SOUTH BEND — The city council unanimously made a positive, unanimous recommendation Monday night for two tax cuts that could put South Bend at the center of the Indiana aquatic products market, and possibly the Midwest, for years to come.
JEM Farms South Bend plans to spend up to $178 million on greenhouses and logistics equipment to grow tomatoes and strawberries year-round on land at Calvert Street and Renewable Drive, adjacent to the South Bend Ethanol plant.
The facility is located on land owned by Ceres Partners, the agricultural investment group south of the University of Notre Dame campus and the original investors in Pure Green Farms.
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Pure Green, the brand name of Greenleaf Holdco, began hydroponic growing a variety of leafy greens in a new 4-acre greenhouse at a site near the ethanol plant in early 2021. Today, its products are distributed to establishments, grocery stores, and warehouses in all over the region.
The Pure Green facility has caught the attention of Paul J. Matronardi, a major figure in the aquatic products market throughout North America. He has invested in the Pure Green facility, but would also like to bring JEM operations to the area because he is also an investor in this business.
The location makes sense because there is ample room for operations to grow with Pure Green owning approximately 64 acres, and parent company Ceres owning 280 acres adjacent to it, said Joe McGuire, CEO of Pure Green. In addition, facilities can eventually use the heat from the residue and carbon dioxide coming from the nearby ethanol plant, and there is plenty of water to support hydroponics and its location is convenient for distribution.
“There are 55 million people within a 300-mile radius of Pure Green,” McGuire said. “And there are 75 million within 400 miles.”
According to its proposal, the JEM could eventually spend about $178 million to build and equip about 100 acres of greenhouses over several years to produce tomatoes and strawberries under the Red Sun Farms brand. Ultimately, it says it could employ up to 110 people involved in farming, packaging and distribution.
JEM employees will get an average of about $29.77 an hour, and even with the cuts, the project will still generate about $2.5 million in taxes during the relief period, according to its implementation.
At the same time, Greenleaf says it could spend nearly $68 million to expand Pure Green’s operations, which currently grow, package and ship romaine lettuce, watercress and leaves. “If things work out, we’d like to add three more greenhouses,” McGuire said.
According to Greenleaf’s proposal, the expansion would allow it to retain 25 existing jobs and add 75 new jobs over the next several years. Greenleaf jobs average just over $24 an hour and the company estimated they would still generate about $500,000 in taxes during the relief period.
The proposals left the South Bend Council Community Investment Committee in unanimous approval with council members expressing enthusiasm for the projects and the city being at the heart of the rapidly growing market for indoor grown products.
In addition to mitigation, the city is also required to contribute $3 million to infrastructure improvements.
“This is one of the most significant capital projects we have seen in a long time,” Jeff Rea, president and CEO of the South Bend Regional Chamber of Commerce, said of the proposal. “It’s in an area of town that’s ready for development but has been disrupted by the rising water table.”
Agra Greenhouse Group, which focuses on the site selection business of large greenhouse operators, represents both JEM and Greenleaf in the expansion proposal and is requesting a 100% reduction in property taxes for five years with the price dropping and finally disappearing after the ninth year of both proposals.
The site selection company is also demanding a 100% reduction in personal property taxes for five years, but the Indiana General Assembly is currently considering legislation that would reduce or reduce these taxes on machinery and equipment.
“It’s a good location because of its proximity to markets, ample water supplies, and potential partnerships with the ethanol plant,” Greg Elam, director at Agra Greenhouse Group, said before city meetings. “But the projects are meaningless without incentives and adjustments to electric utility prices.”
If the incentive packages are approved, Greenleaf could be ready to start a second indoor greenhouse for lettuce as early as this spring, Elam said. It may be the end of this year or early next year before the JEM facility can operate.
The 10-year property tax credit for the two projects is approximately $10.4 million, and the personal property tax is estimated to be just over $6.8 million.
Based on its economic analysis, the city’s Department of Community Investment estimated that the deal could have an economic impact of $84.6 million due to other investments it could stimulate, as well as direct and indirect jobs.
The project will also reflect positively on the city as a place that embraces the emerging new fields, as well as ensuring a stable supply of fresh produce to the area, said Santi Garces, executive director of community investment in the city.
McGuire said food security has become more important due to the transportation disruptions caused by the pandemic. Additionally, he said, although there have been several recoveries in field-grown lettuce leaves in the past month, hydroponic foods are safer because they are generally untouched by human hands and are raised without pesticides and fungicides.
The mitigation decisions will be presented to the city council on February 14 for final approval.