No success yet in finding buyer for soon-to-close Simply Essentials plant

By Bob Steenson, bsteenson@charlescitypress.com

Efforts are ongoing to find a buyer for the Simply Essentials plant in Charles City that announced it will close in August, but so far nothing has developed.

Meanwhile, other food processing plants in and around Iowa are eager to woo the more than 500 soon-to-be-former Simply Essentials employees to come work for them.

Tim Fox, executive director of the Charles City Area Development Corp., gave a brief update on the status of the plant at the group’s monthly board meeting Wednesday.

“Apparently the plant wasn’t profitable. That’s as simply as I can state it,” Fox said.

He said he was telling meat packing companies that have contacted him from other Iowa cities and from Minnesota, Wisconsin and Nebraska that they’re welcome to have job fairs in Charles City after the plant closing date, Aug. 5.

Although the Area Development Corp can’t prevent anyone from holding a job fair in the community, Fox said, it is the ADC’s responsibility to try and place as many of the employees as it can in jobs in Charles City and Floyd County.

“What I’ve told company representatives that wanted the job fairs is, why don’t you just buy it,” Fox said about the Simply Essentials plant. That way they’d have the labor and wouldn’t have to relocate them.

“They didn’t go for that,” he said.

Fox said he was working with a couple of site selectors that could broker a sale of the facility.

He is also working with the Iowa Economic Development Authority to help find a buyer.

“I asked them if they were growing weary of doing packages for this particular site,” said Fox, about the plant that has now seen several previous owners try and fail to run a chicken processing operation.

He said the IEDA said as long as it meets the criteria, the state agency would try to help out, just like any other project.

The plant isn’t large enough to have any economies of scale for processing regular chickens, Fox said. Instead it needs to process premium chickens that can be sold at a higher price. But that also means increased costs to raise the chickens.

Simply Essentials marketed chickens raised on natural feed without artificial ingredients that were promised to be lower in cholesterol and higher in healthy Omega-3 fatty acids, and were air-cooled to improve taste.

It advertised itself as an “innovative chicken processing plant producing high quality, premium chicken products to meet demands of the health focused consumer.”

Fox was asked at the meeting if the facility could be used for anything other than a chicken processing plant.

He said it might be possible, but, “the question is then what do you do with all that machinery and equipment that they paid a lot of money for.”

He said Simply Essentials wants to sell the plant and all the equipment as a package.

It might be possible, Fox said, that the plant and equipment could process some sort of poultry other than chickens.

Charles City Mayor Dean Andrews, who is also a member of the ADC board, said, “I just know from a citizens’ complaint standpoint, it would be nice if something didn’t have an odor to it. That’s been a big problem.”

Board member Craig Anderson, of State Bank, said it would be hard to imagine something other than some sort of food processing company going in there.

Simple Essentials announced on June 6 that it would close in 60 days, on Aug. 6. It said the jobs of all 513 current employees would be terminated, but gave no reasons for the decision to close. Simply Essentials had purchased the Charles City facility in June 2016 and opened in December 2016.

Also at the meeting, Fox gave an update on the process to procure an Iowa-certified development site at the intersection of South Grand Avenue and Highway 27/218.

He said Step 3 of the documentation process was submitted to the state June 14.

He also said a wetlands survey showed the 75-acre site has 1.13 acres of wetlands on it, but the surveying company determined it was not under the jurisdiction of the U.S. Army Corps of Engineers.

“Now we’re waiting for a confirmation letter from the Corps to validate that claim. That’s a very good development, by the way,” Fox said.

The ADC board set the asking price for any company wanting to purchase the property to build on at $46,500 per acre for most of the site, except for two frontage lots that were about 1.4 acres each and would be priced at $100,000 an acre if purchased separately.

Fox said that price would be the starting point, and provided room to negotiate from the price that the city of Charles City will pay to buy the land of about $28,750 an acre, or $2.156 million total.

The Charles City Council discussed the development agreement at its workshop meeting Monday night.

The plan would be for the city to sell general obligation bonds to purchase the property, then the bonds would be repaid with TIF revenue from the South Grand TIF District where the property is located. The property would be given to the ADC.

“It looks like the city’s prepared to bond for the cost of the ownership or the purchase, and then we would be the owners and marketers and landlords,” Fox said.

Mayor Andrews asked at the ADC meeting Wednesday what would happen if the land didn’t sell for a couple of years so that part of the bonds had already been repaid with TIF money, then the land is sold is for more than what is left to repay on the bonds.

“Whose money is the leftover money?” he asked. “Area Development or the TIF or who?”

Fox said he assumed any profit made on the sale would remain with the ADC to be used to start developing another state-certified site.

“You’re assuming that,” Andrews said. “So that discussion is yet to be had. I just want to let everybody know to think about that, because that’s got to be decided.”

Fox said he hopes to have a development agreement between the city and the ADC ready for the board to look at during the next ADC meeting, scheduled for July 24.