Seen as mutually beneficial
Tyson/IBP is promising the City of Storm Lake it will help share in the costs of improvements at the city's water treatment plant.
Yesterday afternoon, Tyson Foods IBP Fresh Meats and the City of Storm Lake announced that they reached an agreement on a new 20-year water contract as well as a "leave town guarantee," which ensures Tyson/IBP's financial role in a proposed water treatment facility for the city. The city council will review the contract Monday.
The deal requires IBP to pay $1.66 per thousand gallons (the current standard industrial rate) or 69.17 percent of the residential user's rate. Any increase or decrease in residential rates will see a comparable increase or decrease in the company's rate.
The agreement also includes a "leave town guarantee." If the plant were to close or significantly reduces its water usage below a minimum level during the term of the contract, the company would be obligated to make up the difference through payments to the city.
"This provision helps guarantee that the company will continue to fund its share of the planned improvements in the city's water supply system through its monthly rate payments," a joint city-Tyson press release said yesterday.
If approved by the city council, the new contract will take effect Dec. 1 of this year.
"The city is pleased to have worked together with IBP to reach an agreement that will provide enough revenue to guarantee our bond payments for the next 20 years," Storm Lake Mayor Jon Kruse said. "We are happy to be moving forward with our improvements to the water plant to ensure that our water needs in the community, including residential, commercial and industrial, are met for years to come."
"While the negotiation process has taken longer than expected, we are extremely pleased an agreement has been reached," said Mrylon Kizer, general manager of the Tyson IBP Fresh Meats Storm Lake pork plant. "We thank city officials for working with us to develop this contract, which we believe is beneficial to everyone involved. It helps ensure long-term stability in the company's water rates, while giving the city assurance the company's water payments will be there to help fund capital improvements in the city's water system."
The level of water used by the Storm Lake plant has remained virtually unchanged in recent years, using approximately 1.5 million gallons a day, according to the press release.
The Tyson IBP Fresh Meats operation employs 1,700 team members in Storm Lake, generating an annual payroll of $48 million. The company spends approximately $500 million annually to buy hogs to supply the plant.
The proposed agreement is only between Tyson/IBP and the City of Storm Lake. Bil-Mar is not a part of this agreement, and company officials were unavailable for additional comment.
The Storm Lake City Council will consider the IBP water agreement at its meeting on Monday. The next item on the council's agenda that night will be awarding the bid for the water plant improvement project.
That project is estimated at $6 million, but the lack of a firm commitment from the town's two largest water users - IBP and Bil-Mar - has been a sticking point for at least one council member and many community members.
Council member Denny Vaudt has stated his concern at council meetings that if either plant ever closed down, then the burden of paying for the water plant improvement project would fall on the shoulders of citizens in the form of increased property taxes and increased water rates.