The city of Little Rock ended 2021 with tandem land buys totaling $4.7 million to close the deal for a $400 million plant and 500 jobs.
The purchases helped put together a 289-acre site at the Little Rock Port Industrial Park for Trex Co. of Winchester, Virginia. The acquisitions also added more than 260 acres to attract future prospects.
The land assembly for Trex ended the city’s 10-year effort to expand the Little Rock Port Industrial Park in a flurry. The deals effectively emptied the remainder of the city’s economic development war chest dedicated to buying land for industrial recruitment.
“We need to have a long-term acquisition strategy,” said Bryan Day, executive director of the Little Rock Port Authority. “If we don’t, we can’t keep fulfilling our mission of growing jobs. We need to wake up every day and figure out how to grow our footprint.”
For the moment, the industrial park’s prime source of cash to buy land has gone dry.
After 10 years, the city’s dedicated three-eighths-cent sales tax expired at year’s end. Of the millions collected to fund a variety of municipal projects, the city invested $9.7 million in deals that helped expand the Little Rock Port Industrial Park by more than 2,000 acres.
Future efforts to grow the industrial park were tied to an unsuccessful campaign for a permanent 1-cent sales tax increase that voters rejected in September. Of the projected $530 million that would have flowed from the tax over the course of 10 years, $30 million was earmarked for the Little Rock Port Industrial Park.
The Little Rock Board of Directors discussed during its Feb. 22 agenda meeting resurrecting the 10-year three-eighths-cent sales tax. For now, what form the city’s future financial commitment to the Port Industrial Park remains uncertain.
“Not having the city’s funding support will be difficult,” Day said. “What we’ll do for land acquisition in the future would involve pending transactions to sell land and reinvest the money in more land.
“That is how we will continue to grow our footprint until the city and the port come up with new revenue streams.”
Port officials are considering a trio of proposals from developers interested in buying land to house spec warehouse space. The projects range in size from 250,000 SF to 1 million SF.
“It’s something we’ve never done before,” Day said. “It’s sort of a risk, but we’re super excited about the three proposals we received.”
The plan is to parlay the sale of smaller, improved parcels into cash to help buy larger, unimproved tracts for industrial recruitment. Deals for conventional industrial users are in the works, too.
“We’re getting a lot of interest from a lot of manufacturers and site selectors to shore up distribution,” Day said. “We don’t have any announcements just yet, but we expect to make some in the first quarter.”
The Trex Deal
Unlike Amazon, which paid the market price of $3.2 million for its 80-acre site in the industrial park, Trex didn’t buy its land. The company received the land for free but with strings.
“What we did was require of them a minimum rail car use for 20 years,” Day said. “The value of that will exceed the value of the land because we’re guaranteed a revenue stream.”
The math equation: Trex guaranteed the minimum use of 123 rail cars in year one of operations, 533 in year two and 1,080 annually for the next 18 years. Based on the current $325 per rail car tariff charged by the Little Rock Port Authority Railroad, the agreement will produce at least $6.3 million over the life of the deal.
“We anticipate they will do much more than that,” Day said of the contractual minimums. “In exchange for the land, we’re getting a large rail user, which generates revenue for the port.”
Trex officials indicated the plant is expected to generate 2,000 rail cars of traffic yearly once production gets rolling. That rail car revenue stream could receive a further boost if the current tariff, which hasn’t changed in 12 years, catches up with inflation.
2 Land Buys Complete Trex Tract
The city of Little Rock purchased two tracts in October to complete the land assembly for the Trex Co. site in the Little Rock Port Industrial Park.
The city bought 60.2 acres from Jack Tyler Family LLC for $772,580 and 318 acres for $4 million from South Port Properties LLC, led by Charles and Ruth Thomas.
The Tyler property and a piece of the South Port property were combined with land already owned by the city to create a 289-acre location for Trex, a publicly traded company headquartered in Winchester, Virginia.
The city gave the site to Trex in exchange for a 20-year shipping agreement with the Little Rock Port Authority Railroad. The minimum rail-use guarantees over the life of the deal total $6.3 million and exceed the value of the land.
Trex intends to develop a $400 million complex for decking and railing production, plastic film recycling and processing, reclaimed wood storage, warehousing and administrative offices. The facility is forecast to employ 500.