Bonds for Kansas Tyson Plant on Hold

OMAHA (DTN) -- As opposition builds against a proposed Tyson Foods chicken processing plant near Tonganoxie, Kansas, the Leavenworth County Board of Commissioners voted Monday to rescind a resolution that would have been the first step in issuing about $500 million in bonds to support the project.

The three-member board originally passed the resolution when non-disclosure agreements were in place, prior to the board's knowledge that Tyson was the company hoping to build on a 240-acre plot south of Tonganoxie. Also included in the resolution was a 10-year, 80% property tax abatement for Tyson.

Though county residents were told Tyson would break ground on a chicken processing plant in northeast Kansas within 90 days, so far, the county's board of commissioners say they've not received a re-zoning application from the company.

When contacted by DTN Tuesday, Tyson Public Relations Manager Worth Sparkman offered this statement: "We're disappointed by the commission's reversal on revenue bonds. The commission's prior approval was part of state and local efforts to persuade Tyson Foods to locate in Leavenworth County. It was one of the factors we considered when determining where to locate our new poultry complex. We're evaluating our options in light of yesterday's vote."

That resolution does not mention Tyson by name, only to issue "its industrial revenue bonds in one or more series in the approximate principal amount of $500 million to finance the costs of acquiring, constructing and equipping multiple facilities for the benefit of Binswanger Advisory Services, Inc. ..."

On Sept. 5, Tyson announced it would build a processing plant, hatchery and feed mill near Tonganoxie, and contract with eastern Kansas farmers and ranchers to raise chickens. The facility expects to begin production in mid-2019 if it receives the needed zoning and economic development permits.

Tyson currently employs more than 4,900 people across Kansas at five processing facilities, including beef processing in Emporia and Garden City, Kansas, and other food processing at a pair of plants in Hutchison, Kansas, as well as Kansas City. The Tonganoxie project would be Tyson's first chicken processor in the state and would employ as many as 1,600 people.

A packed room at the meeting on Monday erupted in applause when the board voted to rescind the resolution, although the resolution itself would not have committed the county to the project.

Board counsel David Van Parys said that, so far, Tyson had not formulated a development agreement with the county and there were no applications for zoning changes related to the proposed plant.

"That's where people's concerns were in that it was to break ground in 90 days to build the facility, and nobody has been to planning and zoning yet to have any zoning changes," said Doug Smith, third-district commissioner and chairman of the board.

Even without the county's approval to issue bonds, Tyson still can apply for a change in zoning that would allow construction of a plant on the property. Either way, any final approval of the project will be subject to public hearings.

Van Parys told the commissioners that, at this point, the project is out of their hands. "I think it's incumbent that transparency in governing is important," he said. "I think the board has acted to be transparent. I think this project is moving at a very quick pace. I think it's unfortunate that due to the non-disclosure agreement and other matters, this project couldn't have been handled differently. But this is where we are. I think there are a lot of unknowns out there, some of which certainly need to be looked into. The board has made it clear that all action taken on this would be in open session."

Kirk Sours, manager of Tailgate Ranch Co., whose land sits near the proposed Tyson site, told the board the owners of the ranch are considering their options. "One option is a conservation easement," he said. "That can prevent future development of the property indefinitely. That may give commissioners reason to reconsider the Tyson project."

The Tonganoxie plant would process 1.25 million birds a week, and Tyson noted when it announced the facility that it was attracted to eastern Kansas because of the availability of grain and labor. The Kansas Corn Growers Association has come out in support of the proposed plant, because it is expected to generate demand for feed grains. The KCGA said the plant would increase demand for Kansas corn by about 175,000 bushels per week, or about 9.1 million bushels per year.

Todd Neeley can be reached at todd.neeley@dtn.com

Follow him on Twitter @toddneeleyDTN

(BAS/AG)

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