CADDO PARISH, LA (KSLA) - The Caddo Parish Industrial Board gave Hyundai GLOVIS the green light Jan. 6 to lease even more property than is included in the previously signed Industrial Realty Group/Shreveport Business Park agreement.
Hyundai GLOVIS announced its move to the former General Motor's plant in west Shreveport during a news conference Jan. 4.
The afternoon of Jan. 6, the IDB voted to let its attorney, David Wolf, write up an accord to lease 90 additional acres of property to the company.
The 90 acres is owned by the IDB and not currently under the lease of the IRG/SBP, which subleases all the plant buildings and parking areas.
Wolf said the company mainly wants to use the property for parking and to make improvements to the existing area. He pointed out that the property is not now generating any income because it is not included in the IRG/SBP lease.
The IDB had two options to vote on Jan. 6: wait until the lease for the 90 acres is complete then vote whether to sign it, or authorize the IDB officers to sign the lease when it is completed without bringing it back to the board. The IDB voted for the latter option, pending any major changes to the agreement.
Two leases for Hyundai GLOVIS
While Hyundai GLOVIS already has a signed lease with IRG/SBP, it came to the board Jan. 6 to ask for an additional ground lease.
Wolf explained that company's already signed sublease had been negotiated with IRG/SBP. The agreement IRG/SBP has with the IDB lets the company make its own terms with tenants, without the IDB's approval.
"They are entitled to do that; they don't need prior consent by the Industrial Development Board to do that," Wolf said. "So they have done exactly what the lease contemplates so far."
The IDB will get a copy of that lease, he added, but said the terms of the lease are not something they have any control over.
The lease for the additional 90 acres will be different and be drafted by IDB and parish attorneys.
Ultimately, some percentage of the Hyundai GLOVIS sublease will flow to the Industrial Development Board in the form of additional rentals,
"To the extent that the lease income exceeds the operating costs, that's something that will happen, hopefully, sometime in the future, probably not right away," Wolf said.
The company proposes to pay some rent, with the option to purchase the property at fair market value down the line, he added. "It all sounds pretty standard."
Charles Gallub, who is in charge of securing real estate for GLOVIS, said the lease with IRG/SBP is a 90-day interim agreement, "which is intended to lead to a five-year agreement."
Everyone in this transaction entered into it with the intention of it being a longer-term deal, Gallub said. The interim deal is because of the need to still work out deals with third parties such as the IDB and the port, among other factors, he explained.
"It's important to know that we don't view this as a transaction; we view this as a relationship. Trust is very important to us."
Gallub said GLOVIS would like to use the land it needs from the IDB within the next six months. He asked the board allow its attorney to negotiate a ground lease as quickly as appropriate.
"The way it works is the more land we have, the more vehicles we bring in. The more vehicles we bring in, the more people we can employ."
Jobs with Hyundai GLOVIS
The quality of jobs the company will bring also was a topic of discussion at the meeting Jan. 6.
Gallub described the salaries to be paid to employees as "family-sustaining wages."
GLOVIS predicts being able to create 150 direct jobs initially and more than 300 indirect jobs eventually.
Scott Martinez, president of North Louisiana Economic Partnership, told KSLA News 12 on Jan. 4 that the jobs will come with an average annual salary of $31,760 plus benefits.
Patrick Foran, of Hyundai Glovis' operations support division, explained the job timeline. "We've already hired through an agency. As with any agency, after so many weeks, you are able to bring those individuals on as regular employees.
"I've seen where we can invest millions of dollars in infrastructure in a facility. But if we don't have good men and women who are willing to run it for us, to handle the product with quality, then our investment winds up being wasted."
Foran went on to say that he knows the company can get good men and women in the Shreveport area. "Our first group of employees don't want jobs, they want careers. That is very exciting."
Once the company has the property it needs, Foran said, its employee count will get to 150.
"But, additionally, there are a lot of other jobs that get created as part of this project."
History of IDB and IRG partnership
Caddo Parish and the Industrial Development Board began a cooperative endeavor agreement in 2013 when the Caddo Commission agreed to spend $7.5 million to buy the old General Motors plant from RACER Trust. The GM plant was put under the name of the IDB to hold on behalf of the parish.
By using the IDB as an owner of the plant, Wolf said, it created a property tax exemption on the land and buildings because IDBs are tax-exempt. The arrangement allowed for the parish and the IDB to negotiate tax-free rental payments and annual payments.
On Dec. 27, 2013, the parish signed an agreement with Industrial Realty Group/Shreveport Business Park to market and lease the plant with what the IDB calls a PILOT lease and then sublease it to other companies to set up shop in the plant.
PILOT stands for contractual "payment in lieu of tax." PILOT payments are waived for the IRG/SBP until 2025.
Starting in 2026 through 2033, SBP will owe a PILOT equal to the full amount of taxes that would otherwise be due on the property. After 2034, the IDB lease will be terminated and the property will be sold to the SBP or another private owner, which will have to pay full taxes.
"The Shreveport Business Park has been busy preparing the plant for folks to come in, not just Elio, but businesses as well," Wolf said during the meeting Jan. 6. "This development is exactly what was contemplated by the original PILOT lease."
About GLOVIS America
GLOVIS America is a wholly owned subsidiary of Hyundai GLOVIS CO. LTD. of South Korea. It operates in 7 ocean ports, 2 U.S. factories, 3 warehouses and one inland processing center. The company website says GLOVIS America currently handles more than 1.5 million vehicles a year and employs more than 3,000 people in the United States alone.
About HYUNDAI GLOVIS Co.
HYUNDAI GLOVIS Co. Ltd. is a Korea-based company mainly engaged in integrated logistics and distribution businesses, providing shipping and air freight logistics services. The company also is involved in equipment leasing, storage services and others. To learn more about HYUNDAI GLOVIS Co., click here.