Tyson Foods has asked the city government for financial incentives to build a new refrigerated warehouse in Denton.
The Denton City Council is expected to discuss the request during its work session Tuesday afternoon. The request is part of Tyson’s strategy to ask Denton County and the state of Texas for incentives, too.
Tyson has proposed building a $30.6 million, 350,000-square-foot automated, refrigerated warehouse along Western Boulevard on the city’s west side near other refrigerated warehouses, including Target, WinCo and U.S. Cold Storage. Tyson told city officials it expects to employ 100 people at an average wage of $24.82 per hour, according to a council briefing.
If the City Council approves Tyson’s request, Denton would pay out $735,000 over six years, most of it in electricity discounts.
Both the county and the state require local incentives before they will consider similar requests. In the case of state incentives, the Texas Enterprise Zone Program is administered by the governor’s office and is designed to stimulate development in economically distressed areas. Denton County is not listed as economically distressed this year, nor has it been listed in any of the past five years.
The city’s Economic Development Partnership Board recommended fully funding the request, but the City Council has the option to fund less, or nothing at all. Earlier this year, U.S. Cold Storage made a similar request and the council approved only the electric rebate.
Called the electric growth rider, this little-known policy of Denton Municipal Electric helps recruit industrial users that consume electricity at a steady, around-the-clock rate. According to the council briefing, such consumers allow DME to purchase power at better prices for all ratepayers.
DME attaches the rider to the demand charges of an industrial customer’s electric bill, not the electric rates or other charges. The rider lasts for five years, beginning at a 50 percent discount and declining to 10 percent the last year.
A staff analysis provided to council members showed that Tyson likely would incur $2.5 million in demand charges the first five years the warehouse is open. Therefore, the company could receive about $450,000 in discounts through the life of the rider, beginning at $150,000 the first year and declining to about $30,000 in year five.
The staff analysis also said that such discounts do not negatively affect rates for other customers.
The council’s work session materials mark the second time in a year that the City Council considered economic incentives with the business name and project details disclosed to the public in advance. The city had come under fire for unveiling project code names, such as Project Ranger One and Project Cartoon, only after the deal was done and ready for a vote.
After the code name Project High Flyer appeared on a council closed session agenda, open meetings advocate David Zoltner asked the Texas Attorney General’s Office whether the agenda posting was sufficient. The city was forced to reveal that Project High Flyer was Amazon Air and the company had asked about possible incentives to expand to Denton Enterprise Airport.
Tyson Sales and Distribution is based in Springdale, Arkansas, and employs 122,000 people. Last year, the company had $38 billion in sales, which includes brands under the Tyson label as well as Jimmy Dean, Hillshire Farm, BallPark and State Fair.
The City Council work session is scheduled to begin at 1 p.m. Tuesday and will be streamed live online on the city’s website, cityofdenton.com.