Plants' tax breaks under fire

Friday, September 16, 2011

Property tax breaks for factories are again being considered by city councilmen, but at least one of them wants contracts to be more specific about requiring jobs created in conjunction with the financial incentive granted by elected leaders.

Several residents have called Councilman Robin Minor complaining about employment practices by businesses expanding or being established here with a reduction in city and county property taxes. The work isn't really full-time employment, Minor said.

There are furloughs and seasonal shutdowns, the councilman said of the work schedules.

A Lewisburg-based attorney representing two of several businesses named in the discussion points out that current economic conditions cause peaks and valleys for factories, and some businesses are seasonal.

Such thinking was acknowledged during the Monday afternoon meeting of the Lewisburg Industrial Development Board as well as Tuesday night when Minor repeated his point during the city council meeting.

Ace Bayou, Christian Brands and Calsonic Kansei North America were mentioned during both public meetings in City Hall. All three have contracts called Payment In Lieu Of Taxes (PILOT agreements) that use the city's tax-free status when owning property. Technically, the city holds title to plants and accepts a series of payments calculated to mimic personal and real property tax obligations that increase, usually from 10 percent of the normal tax bill to 100 percent over 10 years. Thereafter, the business reacquires the title.

PILOT agreements here require jobs be created, but jobs aren't sufficiently defined, according to Minor. His point seemed to gain acceptance during both meetings and it would appear a definition will be discussed when the IDB meets again on Oct. 3.

"Some PILOTs," Minor said Monday, "included a two-way agreement and they agreed to hire some people. Are they meeting the agreement?"

"Yes," replied city Economic Developer Greg Lowe.

"But," Minor continued, "they've had layoffs."

Lowe agreed and Minor asked, "Did the agreements say part-time, full-time, or seasonal?"

They weren't specific, according to Lowe, and Minor said, "We need to revisit that."

Also during Monday's meeting, IDB Chairman Eddie Wiles spoke against revoking PILOT agreements.

Lowe said a number of the workers "are full-time employees nine months of the year."

Wiles spoke up.

"If that situation exists, then it's our obligation to the taxpayers to look into it," the IDB chairman said.

Lowe countered that the businesses are to complete a questionnaire annually to report the number of employees they have so they will remain qualified for the property tax break.

It's a point that was made when Lewisburg-based attorney Bob Binkley was legal counsel to the IDB. Since then, the employment obligation has had a monitoring device - the annual questionnaire

A consensus appeared to be reached among the IDB members that the employment requirement should be examined more closely.

The issue arises now at a time when CKNA wants a modification of its PILOT agreement so that it might expand its building here instead of Shelbyville. The Lewisburg plant is where the inverter is being manufactured for the Nissan Leaf vehicle to be assembled at Nissan's plant in Smyrna.

The modification was recommended by the IDB on Monday afternoon, but it was not subjected to a vote Tuesday night by city councilmen who said they didn't have a copy of the proposed contract modification.

Lowe described the change as altering the schedule of payments such that the city will start to receive more dollars, but that the term of the contract will be extended. Discussion was not specific as the document was not in the council meeting room.

CKNA is the "biggest employer in the industrial park," Lowe said, noting 50 more jobs will come from the expansion, although they will come in groups of 25 positions.

"These will be full-time, high skilled jobs," Lowe said, responding to comments from mayor Barbara Woods who'd noted Lewisburg was competing to get the jobs that might have been placed in Shelbyville.

Meanwhile, it's been unclear whether there is room for expansion at CKNA's current property in Shelbyville.

As there was a recommendation to approve the modified PILOT, Minor spoke up again: "Can we amend it to say 'full-time' employees?"

City Attorney Steve Broadway noted the council has the authority to write the contract it wants.

Minor said he wants "them to be full-time and not part-time, temporary jobs."

Lowe said the jobs would be full-time positions and Minor responded, again, advocating full-time jobs be specified in any future PILOT agreement.

"Well, Greg," Woods said, "you are telling us these will be full time jobs."

A vote was postponed until a later meeting.

Thursday, Binkley said Ace Bayou and Christian Brands are living up to their contracts.

"Ace Bayou hit a peak a couple of months ago," Binkley said of employment at the plants that make game seats, beanbag chairs and cat furniture where felines hide.

"They're seasonal," Binkley said with a reference to Ace Bayou products that are frequently purchased to be Christmas gifts.

"However, I think they're meeting the full-time requirement in the contract," he said. "Yes, they hired a bunch and laid off some."

As for the employment picture at the new buildings in the business park off Mooresville Highway, the attorney commented, "I got the same impression from some of the people at Christian Brands.

"One man said they laid off some, but they'll hire back even more."

Christian Brands includes the recently opened Creed Jewelry, Will & Baumer Candles, a warehouse for a wide variety of religious products and a call center. Company officials have said the business revolves around Christmas and Easter.