Tax abatement business reveals good numbers for local factories

Monday, August 17, 2020

Tax abatement continues to pay dividends for Greencastle and the Putnam County communities.

Long considered a necessary local economic development tool that allows abatement on real property (real estate) and personal property (essentially equipment), tax abatement basically trades abated real and personal property taxes for the increase in income taxes paid by the new employees created as a result of the company’s creation or expansion.

Statements of benefits are reviewed annually on previously granted abatements, and the August City Council meeting was the time for that Thursday night.

As the City Council pondered resolutions on those properties, Greencastle/Putnam County Development Center Director Kristin Clary reviewed six industrial abatements and one involving the “shell building” built by Garmong Development. The figures are from Dec. 31, 2019, so some fluctuation is possible.

Overall, Clary assessed, “we’ve got a couple no longer meeting their numbers only because sometimes it’s a downturn in the economy, and sometimes it is because the business is just not there.”

Take, for example, IAC, she said of the Fillmore Road facility.

“They said they were going to add 53 additional jobs (reaching 837 employees when once they got their abatement) but currently they’re only at 561 employees, so they’re not hitting their employment numbers,” Clary said. “However, they definitely made their capital investment number.”

The lower jobs figure at IAC, she reasoned, is “largely due to the shift in the auto industry as cars are down in favorability to SUVs and trucks.”

“They’re in years seven and nine on their abatements, so they’re almost done with theirs. Again, they’re currently at 561 but they are almost meeting -- not the numbers -- but the amount of money they said they would pay to employees, which is important when we talk about all of our income tax we are receiving -- EDIT, CAGIT, COIT, public safety, all those.”

Less familiarly, those are Economic Development Income Tax (EDIT), County Adjusted Gross Income Tax (CAGIT) and County Option Income Tax (COIT).

Clary unveiled some interesting numbers culled from those statements of benefits, all seven of which were unanimously approved by the City Council.

For example, she said the abatements represent 3,179 jobs with a total payroll of $135,264,867 “being spent in the community.”

Those jobs also represent an annual wage per job of $42,546, “which is definitely a livable wage,” Clary noted.

“They are all valuable employers to us, and we hope they stick around a long time,” she added of the local industrial scene.

First up before the City Council was Ascena Retail Group with abatements granted in 2012, 2014 and 2015.

Ascena had promised to add 30 additional employees to a workforce of 308 at the time of abatement.

“They are currently at 834,” Clary said, “so they have more than made their job creation numbers.”

Councilor Stacie Langdon, taking note of Ascena’s presence in the news recently when it filed for bankruptcy, asked how that filing might affect operations at the Ascena plant in Greencastle.

“Actually,” Clary replied, “it’s making more work for them because of direct-ship ordering.”

The reorganization bankruptcy filing has had more of an impact on their actual stores, Clary clarified. The Greencastle plant and another in Ohio are Ascena’s fulfillment centers with Greencastle shipping directly to purchasers’ homes, while Ohio ships to stores.

“So right now it’s creating even additional work” for the Greencastle operation, Clary said, adding that “they have great robotics out there. They really run a tight ship and they’re always looking for new employees.”

Chiyoda USA Corp. was next up in the abatement parade for tax breaks received in 2011 and 2018.

Hoping to add 60 workers to reach an employment total of 406, Chiyoda did not meet its employment numbers, Clary noted.

“However, that was to be $16.7 million in payroll,” she said, “and currently they are at $18.3 million.”

Mayor Bill Dory noted that a footnote on the Chiyoda paperwork indicated that the company has hired an 121 additional temporary employees with a payroll of $4.7 million.

Meanwhile, Crown Equipment had projected 100 additional jobs during a 2017 abatement request when Crown was at 667 employees, Clary said. Adding 83 to its workforce, Crown is now at 750 employees, which is 17 shy of its target number.

However, once again payroll figures are better than expected with Crown at a $35.3 million figure, far above its project $32.8 payroll total, “which has a positive impact on our income taxes,” Clary said.

At Heartland Automotive, the numbers are up all around, Clary reported on Heartland abatements covering requests on equipment from 2013, 2016, 2017 and 2018.

Heartland had hoped to hire 32 workers to reach the 455 mark. However, the Heartland workforce has boomed to 551, which is nearly 100 more than projected.

“So they’re really healthy out there and doing a great job,” Clary praised.

Likewise, the situation at Phoenix Closures in the old Greencastle Manufacturing building.

For its initial 2011 abatement request, Phoenix said it planned to employ 90 workers with a payroll of $3.9 million. However, Phoenix is currently at 118 employees with a $6 million payroll, Clary notes.

“They’re a healthy company and a great fit for that building,” Clary said, calling Phoenix “a great facility and a great employer” as well.

The Council also approved the resolution for Garmong, which is in year nine of its 10-year abatement for the “shell building” west of the Fillmore Road “T.”

Clary said she had no employment numbers on Garmong, noting that the building is currently being used by Dixie Chopper to distribute parts to its dealers and end users now that the company has been purchased and is building its mowers in Gibson City, Ill.

Mayor Dory and Councilor Langdon were joined for the August City Council meeting by Council President Mark Hammer, Dave Murray, Veronica Pejril and Jacob Widner at City Hall with Adam Cohen and Cody Eckert participating via zoom.

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