Oak Farms Dairy’s Houston facility is preparing for a $42 million renovation with the help of a property tax abatement offered by the Houston City Council.

The facility, which is located on a 22-acre site and bounded by Leeland, Polk, Velasco and Sampson, will be upgraded and expanded to improve operational and supply chain efficiencies, the cooler facilities and other production operations, company officials say.

“We’ve outgrown our facility,” says Bill Murphy, general manager of the Dallas plant. “We’ve needed to be more efficient and add better technology and this project will allow us to do that.”

The 71-year-old plant produces approximately seven million gallons a month and this project will “significantly increase” that production level.

The City of Houston and Harris County awarded the company a four-year tax abatement as part of a so-called Chapter 380 Economic Development deal with the city, that will offset the $500,000 worth of impact fees paid by Oak Farms, according to Gordon Harris, project manager of the Oak Farms expansion project. Oak Farms will still pay all fees up front but the city will offset the impact fees once the project is complete.

As part of the agreement, the city also is also abandoning the street rights-of-way that currently end at the facility, Harris says.

“It was very important to the project that we got this tax abatement from the city because it was the only way we could make the capital investment numbers add up,” Harris adds.

In addition to preserving the company’s 500 jobs, the expansion will save another 3,640 indirect jobs pertaining to the surrounding community.

Oak Farms’ Houston facility distributes products in the Houston region, Beaumont, Brenham and Port Lavaca. Oak Farms Dairy is based in Dallas and is owned by Dean Foods Co., also based in Dallas.