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City Council approves most tax abatement requests though IAC decision remains
Numbers don’t lie, they say.
But a multitude of numbers from statements of benefits from 21 individual abatements may have left city officials’ heads spinning.
While the individual abatements -- all of which were approved except for two statements of benefits for IAC Corp. -- offered some intriguing numbers themselves, the big numbers came from Greencastle/Putnam County Development Center Director Kristin Clary, who offered up some surprising totals.
The six local industries with tax abatements in place -- IAC, Chiyoda, Crown Equipment, Premium Brands (formerly Ascena), Heartland and Phoenix Closures -- saw a loss of 550 jobs and more than $22 million in payroll over the period Dec. 31, 2019 to Dec. 31, 2020.
Much of that can be attributed to decisions made by those corporate citizens during the pandemic period.
“So you see,” Clary said after sharing the numbers with the Greencastle City Council during its July meeting, “we have gone down because of the pandemic.”
The figures still show $51,957,578 in real property (real estate and buildings) and $226,953,518 in personal property (equipment) invested by those companies in Greencastle and Putnam County.
Overall, the total payroll for the six industries in abatements went from $135,254,867 at the end of 2019 to $113,648,673 at the end of last year.
“Those numbers are from the end of 2020,” Clary said, “so hopefully in the last seven months they have ramped back up.”
While the overall payroll is down by $22 million, Clary reported that the average annual wage (payroll divided by number of employees) for employees at the six industries has increased from $42,526 annually in 2019 to $43,229 in 2020.
“So it went up minusculely but incrementally,” Clary said, stressing that the figures are not citywide but just the companies receiving tax abatement.
“If there’s a negative thing it’s we’re talking about 550 less employees and $22 million less in wages,” City Council President Mark Hammer pointed out. “We can see what we expect our income tax revenue to drop next year when we start getting our 2020 income taxes for 2022. Again, that’s just those industries, not all the others.
“And no small businesses and no mom-and-pop shops,” Clary interjected.
Mayor Bill Dory advised that it’s not all gloom and doom.
“Even though some of these folks are looking for people,” he said, “some of them have ramped up their numbers already this year.”
Dory also pointed out that the community will receive funds through the Payroll Protection Program (PPP) that should help offset the lost payroll.
“Over $30 million is coming to the county via the PPP program,” the mayor said, “and most of that was dedicated to help subsidize payroll, so hopefully some of that will help make up for some of these other losses.”
Dealing with the ongoing abatements and the annual statements of benefits designed to show justification of those tax reductions, the Council chose to table approval of IAC abatements on equipment that went into effect in 2011 and 2013 for 10 years.
“Have we ever not certified one of these?” Councilman Adam Cohen asked.
“The county has denied a couple but the city has not,” Mayor Dory, who held Clary’s position before her, said.
Cohen suggested councilors could use some additional time to study the situation.
The County Council denied POET two years ago due to similar circumstances, Clary noted. POET subsequently shuttered its whole operation.
“So the precedent has been set in the county, but not the city,” she added.
For the end of 2019, IAC had 561 employees with a payroll of $27,808,000, Clary said, with 425 employees with a $16,010,000 payroll reported for the end of 2020.
“So they’re down $9 million and 130 employees and this does not even take into account the most recent announcement.”
IAC has announced layoffs and moving of some lines and equipment to plants in Michigan.
However, IAC has acquired a new line for the Toyota Camry and will make center consoles and door panels at the local plant on Fillmore Road.
(Since the Council meeting, Jason Waller, UAW Local 2382 president for International Automotive Components, said he spoke to Kristin Clary at length and the Camry comment was a misunderstanding. "We have a small amount of existing Toyota work in the plant that should build out early next year," Waller said."That is the work that was referenced in the meeting with IAC, Mayor Dory and Kristin. It actually is for the Sequoia not the Camry. It has been in our plant for years. There is no Camry work coming to Greencastle IAC.")
If the city does deny the abatements for IAC, the denial will have to be certified to the company, which can then request a hearing process.
Meanwhile, among the 19 tax abatement approvals, Phoenix Closures was ”the one bright shining star in 2020,” Clary said.
While Phoenix only showed an increase of one employee from 118 at the end of 2019 to 119 at the end of 2020, its payroll jumped from $6,043,000 in 2019 to $6.6 million last year.
The Phoenix abatement on both real and personal property are almost up, issued in 2011. But another will be coming on that was just approved last month by the Council.
Thursday night, the Council also issued 10-year tax abatement to Chiyoda USA on $1,060,000 in new manufacturing and IT equipment that will help retain 267 jobs.
“The totality of the benefits is sufficient to justify the deduction,” the resolution noted.
Chiyoda, Clary explained, is “displacing entry-level positions with some robotics, so they can skill up those workers so they can understand more of IT and more technical skills.
“They’re not adding new jobs necessarily simply because they can’t find the people to fill those positions. They’re just hoping to get some abatement on that new set of robotics and electronic equipment so they can just continue to operate basically. We’re just looking at bare-bones operations.
With the abatement, Chiyoda will still be paying $50,000 in taxes on the equipment over the next 10 years. Without abatement, it would have paid $123,000.
“So it’s going to save them $75,000 over 10 years,” Clary said. “They desperately need this to keep their operation fluid and keep going.
“It’s a great employer,” she added. “ I would hate for them to leave our community. There’s no threat of that or anything. I’m just saying when we can help a local manufacturer and employer out, we like to do that.”
From 2006 to 2021, Chiyoda has paid $3,075,000 in property taxes, Clary said. “So they’ve definitely added to our bottom line.”