State board approves up to $30 million in rebated taxes to help Sioux Falls pork plant’s move

A South Dakota board approved rebating up to $30 million in sales taxes to Smithfield Packaged Meats Corp. for construction costs associated with its move from downtown to northern Sioux Falls, raising total state support of the project to $42 million. 

Governor’s Office of Economic Development Commissioner Bill Even said in a news release Wednesday that the company’s construction of a new slaughtering and processing facility is “the largest private capital investment in South Dakota history, and reinforces the critical role agriculture and food processing play in our economy while supporting thousands of South Dakota families and producers.”

Even has a pork-industry background that includes farming, leading the state Department of Agriculture, and serving as the CEO of the National Pork Board. 

The state’s Reinvestment Payment Program allows companies to earn a rebate on sales taxes paid for upgrading equipment or constructing a new building or expansion in South Dakota. The program is limited to building projects over $20 million or equipment upgrades over $2 million. Companies must meet certain expectations — such as the number of jobs created, wages paid and physical footprint — laid out in the plan to qualify for the rebate. 

The state Board of Economic Development approved the application for up to $29,975,400 in rebates associated with Smithfield’s estimated $1.29 billion project. 

Deal to move pork plant from downtown to northern Sioux Falls includes $50 million Sanford gift

The new facility will replace Smithfield’s existing downtown Sioux Falls operation “and will incorporate advanced automation and modern processing technology,” said the press release. The new site is near the intersection of Interstates 29 and 90. 

The state previously committed $12 million in grants from its Future Fund to the Sioux Falls Development Foundation to help with the project. The money will help reimburse the foundation for the land where the new plant will be located, and for costs associated with preparing it for construction.

Meanwhile, T. Denny Sanford, a philanthropist and owner of First Premier Bank and Premier Bankcard, both headquartered in Sioux Falls, is donating $50 million to the development foundation to acquire and demolish structures at the downtown 120-acre Smithfield site for future redevelopment.

The Sioux Falls City Council approved a $90 million Tax Increment Financing district for the project, although opponents have sued the city over the project and TIF approval. A TIF allows a city to use new and higher property tax revenue generated by a development to finance eligible project costs. 

Smithfield is part of the publicly traded WH Group, based in Hong Kong.

Other board actions

The state board also approved a $7.5 million loan from the Revolving Economic Development and Initiative Fund, known as the REDI Fund. It offers low-interest loans to startup firms, businesses that are expanding or relocating, and local economic development corporations.  

The loan is for Elevate Rapid City to purchase and develop 128 acres just north of the Uptown Rapid Mall into a new business park in Rapid City, according to the Governor’s Office of Economic Development. 

Additionally, the board awarded a $500,000 grant from the state’s Local Infrastructure Improvement Program to Lake County to support reconstruction of County Road 17. The project will improve transportation infrastructure serving the Dakota Ethanol facility near Wentworth and “accommodate increased commercial traffic generated by the company’s ongoing expansion,” the state development office said.

The board also canceled a $1.3 million Reinvestment Payment Program incentive for Gevo Inc., because the incentives are contingent on completion, and the company did not build its project. Gevo had withdrawn its application.  

Gevo is a Colorado-based renewable fuels company that aimed to build a sustainable aviation fuel plant near Lake Preston. The project depended on Summit Carbon Solutions’ carbon sequestration pipeline project, which would have captured carbon dioxide from the plant and other ethanol plants and transported it for underground storage in North Dakota. Summit was denied a permit by the South Dakota Public Utilities Commission, and South Dakota lawmakers approved a ban on eminent domain for carbon pipelines. 

Gevo has since shifted its focus to projects in North Dakota.