Marysville City Council has approved a recommendation of the local Tax Incentive Review Council, terminating the tax abatement for the Heritage Cooperative facility on Scottslawn Road, built in 2016. The company failed to meet certain promised thresholds for job creation and payroll, tied to the abatement.
(Journal-Tribune photo by Michael Williamson)
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Marysville City Council has terminated the tax incentive agreement with one of the community’s leading ag businesses.
At Monday night’s meeting, city council approved the Union County Tax Incentive Review Council’s recommendation to terminate Heritage Cooperative’s tax abatement.
“Heritage is a great company,” said council member J.R. Rausch, who sits on the Tax Incentive Review Council (TIRC). “They pledged certain numbers that unfortunately they just weren’t able to meet and the abatement was based on them meeting those numbers. They are not able to meet those numbers so therefore there is a repercussion. They are not going to be able to have that abatement for the last year.”
Economic Development Director Eric Phillips explained that the TIRC is made up of city, county, township, and school representatives. The TIRC oversees the implementation and compliance of tax abatement programs. Each year the TIRC reviews abatements and TIF agreements to make sure the businesses are in compliance. Based on those reviews, the TIRC recommends continuing, modifying or terminating the agreement.
Phillips explained that in 2014 Heritage Cooperative purchased 277 acres on Scottslawn Road. That year Heritage received a 10-year, 75% tax abatement, which expires at the end of 2024. In 2016, Heritage opened its Scottslawn Road campus that includes a grain terminal, silos and research center. Phillips said that since then the company has experienced a lot of turnover, including the CEO. According to TIRC officials, there have been times when Heritage did not produce the required reports in time for the TIRC to audit the company’s compliance.
In exchange for the abatement, Heritage committed to invest nearly $35 million into the new facility and to create at least 35 jobs with a payroll of at least $1.125 million.
Phillips reported that through nine years, the company has more than met the investment pledge, but has only created 17 jobs with a payroll of $688,500. He said that even at its peak, the company had created only 25 jobs with a $803,000 payroll.
Because the company has not met its pledge, the TIRC unanimously recommended terminating the agreement. At Monday’s meeting the city council approved the termination, which must also be approved by the Union County Commissioners.
Phillips said he has met with leadership at Heritage and they are “aware” of the decision to terminate the abatement.
“They understand where we are. They understand the position we are in and they respect the decision we are making,” Phillips said.
City Manager Terry Emery, who sits on the TIRC, said that during COVID, the group was “hesitant” to take action against companies that were not meeting the investment, jobs or payroll thresholds they had agreed to.
“We are clearly out of that time period and they are still not meeting the expectations of the abatement, so it was the unanimous decision of the TIRC board to come in with request to terminate this agreement,” he said.
Rausch agreed that the TIRC took “a little softer stance” during COVID.
He said the council discussed terminating the Heritage agreement in the past but wanted to give the company the benefit of getting past COVID.
Phillips stressed that the decision does not negate what Heritage has done for the community. Phillips said that for 2022, even with the abatement, Heritage paid about $84,800 in property tax for the site.
He said the company also paid income tax but the state does not release how much is paid by companies. He added that in 2021, Heritage donated the Uptown grain terminal that includes two acres, valued at $550,000, to the city.
Council member Deb Groat asked if that donation could be used to “offset” some of the taxes for the final year.
Rausch said Groat needed to “add one more figure to that” explaining that Heritage would have needed to repaint the silos, at a cost of about $350,000, if they had not turned the site over to the city.
“They saved a bunch of money by giving the property to us,” he said.
Council member Henk Berbee said the largest recipient of the increased tax money would be the schools and other entities that rely on property taxes for revenue. Phillips said 70% to 75% of the property tax would go to the school district.
Phillips said he has asked Union County Auditor Andrea Weaver how much Heritage would need to pay in property tax for next year, but she has not gotten that number to him.
In addition to recommending the termination of the Heritage abatement, the TIRC also reviewed several other enterprise zone and TIF agreements, most of which were continued. The council continued abatements for Sumitomo, MIXT Solutions, Scotts Miracle-Gro, Ohio Laser and Velocys and Richwood Bank.
The TIRC did reduce the abatement for AutoTool in Jerome Township. Phillips told the council that AutoTool has satisfied its pledged investment but has failed to meet its pledged thresholds for new jobs, retained jobs or payroll. He expressed concern about whether the company would be able to meet the promised goals. Phillips recommended the TIRC reduce the abatement from 100% for 10 years to 55% for eight years, which is in line with the county’s Economic Development Incentive Policy (EDIP).
The council transferred an abatement from KTH Parts Industries to RT Moore. Phillips told the TIRC that KTH is no longer occupying its former building in Jerome Township and sold the property to RT Moore. He explained that the abatement is tied to the property not the business.
Phillips said he spoke with the new owner who anticipates creating more jobs and payroll than KTH pledged at the start of the abatement.
Rausch said the TIRC takes its obligation to review the agreements “very seriously.” He said that when a company applies for an abatement, “it’s not just willy-nilly given out.”
“We go through a negotiation process and we do hold them to what they pledged. Unfortunately for Heritage, they were unable to meet what they pledged,” he said.