Simplified: Smithfield Foods this week announced plans to build a brand new, state-of-the-art facility in northwest Sioux Falls estimated at $1.3 billion. The move also opens up 120 acres of downtown for redevelopment – enough to essentially double the size of the existing downtown area. Here's what we know so far.
Why it matters
- The new location is expected to be in Foundation Park near where Interstates 90 and 29 intersect. As part of the move, Billionaire philanthropist T. Denny Sanford agreed to donate $50 million to the Sioux Falls Development Foundation to fund the purchase and clean-up of the existing pork plant.
- That future development – which Mayor Paul TenHaken said was "a whole 'nother downtown" – is expected to be called the "Sanford District," though planning isn't yet underway for what that'll look like.
- The timing of the announcement is also significant. It's only about two months from the anniversary of the 1993 plane crash that resulted in the death of then-Gov. George S. Mickelson and seven others – primarily economic development officials returning from a conversation with executives in Ohio working to convince them to keep the downtown John Morrell meat packing plant in Sioux Falls open.
- More than 30 years later, city and state leaders once again convinced industry leaders to keep investing in Sioux Falls. Mayor Paul TenHaken told a standing-room-only crowd Monday morning that it wasn't a guarantee Smithfield was going to stay, and at one point they were looking at other states to build a new facility.
"We could've easily lost this plant," TenHaken said during an announcement Monday morning. "I don't want to just take for granted that it was assumed Smithfield will stay here because it wasn't."
OK, time for some rapid-fire questions
After the announcement, Sioux Falls Simplified readers (and folks all across town) came in hot with dozens of questions about what exactly this all means for the city.
Here is what we know now, based on interviews with city and Smithfield leaders as well as comments shared publicly.
Why did Smithfield decide to build in Sioux Falls?
A lot of it has to do with the collaboration between the business, the city, the state and economic development agencies.
Jim Monroe, Smithfield's vice president for corporate affairs, told City Council on Tuesday afternoon that he's "never been a part of anything like" the level of collaboration seen in Sioux Falls and South Dakota.
"It’s a rare opportunity for all of us," Monroe said. "Meat processing plants built from the ground up don't come about very often."
What kind of incentives is Smithfield getting to build the new pork processing plant here?
The city – pending City Council approval – is looking to offer $90 million in tax-increment financing.
- That essentially means that once the new Smithfield plant starts making more money in tax revenue than the vacant lot currently sitting there, that money can be collected and funneled back to the company to offset construction costs – up to $90 million.
- In this case, the TIF would primarily be used to offset wastewater treatment costs that the company plans to handle on-site, according to Dustin Powers, business development coordinator with the city.
A $90 million TIF? Is that the biggest TIF in city history?
Nope. It'd be the second-biggest.
Just a couple years ago, the city approved a $94 million TIF district at Foundation Park – which is exactly where the new Smithfield plant is planned.
Megan Raposa
- That TIF was approved around the time Amazon was looking at locating a facility in Sioux Falls, and since then, CJ Schwan's has also opened in Foundation Park.
- Neither of those businesses got their own TIF, and it's unclear how the "TIF on a TIF" setup might look for Smithfield. (Editor's note: there's certainly more questions I need to ask the city on this, but this is what we know so far).
What's going to replace Smithfield downtown?
It's way too soon to tell.
The existing agreement gives Smithfield up until July 1, 2030 before the Sioux Falls Development Foundation officially closes on the property, foundation President and CEO Bob Mundt told councilors Tuesday afternoon.
"We don't have any grand visions at this time," Mundt told Sioux Falls Simplified, adding that the foundation will be working with the city and community to build that vision.
That 120 acres is also essentially the size of downtown today, so it's not going to be just one thing that goes there, TenHaken said.
"There should be everything," he told reporters after the announcement Monday. "There should be park land. There should be mixed-use retail and development. There should be living opportunities and housing opportunities. There should be an extension of our bike trail and recreation opportunities, and there's gonna be a little bit of everything."
It's also going to "upend" the last few years of discussion on a new convention center downtown at the Riverline District.
Will the new pork processing facility just make the west side stinky?
Not near as much as the current Smithfield processing plant.
Monroe told Sioux Falls Simplified the new facility will take advantage of the "most advanced technology" available – including things like air scrubbing and enclosing parts of the plant that were difficult or impossible to enclose in the current 100+-year-old building.
What about water usage?
Smithfield currently uses 2.2 million gallons of water per day, according to Frank Kern, general manager of the Sioux Falls plant.
It's unclear if or how that would change in a new facility.
Will current employees keep their jobs?
Probably not all of them.
Monroe told Sioux Falls Simplified many of the jobs at the new facility will be higher-skilled positions because the new plant will have more automations and a totally new workflow.
"We fully plan to partner with local resources to train and develop our team to work with new, more advanced technology," he said. "And I think that's a good thing for our team at Smithfield, and it's also a good thing for the development of our workforce as a whole."
Tuesday afternoon during the City Council informational meeting, Kern noted that the anticipated number of jobs was between 2,800 and 3,200 – meaning there may be as many as 400 jobs lost from the current workforce employed by Smithfield.
But Monroe said he doesn't anticipate a "material change" in employment levels.
"Clearly we’re going to realize some new efficiencies, but we’re also going to realize more productivity," he said. "It's hard to predict how exactly that lands in terms of labor."
What about transportation for employees? Is the city looking at a bus stop near the new facility?
The discussion is happening, but no formal plans are in place to put a bus route out there at this point.
Here's what Planning Director Jeff Eckhoff had to say:
"The potential addition of a Sioux Area Metro bus route has been part of the conversation with Smithfield, and more broadly, the future public transportation needs of Foundation Park. We have been studying public transit demand since Amazon opened. Currently, public transportation needs at Foundation Park are being met through SAM’s On Demand service, but with the addition of CJ Foods and now Smithfield, there is an increased focus on the best way to serve this area."
What happens next?
The next step in the process will be the City Council vote on the TIF. That's expected to come before the planning commission on March 4, and then, if passed, it'll move to the City Council for first and second reading on March 10 and March 17, respectively.
