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Incentive Package at SAJ Would Create Extra Jobs

Posted: 02/20/2013
Author: Ray King of the Pine Bluff Commercial

December 19, 2012... A proposal that would create an additional 81 jobs at what is now SAJ Distributors was approved Tuesday by the Economic Development Corporation of Jefferson County, more commonly known as the tax board.

L&R Distributors of Brooklyn, N.Y., announced in November that they would be buying the distribution center from Walgreen Co., which bought the assets of USA Drug from the LaFrance Family earlier this year.

L&R hopes to take possession of SAJ by late January or early February and anticipates there will be 119 employees at that time, Lou Ann Nisbett, president and chief executive officer of the Economic Development Alliance of Jefferson County, said during the tax board meeting Tuesday.

The proposal by the tax board would offer $500,000 in project infrastructure or equipment assistance to the company in return for them creating the additional 81 positions for a workforce of 200 within five years.  The average annual salary for workers would be $32,000.

Nisbett said the company currently has distribution facilities on the east and west coast.  The Pine Bluff facility would be their largest and have the most potential for expansion.

The tax board will also offer 30 to 50 acres of land in the Jefferson Industrial Park, at a value of $20,000 per acre, for a total of $1 million, plus potential payment in lieu of property taxes.  The Alliance would also pay up to $25,000 for a bond attorney to draw up the contract.

The total potential value of the incentive package is $1.525 million, and Nisbett said L&R is also working with the Arkansas Economic Development Corp. on a state incentive package.

Nisbett said L&R is buying the building where the SAJ facilities are located, making them committed to Pine Bluff and Jefferson County.

Tax Board Chairman George Makris said the current payroll at SAJ is $2.3 million annually, but that would jump to $3.8 million under the new ownership, with 2011 sales of $146 million.

Since the tax board cannot give a potential employer cash, Makris said the board was proposing buying "rolling stock, truck, trailers and fork lifts from Walgreens with a maximum value of $500,000, then selling it to L&R.

He said the company was given the option of taking a graduated credit for their job creation, or taking a cliff option, and chose the cliff option, meaning that within 12 months of their fifth anniversary, have to average 200 employees with an average annual salary of $32,000 to receive full credit.

"There is no partial credit," Makris said.  "They have to meet 200 jobs or they pay back, and 200 was their number.  We're basing our incentives on what they were willing to commit to."


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