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Tax Incentive Panel Finds 2 Companies Fall Short
YOUNGSTOWN, Ohio -- Members of the Mahoning County Tax Incentive Review Council say they want to take a harder line on companies that fall short on their job creation and investment promises.
The council voted Monday at its annual meeting to withhold recommending to the Mahoning County Board of Commissioners to continue the current abatements for InfoCision Management Corp. in Austintown and Valley Sports Ltd. & Simon Roofing, until they receive more information. The council, which normally meets once a year to review the status of tax abatement agreements administered by Mahoning County, will meet again to consider the information sought on its behalf by county Auditor Mike Sciortino.
At one point, members had voted to recommend suspending the abatements for 2014 retroactive to Jan. 1 until representatives of the companies came in to address their concerns.
The council supported the remaining abatements, although members discussed withholding support for one of the abatements. Members voted to recommend continuing the abatements for Advanced Recycling System, Coitsville Township; PMC Facilities Management Inc., North Jackson; Trumbull M.A.R.S., Austintown; Youngstown Baseline/FedEx Ground; and McHenry Industries, Austintown. An abatement for PMC Facilities Management Inc., North Jackson, expired in March 2013.
“It’s a very simple program but it is very, very important,” said Sciortino, chairman of the council. “It’s worth millions of dollars of abated taxes and also millions of dollars of investment.” Overall, the projects have generated 370 new jobs and $21.93 million in investment over the term of the abatements agreements, he noted.
In both cases where the council held off endorsing continuing the abatements, the companies involved fell short on either meeting employment or investment projections, but exceeded the projection in the other measure.
Simon Roofing, which received a 10-year, 60% tax abatement, has invested $3.73 million, exceeding the $3.45 million investment target, but has added just 13 of the 25 projected jobs.
In an email to Sciortino from Sarah Lown, senior economic development manager for the Western Reserve Port Authority, which provides economic development services to the county and administers the county enterprise zone program, Simon officials state that “increasing employment via growth through our manufacturing operations remains” the company’s “highest priority.”
The memo, which points out the banking and housing market collapse of the past decade has been “probably the worst economic crisis since the Great Depression,” notes that Simon has restructured its business model to only install its own products, a change in its business model that began last year and is “positively impacting” its business. Also, the company paid off a loan it took out ahead of schedule, added two employees last year and is in the process of adding a third, and has “impacted the city of Struthers with increased commerce,” a trend company officials said they believe will continue.
Struthers Mayor Terry Stocker told members of the council he has conversations with Simon officials every year but wants the company to come before the board or to meet with Sciortino or Lown. “Somewhere we’ve got to draw a line in the sand and let them know we’re serious regarding what the requirements are,” he remarked.
“They’re a good company and good people,” Stocker added. “We’re all under the magnifying glass. If we allow these tax incentives, we’ve got to hold people accountable” but also work with them.
A Simon official was not available to respond Monday to a media request.
InfoCision has created 95 more jobs at its Austintown call center than projected after six years of being enrolled in the program, but the dollar investment is “a little bit short,” Lown said. Investment to date at the call center, $4.47 million, falls below the $5.25 million to $6.14 million projected.
InfoCision is Austintown’s largest employer, Austintown Township Trustee Lisa Oles acknowledged. However, she is concerned that more than 100 people lost their jobs from 2011 to 2012.
Ken Carano, also an Austintown Township trustee, noted the company has lost contracts. “Their business, like most businesses, has huge competition. There’s more and more call centers,” he remarked. He also noted that turnover is high.
The council mulled suspending support for the McHenry Industries abatement after Anthony Magnetta, deputy county auditor, pointed out that while the company was exceeding its employment targets -- 22 new jobs in the fifth year of the abatement, compared to the 15 projected new jobs -- its investment was short by a similar percentage as InfoCision. The county report shows McHenry has invested $2.6 million to date under the agreement, below the $3.01 million to $4.3 million the company projected.
Oles said she is familiar with the company and has seen the investment made there, and had no problem continuing that abatement.
McHenry’s president, Ron Musilli, said a reporting error was made due to the changeover to the port authority administering the county enterprise zone program, which was formally handled by the Youngstown/Warren Regional Chamber. The company is compiling investment figures to provide to the council but he estimated it has invested about $300,000 in addition to the figure reported
“We understand the frustration across … not only all levels of government that have experienced revenue declines but taxpayers are paying an exorbitant amount of money for governmental services,” Sciortino said following the meeting. “When we’re giving companies an abatement to not pay a property tax or to abate a certain percentage of their property taxes, we have to hold that to a very high standard and be accountable as to whether the companies are being accountable to their end of the bargain.”
“There is a general feeling of this committee that we do not want to be perceived as a rubber-stamp committee,” Oles remarked. “We want to hold companies accountable. We want to hold them accountable to the terms of their initial contract for the tax abatement and we’re just making sure that they’re reaching their goals and their commitment to receive their tax abatements.”
Copyright 2014 The Business Journal, Youngstown, Ohio.
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