REDI.” 

“Our process is the most unique in the country,” Griggs said in the report. “Almost any economic development professional will tell you that.” 

Built-in Accountability 

Under Boone County’s Chapter 100 process, initial contact with county and REDI officials about a new or expanding business is confidential. Additional closed-door meetings are possible for vetting initial paperwork and the company’s financial health, but once the business is invited to apply for Chapter 100 revenue bond financing, the request becomes a matter of public record. 

There are public steps built into the process. REDI gathers and compiles data about how tax abatement would impact taxing entities. A committee made up of representatives of each taxing district reviews and votes on the abatement request before the application goes to the county commission, which also holds two public hearings for additional community input. 

The county’s Chapter 100 policy requires approved applicants to submit an annual compliance report to the commission, and each approval comes with a performance agreement — mostly pertaining to the number of jobs and overall investment — that can be adjusted if targets are not met. 

“That performance agreement holds the company accountable for what the company promises they’re going to do,” Williams explained. “That’s a key component to the success of Chapter 100. We all get a lens into, ‘Are they doing what they said they were going to do?’”