City board revokes Nuform's tax waiver
Lewisburg's Industrial Development Board has revoked a waiver of personal property tax liability for a business that's no longer employing people here.
That business, Nuform Rolling Corp., was here to produce the metal trim for vehicle windshields, rear windows and other auto parts. It owes back taxes that could be up to $32,000 per year on manufacturing machinery valued at almost $2,520,000.
The goal of the city's contract with Nuform was to create jobs in a business that would eventually pay its full share of property taxes to increase the tax base of the city and county.
Industrial Development Board Chairman Eddie Wiles and the board's attorney, Bob Binkley, explained the panel's decision after a City Hall meeting on Monday. The personal property tax computations were obtained from officials who collect taxes: County Trustee Marilyn Ervin and Lewisburg Treasurer Connie Edde. The value of the equipment comes from the files of Property Assessor Linda Haislip.
Lewisburg's Industrial Development Board and Nuform struck a PILOT (Payment In Lieu Of Taxes) Program agreement in May of 2006. It released the company from paying personal property taxes for five years on production machinery. Instead, a five-year schedule of payments was imposed to give the business a break and gradually increase its annual obligation to the local taxing authorities.
Such agreements aren't unusual. Tennessee cities contract with businesses to attract new employers who, under a typical contract would be required to provide more jobs for residents. Some PILOT Program contracts are written with the idea that helping the business with property taxes will increase sales tax revenue. Some such agreements last for more than a decade, such as the one struck for U.S. Tank, the first business to establish itself in the business park on Mooresville Highway.
Nuform's agreement increased the dollar amount to be paid from zero in the first year to 100 percent after five years, when it was to be paying personal property taxes. In the second year of the contract, Nuform was to make an in lieu of tax payment calculated at 20 percent of the actual property tax liability.
In succeeding years, the payments were to be 40 percent, 60 percent and 80 percent of the personal property taxes paid on the equipment.
Nuform set up production equipment in a building here that was constructed for Teledyne because of an agreement to produce IBM's PC Junior, a 1980s desktop computer offered by the computer giant.
However, Nuform apparently hit difficult times and "some of the equipment was repossessed last fall," according to Binkley.
Furthermore, Nuform didn't hire the number of people it agreed to hire, Binkley and Wiles explained. When the business shut down here, there were no employees and so terms of the PILOT Program were not being met.
"When there's a default ... it makes them liable for the full tax," Binkley said.
Details of the demise of Nuform here were not explored during an interview with Wiles and Binkley after the city Industrial Board meeting. The two officials don't know if any of the personal property taxes will be paid.
"Owing it and having the ability to pay are to different things," Wiles said.
However, the eight members of the Industrial Development Board present on Monday unanimously voted for having the tax liability presented to the Marshall County Chancery Court for collection.
Lewisburg has 13 other PILOT Programs and the Industrial Development Board voted Monday to again ask those 13 businesses for a report on the status of their agreements.
Last spring, the board contacted the 13 businesses asking for a report on the status of their PILOT payments and other aspects of their business, including the number of jobs that had been created and filled, according to discussion among members of the city panel on Monday.
City officials said they hoped to have received those reports in January, or perhaps in time for the Industrial Development Board meeting this month. Wiles and Binkley indicated after the meeting that they knew of no report having been provided by any of the 13 businesses for which property tax payments had been waived.
Letters are to be written and sent to those 13 businesses asking for a report at the board's meeting in March, Wiles and Binkley said.
Wiles expressed understanding for businessmen who must file other year-end reports. He and Binkley also indicated that the 13 may well have met or exceeded the PILOT Program requirements, but that the board has a responsibility for due diligence and good stewardship on behalf of the city and county.