On Calumet: Red Lobster Or Red Herring?
City Commission, Economic Development, Great Falls

On Calumet: Red Lobster Or Red Herring?

Ask your average person on the street what they would like to see relative to economic development in Great Falls and there is a good chance they would say, “Red Lobster.” Then ask them if they would rather see a Red Lobster, or an expansion of the Calumet Refinery, and again they would probably answer, “Red Lobster.”

Evidently, the citizens and the Great Falls City Commissioners are in sync. The City Commission’s unanimous decision to deny Calumet’s application for a graduated tax abatement was shortsighted and unfair to the company, which recently made a $454 million dollar commitment to the future of the only true manufacturing company left in Great Falls. By that, I mean a manufacturing facility that takes a raw material and makes something out of it.

Since 1922, the refinery has processed crude oil, first the Shelby fields, and more recently from the Bakken fields and Eastern Montana, and produced fuels and asphalt we use every day. The refinery is the remaining operation of what was once a booming Great Falls manufacturing backbone that supported many local families by providing good paying jobs. Of course, agricultural processing is also as old as Great Falls itself, but gone is the potato chip company, the corn nut company, the foundry, the brick plant, and of course, the Anaconda Company. These companies provided great paying jobs that supported families, educated young people and donated to our community in many ways – in addition to paying taxes.

The City’s staff report confirmed that Calumet’s application met all statutory eligibility criteria, that the expansion had a significant positive effect on the overall tax base of the City, that it had a positive impact on employment, that it will likely result in additional industrial development, that it contributes to the goals of the City’s Growth Policy, and that, overall, it is in the best interest of the City. The Calumet expansion is responsible for the creation of 40 new refinery jobs, and should spin off 276 new jobs worth a total earning impact of $14 million annually. Calumet paid $3.9 million in County property taxes in 2015 and with the abatement schedule it still would have paid a total of $46.5 million through 2026.

So what’s the rub? Well, with the tax abatement on the new investment of $454 million, Calumet would contribute $6 million less to the City and $6 million less to the School District over 10 years, but that would not have reduced its existing tax liability, only the future tax liability of its $454 million expansion. In other words, Calumet is being penalized for making a huge investment in our community, while other companies making much smaller investments have received tax abatements.

Recently, Brett Doney of the Great Falls Development Authority reported to the City Commission that the City lost 707 jobs in 2016 and that he has never seen numbers so scary in his 32 years working in economic development. But aren’t these exactly the types of jobs the City should be doing everything in its power to attract and retain?

You can have your personal opinions about tax abatement incentives on a whole, but the City’s denial of Calumet’s application was wrong, shortsighted, and not in the best interest of Great Falls.

On one hand, we don’t have a Red Lobster because we are half the size of Billings and not growing at the same rate as the other major cities in Montana.

The City’s decision to dismiss Calumet, by far our largest manufacturer and one of our community’s leading charitable donors, sends an ominous message to businesses: “You, and all of those you would employ, would be better off someplace else.”

And that is the real reason why Great Falls does not have a Red Lobster.

January 26, 2017

About Author

Philip M. Faccenda Philip M. Faccenda is an AIA award-winning architect and planner. He is the Editor-in-Chief of E-City Beat.


18 COMMENTS ON THIS POST To “On Calumet: Red Lobster Or Red Herring?”

  1. Lt. Colonel (Retired, Army) Richard Liebert says:

    Phil, Calumet is not going to pack up and leave now I say and there’s an issue of tax-shifting here on 21 million dollars to the school district, county and state taxpayers. Calumet has received very generous permitting and free job-training money from Montana taxpayers. The oil refinery is a mature industry and I’d rather reserve the tax abatements to truly NEW industries. Calumet is very, very fortunate to receive ANY substantial expansion in a river corridor already. IF Calumet had decided to move the refinery north to the Great Bear industrial area, I’d gladly accept a tax abatement for NEW enterprise. Thanks Phil for ALL you’re done for our community and school district!

    • Philip M. Faccenda says:

      Thank You Richard for your service to our country and your involvement in our community. A couple of comments. First the Montana Statute establishing the tax abatement incentive is titled “New OR Expanding Industry; MCA 15-24-1402. I doubt we will see an out-of-state company come to Great Falls and invest $454M in our lifetime. Calumet’s investment is real and its expansion provided millions for our local building trades. As for the River Corridor, I recognize that having an oil refinery on our river banks is offensive. For obvious reasons, refineries are hard to move. In any event, we are fortunate to have now Calumet. The City’s denial of the tax abatement for Calumet reminds me of the farmer who had a goose that produced golden eggs. The farmer enjoyed the wealth that the goose afforded, but the goose had a habit of getting into the house and pooping on the living room carpet. The farmer got so mad that he dispatched the goose and you know how that ends.

  2. Bill Furdell says:

    As one not so fully informed about local issues as he should be, I appreciate the article and follow-up comments.

  3. Gregg Smith says:

    Sorry to cross-post, Phil:

    http://ecitybeat.com/gregg-smith-rick-tryon-discuss-state-great-falls/

    Because you can be sure this decision [to deny tax abatement to Calumet] will hinder development decisions, at least from Calumet, and quite possibly from other large companies who are thinking of expanding into the Great Falls market. ‘Word on the street’ is that Calumet feels betrayed, and that Calumet’s management had every reason to believe this abatement was going to be granted. (I’ve also heard rumor that all charitable contributions in Great Falls by Calumet stop now.)

    Rick points out that some people get breaks and some people don’t. Welcome to Great Falls (or, should I say, small town America?).

    I think the City was wrong to deny the tax abatement, while admitting I do not know all the details that could change my mind. The best way I have to look at it is prospectively. If a company in Great Falls, any company, came to the City Commission and said, “We are going to invest nearly half a billion dollars in your community, and create at least 40 permanent jobs paying $30,000.00 a year, if you will give us a $600,000.00 a year break on our taxes for just 10 years,” would we take that? Or, as many in the business community suspect, does the City just view a new or expanding business as a revenue source? What can you do for me?

  4. Capt BlackEagle says:

    Having lived in Great Falls for quite a few years, and now live in Tampa, there is a Red Lobster, Outback, Chili’s, and at least 3 Sonics within 5 minutes of my house. If those are what you consider progress, you might want to reconsider.

    • I agree with you Capt B.E., and let’s not fool ourselves.. the “real” reason the big-box eateries don’t locate in Great Falls is the prohibitive cost of a suitable liquor license. Though this may be a blessing in disquise, (with respect to big-box-boring franchise food), it also adversly affects the ethnocentric entrepreneur looking to help this town find its heart and soul with a unique new eatery. It is the liquor licensing expense that remains the obstical here, not the tax penalty on Calumet.

  5. Richard Ramstead says:

    You might want to wake up people. Calumet is not no Knight in shinning armor. Our river is polluted from the refinery, the ground water is polluted the refinery. As long as oil prices are high thing will be good but when prices drop watch out !!
    A lot of towns have lost when the bottom falls out. That is it , tax write off’s door close city suffer, jobs are lost. Watch out for that Knight in shinning Armor. Better do your research, it has happen in the 70’s and 80’s 90’and it goes on.2014-15 more.

  6. Kimber says:

    Richard, please enlighten me with your expansive expertise on how the refinery is polluting said water.

  7. Mike says:

    Richard, oil prices have been anything but high. Calumet has actually carried out much of this expansion during a period of historically low oil prices. The bottom did drop out and Calumet didn’t pull the plug.

  8. Dex says:

    Gregg and Philip are right on target! Denying the new and expanding business tax break sends a really negative message to the the economic development folks and those considering investing in the Great Falls community.
    Calumet has added more than 70 permanent jobs in the last five years and to Richard’s point does not discharge any water to the Missouri.

  9. Randie Curtis says:

    Great falls has been left in the dust when it comes to prosperty. For a community to prosper you need a good a strong industry to bring in good paying jobs. Great Fall as with many communities does a good job of discouraging this. Calumet has been in the community for many years, not always known as Calumet. We need to learn a few things in order to prosper. We can’t always get our way. It not about voting a given way to get someone’s vote. It about doing the right for our community. We need debates! We need to do the right things for our community. We need a plan for prosperty. The bottom line is simple. You need a plan. You need a good employment opportunity. If you do this responsibley. The rest will fall in place. Without a good sound plan, debated from all sides Great Falls will never truly prosper, nor will the people. Make a plan, Work the plan. Be industry and small business friendly. They are our future. If we can’t be business friendly the residents of Great Falls will have to take there business elsewhere!

  10. Gregg Smith says:

    Here’s a post from a friend of mine who lived in Idaho Falls:

    Good article and comments. Lacking deep background on the deets but as former Board Chair of the Economic Development Agency in Idaho Falls, this sounds like one we would’ve jumped on. Because of the math. We were on Areva (French commercial nuclear power company) like beagles on a pork chop, including tax concessions we had to push through State Legislature, not just City, and related obligations for rail, etc.

    If this wasn’t seen as win-win enough, were there any counter proposals to try to salvage the investment?

    I thought her question was a good one. Did anyone at the City try to work with Calumet to find a compromise solution? Or was it just “No?”

  11. Kim Wermling says:

    The starting wage for a laborer is over 40k plus benefits. Thise 40 positions would have put more money back into the community in the 10 years then they waived. Not to mention with the expantion they would have more assests to tax at a later date. Economics 101 people!

  12. Kim Wermling says:

    Excuse my typo.

  13. David Clark says:

    I think the new Walmart tells the story. You can have your refinery, we are expanding the Southeast side of town. That’s where the new city growth will be and eventually the new Great Falls (southeast) vs old Great Falls (west)

  14. Katherine Lewis says:

    I am not the smartest person on business, but my worry is not about the business end of things. It’s been said that no residue goes into the river and I hope that is true. I know the refinery was built before the city expanded around it. I know the view of our river front is ruined by the refinery. I know the smell is unbearable at times which concerns me as I know it infiltrates business, homes and the school that’s not that far away. I know they have had fires and other problems that are a huge concern when they happen. Now we want them to expand along the river front even more. I know it will bring jobs and Great Falls needs that desperately, but at the same time, I have always feared a huge accident happening. I know that I will hear that will never happen, however, never happens can and have happened. I, like Lt Colonel Liebert, would be happy to give them the tax abatement and anything else to help them if they would move out where they wouldn’t be such a threat physically and health wise.

  15. Morgan says:

    Billings has at least 3 refineries and is booming. I’m not sure what part of the river the refinery has polluted and I’d also like to know what NEW industry is going to come here and receive the abatement. Great Falls needs to wake up and stop letting the “old money” call the shots.

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