CKNA granted additional tax break

Friday, June 15, 2007

An auto parts supplier that's moving 270 jobs here was credited $303,900 by Lewisburg councilmen on Tuesday for over paying property tax-related bills because the company added more equipment and building improvements than previously indicated, officials explained Wednesday.

Calsonic Kansei North America (CKNA) Inc. decided to expand its Lewisburg plant with a PILOT (Payment In Lieu Of Taxes) Program that excuses property taxes in exchange for increased employment and payment of sums that grow annually to eventually equal normal tax bills. The deal is not unusual.

However, as the company acted on the agreement based on an increase of 150 full-time jobs, it proceeded to move $49.5 million worth of equipment here and spend $500,000 to improve its factory, according to the resolution adopted by the city council on Tuesday.

Those additional steps by CKNA are in conjunction with increased employment at the plant by 120 jobs, City Manager Eddie Fuller said Wednesday abut the council's resolution. It states that those additional jobs are to be combined with the previously planned job growth of 150 positions for a total increase of 270 as a result of the deal.

CKNA employs about 900 people, City Economic Developer Terry Wallace said.

Lewisburg councilmen accepted a recommendation from the city Industrial Development Board, but the council's voted was 3-1 with Councilwoman Quinn Brandon voting no. She questioned several parts of the resolution, including the phrase "by mutual mistake"referring to the omission of $50 million worth of additions to the factory's equipment and building. They now total $101.3 million.

The difference in the value of the building improvements and additional equipment not covered by terms in the original PILOT Program agreement were discovered during reappraisal by Property Assessor Linda Haislip's office, according to attorney Bob Binkley who reported to city council for the Industrial Development Board.

The discrepancy and different liability resulted in CKNA "paying more than anticipated in the payments of in lieu of ad valorem [property] taxes of $207,918 to the county and $96,013 to the city in 2007," according to the resolution.

"How was there a mistake of that amount?" Council-woman Brandon asked.

Binkley and Mayor Bob Phillips replied they didn't know, but that it was not the city's error, and discussion among council members then noted the resolution's phrase stating that the omission was "by mutual mistake," as pointed out by Brandon.

Wednesday afternoon, Fuller explained that CKNA officials "weren't aware of how much the purchase would be, so it [the resolution adopted Tuesday by the council] is an amendment to give the new numbers and give them a credit for the [in lieu of] taxes paid this year" applied to the next bill.

Binkley said with the Industrial Development Board's recommendation to change the PILOT Program, CKNA is "bringing in new jobs and new equipment" and, furthermore, "They're our biggest employer."

As Binkley reasserted a point made by others that night, that many of the jobs are being moved here from Manchester where Calsonic is shutting down some operations, Brandon said, "I have a problem if Calsonic gave the wrong figures."

Mayor Phillips commented to Brandon, "We need to work with them and not be really hard-nosed about them bringing in 270 jobs. If Calsonic ... wasn't investing, there, we wouldn't have a part of anything."

Calls were made Wednesday to speak with a CKNA department director about staffing changes and the nature of the deal. No contact was made as a result of the calls.

Fuller said Calsonic has produced parts for Nissan vehicle dashboards. Wallace said injection molding has been done for Nissan vehicles.

Part of the changes here includes combining the engineering and production lines so they are in the same facility, Wallace said.