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HomeMy WebLinkAbout064-26 RESOLUTION Page 1 113 West Mountain Street Fayetteville, AR 72701 (479) 575-8323 Resolution: 64-26 File Number: 2026-329 A RESOLUTION OF INTENT TO APPROVE AN ECONOMIC DEVELOPMENT INCENTIVE WITH CONAGRA BRANDS BY SUPPORTING THE ISSUANCE OF INDUSTRIAL DEVELOPMENT REVENUE BONDS WHEREAS, the City of Fayetteville, Arkansas (the "City") is authorized by the laws of the State of Arkansas, including particularly Title 14, Chapter 164, Subchapter 2 of the Arkansas Code of 1987 Annotated (the "Act"), to issue revenue bonds to finance the costs of acquiring, constructing and equipping industrial facilities; and WHEREAS, it is proposed that the City issue its revenue bonds under the Act for the purpose of financing an industrial project (the "Project") located in the City for use by ConAgra Foods Packaged Foods, LLC (the "Company") and/or an affiliate designated by the Company, pursuant to a lease agreement to be entered into between the City, as lessor, and the Company, as lessee (the "Lease Agreement"); and WHEREAS, it is anticipated that the Lease Agreement will have a stated lease term of 20 years; and WHEREAS, the Project will generally consist of the installation of machinery and other equipment that will enable the Company to expand the facility’s product line, and at the Company's election, may include improvements to the existing industrial manufacturing facility located at 1100 W. 15th Street in the City; and WHEREAS, the Project proposes to create approximately 100 additional job opportunities in the City thereby increasing payrolls and benefits to the inhabitants of the City; and WHEREAS, in order to secure and develop industry in furtherance of the public purpose of the Act, the City is willing to proceed with the issuance of the bonds as and when requested by the Company, subject to compliance with all conditions set forth in the Act; NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Fayetteville, Arkansas: Section 1: The City hereby states its intention to assist in the accomplishment of the Project and at such time as it may be properly called upon to do so to issue its revenue bonds to finance the same, subject to the following: (a) It is estimated at this time that revenue bonds in the approximate principal amount of $225,000,000 will be issued to finance the Project; however, the City's commitment is to issue revenue bonds under the Act in such amount for accomplishing all or any part of the Project, whether that amount is more or less than the above estimate. (b) The bonds will be special obligations of the City to be paid solely from amounts paid by the Company under the Lease Agreement, and in no event will the bonds constitute an indebtedness for which the faith and credit of the City or any of its revenues are pledged. Resolution: 64-26 File Number: 2026-329 Page 2 (c) The City will not be called upon to pay any costs or expenses incurred in connection with the authorization and issuance of the bonds, and all such costs and expenses will be paid out of the proceeds of the bonds or by the Company. Section 2: The City is informed and understands that the properties comprising the Project may be exempt from ad valorem taxes. In such case, the City desires to enter into an agreement with the Company for payments in lieu of taxes and that such payments will be equal to an amount equal to 35% of the ad valorem taxes which would be payable if the property comprising the leased premises were subject to ad valorem taxes, all subject to the provisions of the Act and the requirements of Arkansas law pertaining thereto. Section 3: This Resolution shall be effective immediately upon its passage. Section 4: If any provision of this Resolution shall be held or deemed to be or shall, in fact, be illegal, inoperative or unenforceable, the same shall not affect any other provision or provisions herein contained or render the same invalid, inoperative or unenforceable to any extent whatever. Section 5: All resolutions and parts of resolutions in conflict herewith are hereby repealed to the extent of such conflict. PASSED and APPROVED on March 5, 2026 Approved: _______________________________ Molly Rawn, Mayor Attest: _______________________________ Kara Paxton, City Clerk Treasurer Mailing address: 113 W. Mountain Street Fayetteville, AR 72701 www.fayetteville-ar.gov CITY COUNCIL MEMO 2026-329 MEETING OF MARCH 5, 2026 TO: Mayor Rawn and City Council THROUGH: Blake Rutherford FROM: Devin Howland, Director of Economic Development SUBJECT: Resolution of Inducement to Issue Industrial Development Revenue Bonds for Conagra Brands RECOMMENDATION: Staff is recommending approval of a Resolution of Inducement to issue Industrial Development Revenue Bonds in the approximate principal amount of two-hundred and twenty-five million dollars ($225,000,000), for the purposes of acquiring and equipping industrial facilities in the City of Fayetteville on behalf of Conagra Brands. Approval of this Resolution of Inducement positions Fayetteville to secure one of the largest private employer reinvestments in recent history while preserving full City Council oversight of the enabling ordinance and agreements to come. BACKGROUND: In February 2025, the City of Fayetteville’s Economic Development Department was notified by Conagra Brands that its manufacturing facility located at 1100 W. 15th Street was among a limited number of locations nationwide under consideration for a significant capital investment and the creation of additional full-time jobs. Upon learning of the potential project, City staff began coordinating with the Arkansas Economic Development Commission to support Fayetteville’s competitiveness for the investment. As part of its evaluation, Conagra inquired whether Mayor Rawn would be supportive of the project utilizing Industrial Development Revenue Bonds, commonly referred to as Act 9 bonds, along with a Payment-in-Lieu- of-Taxes agreement. Industrial Development Revenue Bonds are a standard economic development financing tool authorized under Arkansas law and commonly used to support major private investment and job creation. In December 2025, Mayor Rawn provided a letter to Conagra expressing her support for the company’s request to pursue this financing structure, while noting that any participation by the City would be subject to Fayetteville City Council consideration and the satisfaction of all applicable legal and statutory requirements. In January 2026, Conagra notified the City that, in consideration of receiving certain incentives, it had tentatively selected the Fayetteville facility to move forward with the proposed investment and had retained bond counsel to guide the Industrial Development Revenue Bond and Payment-in-Lieu-of-Tax agreement process. DISCUSSION: Economic Development Project Information: Mailing address: 113 W. Mountain Street Fayetteville, AR 72701 www.fayetteville-ar.gov Conagra’s planned investment of up to $225,000,000 into its Fayetteville facilities, including the addition of a new protein processing line, represents one of the largest employer investments the City of Fayetteville has received in the past fifteen years. As a significant employer that provides more than 500 full-time jobs locally, Conagra serves as a pillar of the City’s advanced manufacturing sector, one of Fayetteville’s targeted industry sectors. The proposed expansion will not create any negative or adverse impacts to surrounding neighborhoods or the broader community. Capital Investment New Jobs Average Annual Wage of New Jobs Existing Jobs at the facility $225,000,000 100 $51,535 ($24.78 per hour) 540+ From an economic development standpoint, an investment of this scale into an existing manufacturing facility represents far more than a capital expenditure. A $225 million investment has the ability to meaningfully influence the long-term economic trajectory of a community, signaling sustained confidence in the City of Fayetteville, its workforce, infrastructure, and overall quality of life. Investments of this magnitude help anchor existing employers, reduce the risk of future facility closures, and position Fayetteville as a community where global companies like Conagra Brands choose to reinvest rather than relocate. Just as importantly, reinvestment in an existing plant strengthens the City’s industrial base, preserves institutional knowledge and skilled jobs, and sends a clear signal to other employers that Fayetteville is a competitive and reliable place to grow. Beyond direct job creation and revenue, projects of this scale support secondary employment, strengthen the City’s tax base over time, and reinforce Fayetteville’s position as a competitive community for employment investment in Northwest Arkansas. Projects of this nature align with the City’s commitment to supporting quality jobs, maintaining a diverse and resilient local economy, and partnering with employers that have demonstrated long-term investment in Fayetteville. What are Industrial Development Revenue Bonds and Payment-in-Lieu of Tax Agreements? Industrial Development Revenue Bonds are a standard economic development financing tool that allows a city to act only as a conduit so a private company can access lower-cost financing for major investments. The bonds are repaid entirely by the company, not the City, and do not pledge any City funds, taxes, or credit. When bonds are used, a Payment in Lieu of Taxes agreement is negotiated to ensure the project continues contributing to local revenues in place of traditional property taxes. This Resolution of Intent does not officially approve the bonds, does not officially approve a tax incentive, and does not legally obligate the City in any way. It simply signals the City’s willingness to continue evaluating the project, with all final decisions returning to City Council for separate approval. Nonetheless, if the Company commences construction of the project, the Company will do so in reliance upon the City’s intention to issue the bonds and provide the tax abatement at the appropriate time. What roles does the Resolution of Inducement play in the Industrial Development Revenue Bonds and Payment-in-Lieu of Tax Agreement process? A resolution of inducement is an early, preliminary action by a government entity that formally declares its intention to issue Act 9 Industrial Development Revenue Bonds and proceed with the project in question, it Mailing address: 113 W. Mountain Street Fayetteville, AR 72701 www.fayetteville-ar.gov functions just like a Resolution of Intent. It does not itself issue the bonds, but it lays out the government’s anticipated plan and provides a policy framework for the financing process to move forward. Are Industrial Development Revenue Bonds and Payment-in-Lieu of Tax Agreements common in Arkansas? Yes. Industrial Development Revenue Bonds, often referred to as Act 9 bonds, are among the most commonly used economic development financing tools in Arkansas and are routinely employed by communities that are successfully competing for large-scale job creation and capital investment projects. These tools are regularly used in cities and counties across the state to support major employer expansions and new facilities. Recent examples include Springdale (2025, Tyson Foods), Little Rock (2023, Dassault Falcon Jet and Synthesia Technology), Springdale (2023, Today’s Power, Inc.), Mississippi County (2022, United States Steel Corporation and 2013, Big River Steel), Russellville (2021, Americold), and Brookland (2019, solar development), among many others. Staff has also identified that the City of Little Rock currently manages more than ten active PILOT agreements tied to economic development projects, with the City of Jonesboro managing a comparable number. Collectively, these examples demonstrate that Industrial Development Revenue Bonds and PILOT agreements are standard tools used by Arkansas communities that are attracting and retaining significant employment investment. These examples reflect a consistent pattern across Arkansas: communities that regularly secure major employer investments routinely utilize Act 9 bonds and PILOT agreements as part of their economic development toolkit. What are the specific terms being proposed to Conagra Brands through this Resolution of Inducement? The Resolution of Inducement proposes a 65 percent abatement over a 20-year term, with a corresponding Payment-in-Lieu-of-Taxes agreement equal to 35 percent of the ad valorem taxes that would otherwise be assessed if Industrial Development Revenue Bonds were not utilized. These terms are proposed as part of the inducement structure and would be subject to a separate approval by the Fayetteville City Council prior to any bond issuance or execution of a PILOT agreement. The proposed 65 percent abatement over a 20-year term is consistent with projects that have used Industrial Development Revenue Bonds across Arkansas for projects of similar scale, capital intensity, and job impact. These terms are intended to support long-term reinvestment while ensuring continued revenue contributions through the PILOT structure. Are there any risks to the City of Fayetteville participating in Industrial Development Revenue Bonds and Payment-in-Lieu of Tax Agreements? The City of Fayetteville assumes no financial risk by participating in Industrial Development Revenue Bonds or associated Payment-in-Lieu-of-Taxes agreements under Arkansas law. The bonds are special, limited obligations that are repaid solely by the private company and are not backed by the City’s taxing authority, general fund, or credit. At no point is the City responsible for bond repayment. Any PILOT agreement is a negotiated, contractual arrangement approved by City Council and structured to ensure continued revenue contributions while supporting job creation and capital investment. If a project does not move forward or the bonds are not issued, the City incurs no financial liability or exposure. Staff has identified examples where Industrial Development Revenue Bonds and PILOT agreements did not proceed, including a project involving CZ Mfg., Inc. in the City of Little Rock, and in those instances the City experienced no adverse financial or legal impacts. Are there costs to the City of Fayetteville for participating in Industrial Development Revenue Bonds and Payment-in-Lieu of Tax Agreements? Mailing address: 113 W. Mountain Street Fayetteville, AR 72701 www.fayetteville-ar.gov There are no direct costs to the City of Fayetteville associated with participating in Industrial Development Revenue Bonds. All costs related to the bond issuance, including legal, administrative, and financing expenses, are borne entirely by the private company. What revenue could the City, County, and School District realize by participating in this request for Industrial Development Revenue Bonds and a Payment-in-Lieu of Tax Agreement for this project? Under the proposed Payment-in-Lieu-of-Taxes agreement, the City of Fayetteville, Washington County, and the local school district could collectively realize an estimated $423,351 in annual revenue, which is in addition to the estimated $373,572 in annual property tax revenue currently generated by the facility. This represents an estimated 113 percent increase in annual property tax-related revenue compared to existing collections, while also supporting a significant capital investment and job creation project within the community. Annual Payments in Lieu of Taxes School (45 mills) County (4.3 mills) Road (1 mill) City (6.8 mills) Annual Payment Collected with the PILOT Agreement (35%) $423,351 $333,639 $31,881 $7,414 $50,417 Over a twenty-year period, the City could realize an additional $1,008,331 in payments from the project: Total revenue from PILOT Payments after 20 years School (45 mills) County (4.3 mills) Road (1 mill) City (6.8 mills) Total estimated Payments Collected with the PILOT Agreement over a 20 year period (35%) $8,467,020 $6,672,780 $637,620 $148,280 $1,008,340 What is the process and timeline of the Industrial Development Revenue Bonds and Payment-in-Lieu of Tax Agreement if the City Council passes this Resolution of Inducement? While the Industrial Development Revenue Bonds are expected to be finalized within an estimated 18 to 24 months, certain construction activities associated with the project are anticipated to begin prior to bond issuance. Once the financing structure is fully prepared, an ordinance will return to the Fayetteville City Council seeking approval to issue the Industrial Development Revenue Bonds and to formally enter into the Payment- in-Lieu-of-Taxes agreement. No bonds will be issued and no PILOT agreement will take effect without subsequent City Council approval. Mailing address: 113 W. Mountain Street Fayetteville, AR 72701 www.fayetteville-ar.gov Step 1 Step 2 Step 3 Step 4 Inducement Resolution Public Hearing and Notices Bond Ordinance Closing and Issuance of the Bonds BUDGET/STAFF IMPACT: There is no budgetary impact to the City of Fayetteville associated with this Resolution of Inducement. All bond-related costs are borne by the private company, and existing staff capacity is sufficient to administer the required review and coordination. ATTACHMENTS: 3. Staff Review Form, 4. Preliminary Letter of Support from Mayor Rawn, 5. Additional Information - Letter of Support from Chamber Fayetteville, 6. Additional Information - Project Overview Page 1 City of Fayetteville, Arkansas Legislation Text 113 West Mountain Street Fayetteville, AR 72701 (479) 575-8323 File #: 2026-329 A RESOLUTION OF INTENT TO APPROVE AN ECONOMIC DEVELOPMENT INCENTIVE WITH CONAGRA BRANDS BY SUPPORTING THE ISSUANCE OF INDUSTRIAL DEVELOPMENT REVENUE BONDS WHEREAS, the City of Fayetteville, Arkansas (the "City") is authorized by the laws of the State of Arkansas, including particularly Title 14, Chapter 164, Subchapter 2 of the Arkansas Code of 1987 Annotated (the "Act"), to issue revenue bonds to finance the costs of acquiring, constructing and equipping industrial facilities; and WHEREAS, it is proposed that the City issue its revenue bonds under the Act for the purpose of financing an industrial project (the "Project") located in the City for use by ConAgra Foods Packaged Foods, LLC (the "Company") and/or an affiliate designated by the Company, pursuant to a lease agreement to be entered into between the City, as lessor, and the Company, as lessee (the "Lease Agreement"); and WHEREAS, it is anticipated that the Lease Agreement will have a stated lease term of 20 years; and WHEREAS, the Project will generally consist of the installation of machinery and other equipment that will enable the Company to expand the facility’s product line, and at the Company's election, may include improvements to the existing industrial manufacturing facility located at 1100 W. 15th Street in the City; and WHEREAS, the Project proposes to create approximately 100 additional job opportunities in the City thereby increasing payrolls and benefits to the inhabitants of the City; and WHEREAS, in order to secure and develop industry in furtherance of the public purpose of the Act, the City is willing to proceed with the issuance of the bonds as and when requested by the Company, subject to compliance with all conditions set forth in the Act; NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Fayetteville, Arkansas: Section 1: The City hereby states its intention to assist in the accomplishment of the Project and at such time as it may be properly called upon to do so to issue its revenue bonds to finance the same, subject to the following: (a) It is estimated at this time that revenue bonds in the approximate principal amount of $225,000,000 will be issued to finance the Project; however, the City's commitment is to issue revenue bonds under the Act in such amount for accomplishing all or any part of the Project, whether that amount is more or Resolution: 64-26 File Number: 2026-329 Page 2 less than the above estimate. (b) The bonds will be special obligations of the City to be paid solely from amounts paid by the Company under the Lease Agreement, and in no event will the bonds constitute an indebtedness for which the faith and credit of the City or any of its revenues are pledged. (c) The City will not be called upon to pay any costs or expenses incurred in connection with the authorization and issuance of the bonds, and all such costs and expenses will be paid out of the proceeds of the bonds or by the Company. Section 2: The City is informed and understands that the properties comprising the Project may be exempt from ad valorem taxes. In such case, the City desires to enter into an agreement with the Company for payments in lieu of taxes and that such payments will be equal to an amount equal to 35% of the ad valorem taxes which would be payable if the property comprising the leased premises were subject to ad valorem taxes, all subject to the provisions of the Act and the requirements of Arkansas law pertaining thereto. Section 3: This Resolution shall be effective immediately upon its passage. Section 4: If any provision of this Resolution shall be held or deemed to be or shall, in fact, be illegal, inoperative or unenforceable, the same shall not affect any other provision or provisions herein contained or render the same invalid, inoperative or unenforceable to any extent whatever. Section 5: All resolutions and parts of resolutions in conflict herewith are hereby repealed to the extent of such conflict. Comments: Purchase Order Number: Change Order Number: Previous Ordinance or Resolution # Approval Date: Original Contract Number: Project Number Budget Impact: FundAccount Number Project Title City of Fayetteville Staff Review Form 2026-329 Item ID 3/3/2026 City Council Meeting Date - Agenda Item Only Staff is recommending approval of a Resolution of Inducement to issue Industrial Development Revenue Bonds in the approximate principal amount of two-hundred and twenty-five million dollars ($225,000,000), for the purposes of acquiring and equipping industrial facilities in the City of Fayetteville on behalf of Conagra Brands. N/A for Non-Agenda Item Action Recommendation: Submitted By Devin Howland ECONOMIC DEVELOPMENT (050) Division / Department 2/10/2026 Submitted Date No -$ -$ V20221130 Budgeted Item? Does item have a direct cost? Is a Budget Adjustment attached? Total Amended Budget Expenses (Actual+Encum) Available Budget Item Cost Budget Adjustment Remaining Budget -$ -$ No No -$ -$ Additional Information Received Date Received: MM/DD/YYYY Time: 00:00 (AM/PM) From: Name & Title To: Name & Title Agenda Meeting Date: MM/DD/YYYY Civic Clerk Number: Ex. 2025-994 Forwarded to City Attorney’s Office and Department Head 02/23/2026 5:02 PM Devin Howland, Director of Economic Development City Council 02/24/2026 2026-329 N/A