Kraft plan a plus for Champaign
Kraft's request for a property tax break as part of its plan to build new warehouse space deserves support.
It's no surprise that city council members in Champaign Tuesday approved plans for a property tax subsidy aimed at assisting Kraft Foods in building a $38-million, 760,000-square-foot warehouse on the site of the old A.C. Humko plant.
While some may blanch at the idea of providing financial aid to a multibillion-dollar corporation through the establishment of a tax increment finance district, the downside of not doing so is too great to risk.
If Kraft follows through on its plan to build the warehouse on the now-abandoned property adjacent to its current location at the corner of Mattis and Bradley avenues in north Champaign, it will benefit the city in a number of ways.
— Restoring the now-abandoned Humko site to a productive role that adds to the property tax base. This may be a one-time opportunity because there are few development options for this location. Just clearing the property will cost an estimated $4.2 million.
— Opening up 400,000 square feet of space at Kraft currently used for storage to prospective new food lines. That would mean more jobs at Kraft, and the impact there in terms of personal income and taxes paid is obvious.
— Protecting the 1,200 jobs Kraft currently provides by further cementing the company's ties to the community.
On the other hand, if the city had rejected Kraft's request and the warehouse is not built, the company could look elsewhere both in the short and long term. The ugly reality is that companies' needs change, and, as a result, plants come and go. There's no sense in giving Kraft one less reason to remain here for decades to come.
Since Humko closed in 2008, the assessed value of the property has declined from $1.5 million to $661,000.
Creating the TIF district would freeze the amount of property taxes various taxing districts, like the schools, receive. As the property increases in value with the warehouse construction, Kraft's tax payments would be deposited in a TIF fund controlled by the city, and then paid out by the city to the various districts as well as Kraft. Once Kraft receives $3.6 million in payments — it's estimated that would take anywhere from 8 to 12 years — the city's obligation to Kraft would be complete and the TIF could be dissolved.
The plan's benefit is that taxing districts other than the city of Champaign won't lose a penny while Kraft would receive what amounts to a $3.6 million property tax rebate.
That's a lot of money, but it's not prohibitive given Kraft's planned investment and its economic spin-off, current Kraft jobs protected and possible new jobs created, restoration of the Humko site to productive use and an increased property tax base.
City economic development director Bruce Knight characterizes the plan as "win-win," and, under all the circumstances, he is correct to do so.