American Foods Group will be paying some property taxes on its new facility being built between Foristell and Wright City, it was explained during a Dec. 7 meeting at the Warren County Administration Building.

So will the owners of the two new solar farms being built in the county.

The tax situation was explained by Mark Grimm of Gilmore Bell finance law firm based in St. Louis.

He was in Warren County to help explain Chapter 100 incentives and how they apply to the large projects being constructed.

“There’s two reasons that cities and counties typically offer Chapter 100 bonds,” he said. “One is to attract companies like AFG. The other is to provide tax certainty.”

Chapter 100 allows the facility, construction materials and certain tangible personal property to be purchased tax exempt by the city or county and then leased back to the company. The tax exemption extends to both state and local sales and property taxes. 

“AFG was a very competitive project,” Grimm said. “And the county, in order to attract those 1,300 jobs, offered a certain level of tax abatement over the next 20 years.”

The abatements have drawn criticism from members of the public, some of whom believe the company will pay no taxes during the abatement period.

“The new meat packing facility is getting an $82,000,000 abatement for 20 years on taxes, which would normally be due to the Wright City School District,” one Wright City resident said in a comment on The Warren County Record’s Facebook page. “If all of this funding was so important to the schools, one might imagine that the superintendents and/or the school board would have fought a little harder (or perhaps at all) to negotiate themselves a better deal.”

But Grimm stressed the company will still be paying taxes during that time, and that the money will be distributed to the appropriate taxing bodies.

During construction, he said, AFG will make payments in lieu of taxes equal to 100 percent of what the taxes would otherwise be.

“The county will bill those and collect those and distribute those tax revenues,” he said. 

The abatements don’t kick in until construction is complete, likely by the end of 2024. So the first year AFG will benefit from its tax abatements are the taxes due at the end of 2025.

Starting then, AFG will have an 80 percent tax abatement in years 2025, 2026, 2027 and 2028. That number will drop to 75 percent for the next sixteen years.

“And in the cost-benefit analysis that everybody received, it was estimated that the payments in low taxes would be $57.8 million over a 20 year period,” Grimm said.

However, Grimm said the abatements only apply to the AFG facility and equipment in place when construction of the new plant ends. As that equipment ages and is replaced, the abatements will not apply.

“That new replacement equipment will be fully taxed,” he said, which would likely increase the amount AFG pays during the abatement period.

After the meeting, one participant summed it up this way: the business may not be paying 100 percent of what it owes, but local taxing bodies are still receiving more money in the long run than if AFG had chosen a different location for the plant.

There is a similar situation in place for the new solar farms.

The new Bluebird farm is expected to generate $36 million in tax revenue for 35 years, which is expected to begin in the 2026 tax year.

No information was available for the second solar farm during the meeting.

About the author: Jason Koch is the editor of The Warren County Record, and covers local news and government for the newspaper. He has won multiple awards from both the Indiana and Illinois APME and from the Illinois Press Association. He can be reached at 636-456-6397 or at jason@warrencountyrecord.com