A proposal that would create an additional 81 jobs at what is now SAJ Distributors was approved Tuesday by the Economic Development Corp. of Jefferson County, more commonly known as the tax board.
L&R Distributors of Brooklyn, N.Y., announced in November that they would be buying the distribution center from Walgreen Co., which bought the assets of USA Drug from the LaFrance Family earlier this year.
L&R hopes to take possession of SAJ by late January or early February and anticipates there will be 119 employees at that time, Lou Ann Nisbett, president and chief executive officer of the Economic Development Alliance of Jefferson County, said during the tax board meeting Tuesday.
The proposal by the tax board would offer $500,000 in project infrastructure or equipment assistance to the company in return for them creating the additional 81 positions for a workforce of 200 within five years. The average annual salary for workers would be $32,000.
Nisbett said the company currently has distribution facilities on the east and west coast. The Pine Bluff facility would be their largest and have the most potential for expansion.
The tax board will also offer 30 to 50 acres of land in the Jefferson Industrial Park at a value of $20,000 per acre, for a total value of $1 million, plus potential payment in lieu of property taxes. The alliance would also pay up to $25,000 for a bond attorney to draw up the contract.
The total potential value of the incentive package is $1.525 million, and Nisbett said L&R is also working with the Arkansas Economic Development Corp. on a state incentive package.
Nisbett said L&R is buying the building where the SAJ facilities are located, making them committed to Pine Bluff and Jefferson County.
Tax Board Chairman George Makris said the current payroll at SAJ is $2.3 million annually, but that would jump to $3.8 million under the new ownership, with 2011 sales of $146 million.
Since the tax board cannot give a potential employer cash, Makris said the board was proposing buying “rolling stock, truck, trailers and fork lifts from Walgreens with a maximum value of $500,000, then selling it to L&R.
He said the company was given the option of taking a graduated credit for their job creation, or taking a cliff option, and chose the cliff option, meaning that within 12 months of their fifth anniversary, have to average 200 employees with an average annual salary of $32,000 to receive full credit.
“There’s no partial credit,” Makris said. “They have to meet 200 jobs or they pay back, and 200 was their number. We’re basing our incentives on what they were willing to commit to.”
On another subject, Nisbett reported on contacts with Entergy Arkansas since the board in October offered a proposal to save the more than 90 jobs that would be lost if the company goes ahead with plans to close the Pine Bluff Operations Center in 2015.
Following a meeting with the president of Entergy Arkansas and other company officials on Oct. 29, Nisbett said she contacted the company on Nov. 6, and was told they had made no decisions but would like to look at the site in the Bioplex. The following day, an Entergy official toured the site near the Pine Bluff Arsenal and National Center for Toxicological Research.
On Dec. 2, company officials requested additional information which Nisbett provided, and when she followed up Dec. 18, was told that the company “had all the information they needed at this point.”
“Right now we’re in a holding pattern but we’re still in the game,” she said.
Makris said he had checked on the price of running sewer and water lines to the site being offered to Entergy, and was told it would cost about $200,000, far less than the $600,000 the board had proposed for site improvements.
Nisbett said she expected the company to make a decision in January.
“At least they’re giving us a serious look,” board member Scott McGeorge said.
During its first year, the countywide three-eights cent sales tax for economic development raised almost $3.5 million, and has generated $857,000 in the past three months, which Makris said was “down a bit from last year.”
“I’m not willing to call three months a trend,” he said. “We’ll wait a couple more months and see what happens.”