A guarantee of 700 to 800 jobs at Cargill Protein’s new Wichita headquarters may not be ironclad.
The pact to be voted on Tuesday will solidify millions of dollars in city subsidies to help the company develop its new headquarters at 825 E. Douglas, the former site of The Eagle.
Cargill is making job commitments to City Hall as part of a package deal for about $20 million in publicly funded subsidies.
Language in the contract indicates that Cargill will be allowed to count employees who work only one day at the company’s headquarters as part of its commitment, as if they had worked an entire year.
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In addition, the agreement allows Cargill to “annualize” the salaries of temporary and part-time employees to meet a guarantee that salaries at the new facility will average $66,814 a year.
According to a grid in the staff report and the agreement itself, Cargill is committing to maintain a minimum of 700 to 750 jobs with an average annual salary of $66,814 for its first three years in the new building. That guarantee rises to 800 jobs for years four and five of the agreement.
The fine print says those counted as employees for compliance purposes “must be employed for at least one (1) day during such year,” and “the base wage or salary for an employee may be an annualized amount (e.g. if an employee is an employee for less than a year, his or her base wage or salary may be rounded up to an annualized amount).”
City Manager Bob Layton said that the definition of employee came via the state government, which negotiated alongside Wichita to keep Cargill in the city after it outgrew its current downtown office space.
“It’s my understanding that what’s in this agreement is reflective of what’s in the agreement between Cargill and the state,” Layton said.
He said the job guarantee is not the only protection for the city’s taxpayers.
Cargill is guaranteeing to invest at least $45 million in its new building, Layton said.
Cargill has also agreed to keep the building operating as a corporate headquarters. That means that another Cargill division or affiliate would have to move in if Cargill Protein – the company’s meat division – moves out, Layton said.
“With all of those factors in play, I think I’m OK with using the state definition for employee,” Layton said, although he added, “It’s a little different than what we would ordinarily use.”
He said he’s confident Cargill won’t try to game the system by counting temporary workers and part-timers as $66,000-a-year employees.
“Cargill’s been a pretty solid and trustworthy business in the community,” he said.
Cargill spokesman Michael Martin said employment won’t be an issue.
The company is building its 170,000-square-foot headquarters to accommodate 950 employees and fully expects to fill the space over time as the business grows, he said.
The protein division was the company’s most successful branch last year and it employs very few part-time workers, he said.
“You can count every (part-time worker) on one hand and have a finger left over,” he said.
Council member Jeff Blubaugh said he hadn’t heard anything about the definition of what constitutes a Cargill employee and that the contract provisions appear to have some “loose language.”
He said he intends to ask city staff to explain the job-counting process before he votes on it Tuesday.
“I’d like more clarification on that,” he said.
The state and city have already approved tax breaks for the company with an estimated value of about $13.6 million.
The development agreement also commits the city to pay an additional $6.5 million over 15 years to allow the public to use Cargill’s garage on evenings and weekends.
The garage will be in convenient walking distance to Old Town clubs and the Intrust Bank Arena.