Clovis approves measures for cheese plant
CLOVIS — Clovis city commissioners approved three items related to wastewater infrastructure for Southwest Cheese at a special meeting Monday.
The items were a memorandum of understanding between the city and Southwest Cheese and two resolutions from the city requesting loans from the New Mexico Finance Authority.
Under its agreement with Southwest Cheese, the city will add an additional cell to its wastewater treatment facility and other infrastructure at a cost of $8 million.
The new cell will handle the company’s waste and keep it separate from other city wastewater. The infrastructure will include a pipeline from the company to the city’s treatment facility, the new treatment cell and storage for the treated water for times, like winter, when it cannot be put on nearby farms.
Commissioner Gloria Wicker said, because the cheese plant’s water is highly saline, it must be mixed with other treated city water before being put on fields.
The city also has agreed to provide $4.5 million for a facility at the cheese plant to “pretreat” the water prior to being pumped to the treatment facility.
One request to the New Mexico Finance Authority is for $8 million to pay for the wastewater treatment facility addition. The second is for $4.5 million to pay for the pretreatment facility at the Southwest Cheese plant.
Under the memorandum of understanding, the city will charge Southwest Cheese an operation and maintenance fee that will include the finance costs of the $8 million load. The $4.5 million loan will be paid for with city economic development tax funds. At about $399,388 a year, the payments will be stretched over 20 years and will take up about 60 percent of the economic development tax fund at its current rate of return, officials said.
“The economic development tax fund is funded from a one-eighths percent gross receipts tax. It’s about $600,000 a year right now, but if the city’s economy improves it could increase to $1 million a year or more, so debt payments would take up a smaller percent of it,” said Mayor David Lansford.
Clovis Industrial Development Corporation executive director Chase Gentry said the company hopes to break ground on the new plant in January, with production to begin in September 2005.
At peak operation, the company will take in about 800,000 gallons of water a day, Gentry said.
City Planning and Zoning Commissioner Bill Bollinger, who attended Monday’s commission meeting, said he questions what will happen with the proposed loans if Southwest Cheese ever leaves the area.
“You have these big companies, if they shut down, they declare bankruptcy and it’s the city left holding the bag on the loans. And what does the city do? They turn to the poor taxpayer, saying ‘Well, you have to help us pay off this loan,’” he said.
City Attorney Dave Richards said even if the plant closes down, the loans will be secured by collateral.
“Yes, it could require payment by the city, but the city would have the wastewater treatment plant facilities and the pipeline. As part of the industrial revenue bond financing, the city will own that plant,” Richards said, adding that details of the collateral agreements have not been settled and will be ironed out during discussions between the bond attorneys, the New Mexico Finance Authority and Southwest Cheese.
The items were approved by 7-0 votes, with Commissioner Isidro Garcia absent. City Manager Ray Mondragon said Garcia told him he would be absent for medical reasons, but supported the items.