Tax abatement reports met with mixed reviews
Posted: Tuesday, March 22, 2011 9:03 pm
By: Chris Menees, Staff Reporter
By CHRIS MENEES
Obion County Finance Committee chairman Tim Doyle told the Obion County Commission he had good news for the 21-member panel Monday morning.
However, it was received with mixed reactions.
Doyle appeared before his fellow commissioners during their session at the Obion County Public Library in Union City to give reports on pilot agreements for tax abatement with DuPont/Pioneer Corp. and Green Plains Obion LLC. Both issues were discussed March 1 by the finance committee.
For DuPont/Pioneer, the county commission in July 2010 approved a pilot agreement consisting of a 75 percent abatement for years 2011-15 and a 50 percent abatement for years 2016-20 on real property, building only, which has been deeded to the Union City Industrial Development Board. There was no personal property involved, according to the finance committee meeting minutes.
The finance committee signed off on the agreement. It was also noted by the finance committee that, in the future, pilot agreements will come before the committee for discussion before being presented to the full commission for a first reading.
Doyle’s first report proceeded quickly without comment, but it was his second report on Green Plains — the local ethanol plant — that prompted about 20 minutes of vigorous discussion by commissioners.
Doyle prefaced his report by telling commissioners he had “good news,” explaining that Obion County is going to draw more money than initially thought for the next three years. The county originally agreed to a $50,000 per year tax abatement for a five-year period with Green Plains and is currently in its third year.
He explained that after an audit, it was discovered the county is also due some inventory money which amounts to about $30,000 per year over the next three years, as well as about $10,000 more per year over the next three years for the acquisition of personal property after the cut-off date. Instead of $50,000 per year during the remainder of the original agreement, the county will receive an additional $40,000 per year.
Doyle said Green Plains officials were in agreement to pay the additional funds and a check should be forthcoming. He said the finance committee decided to abide by the original agreement approved by the commission and to accept the additional funds. He said at the end of the original five-year period, “all bets are off” and the ethanol plant will pay its full share of taxes.
Commissioner Jerry Grady launched discussion by asking about the auditor indicating a significantly higher amount is actually owed to the county.
Doyle explained there was a discrepancy on the amount listed on the building and a discrepancy over what is considered personal property and what is considered real property. He said it was discussed with the Green Plains representative and the feeling among finance committee members was that the county should stand by its original agreement for $50,000 per year. He said the county could go after the company for the money, but then there is a risk of no payment being made and the county ending up in court with the possibility of losing and receiving nothing.
Doyle said the finance committee also considered the possibility of another company locating in Obion County and also wanting a pilot agreement. He said if the county fights Green Plains, any industrial prospects will hear about it and it will set a precedent that the county does not live up to its word.
Commissioner Donnie Braswell said Obion County has to live with the $50,000 per year agreement, but he said Green Plains owes the county more.
“We’re losing. We take this $40,000, we’re losing,” he said.
Braswell said by taking the $40,000 per year, the county is losing $191,000 that could be used for roads or education. He said the funding will be needed when the new budget year starts in July and said commissioners will then “ask taxpayers to increase the tax rate to offset what we’re giving someone else.”
“We can smooth this over all we want to, but we’re selling out is what we’re doing,” Braswell said. “They owe us this money. Ninety-five percent of the taxpayers in this county pay their taxes. We’ve already given them an abatement. It’s not right. Forty thousand is a sell-out.”
Doyle said the finance committee approved accepting both the $50,000 per year and $40,000 per year amounts, but he said the commission had the right to change the decision. However, he reiterated that the county would likely end up in court and it would set a precedent for the next company looking to locate in Obion County.
Commissioner Danny Jowers explained there had been considerable negotiation and Green Plains originally sought a 20-year abatement with terms that were not acceptable to the county. The negotiations finally resulted in the $50,000 per year figure for five years “and no more after that.” He said it may be somewhat low, but it is better than what the company proposed.
Jowers reminded commissioners the county is in the third year of the original agreement and has only two years remaining. After the fifth year, unless there is another abatement, the county will get the full amount of taxes owed.
Commissioner Ned Bigelow said Green Plains is a large complex which benefits many area farmers. He said the county ought to give the local industry some kind of break. Commissioner Kenneth Cheatham said the county agreed to the $50,000 and he saw nothing to discuss, adding that the county should be thankful for the additional $40,000.
Braswell said the Pioneer pilot agreement was only on real property, while the Green Plains agreement was on both real and personal property. He said the commission needs to set some guidelines for the future. Doyle said commissioners will continue to learn from the past and will get better at making the agreements.
Doyle made the motion to accept the finance committee recommendation and to enter into an agreement for a memorandum of understanding with Green Plains to accept the $50,000 per year and the added $40,000. It was approved by a vote of 18-2, with Braswell and Grady voting against it and commissioner Paul Albright abstaining due to a conflict.
In other action during Monday’s 65-minute long meeting, which was opened with prayer led by Bishop Street Church of Christ minister Jeff Bell and with the Pledge of Allegiance, the county commission:
• Approved a resolution in opposition to anonymous postings on the Topix website. (See related story, Page 1; and related Letter to the Editor, Page 4).
• Approved a Budget Committee motion to rescind and delete the Goodyear railroad crossing project.
Jowers, chairman of the Obion County Budget Committee, explained roughly $40,000 had been appropriated in the last budget for the county’s match for a FastTrack Infrastructure Development Grant to repair the railroad crossing at the plant entrance. He said once motorists cross the tracks, they are immediately on Goodyear property. With Goodyear’s recent announcement that the Union City plant will be closing, Jowers said if Goodyear’s property is fenced off, it will be “the proverbial railroad crossing to nowhere.”
Jowers said the decision will save money for Obion County, Union City and the State of Tennessee.
• Approved a resolution to amend the County General Fund $35,495 to budget the cost for replacing the roof at the Obion County Health Department and a related resolution to amend the Debt Service Fund $35,495 to pay for a one-day capital outlay note for the cost of the roof repair project.
• Approved a resolution to amend the General Purpose School Fund $306,129 to cover a one-time merit bonus for county employees, an insurance premium increase and an additional loan principal payment of $250,000 to the county.
• Tabled a presentation concerning farm lease contracts for Everett-Stewart Regional Airport and the Obion County Nursing Home. Obion County Mayor Benny McGuire asked that the item be tabled until April’s meeting in order for some contract language to be clarified.
• Approved a surety bond for bookkeeper Mary Sue Chilcutt with the Obion County Highway Department.
• Approved a resolution to authorize the issuance, sale and payment of a capital outlay note not to exceed $240,000 to purchase law enforcement equipment and to replace the roof at the health department.
The original resolution also included the county’s matching funds for the Goodyear railroad crossing but it was deleted from the resolution after the commission voted to rescind its previous decision to match funds for the project.
• Approved a resolution to authorize the submittal of an application to the Tennessee Department of Transportation for a Courthouse Improvements Grant for the second phase of improvements to the courthouse grounds. McGuire said the grant will allow for the construction of a retaining wall to correct washing and draining problems within low areas of ground around the courthouse. The $73,018.25 grant will have a 20 percent match for the county, making its portion $14,603.65.
The second phase will need to be completed prior to sidewalks being replaced, which is the first phase of a sidewalk grant previously approved. McGuire said the county has five years to complete the two phases.
• Approved appointments to three boards or commissions. They included the re-appointments of Bigelow and Larry Gray to the Joint Economic and Community Development Board (farming interests); the re-appointments of Kenneth Thurmond, Harold Jenkins and Tim Partin to the Emergency Communications District (911 board); and the re-appointment of Truman Johnson to the Obion County Highway Commission.
• Approved notary public applications presented by Obion County Clerk Vollie Boehms.
• Was informed by Jowers that the budget process for next year’s county budget will begin soon. He told commissioners everyone is welcome to attend and said everyone needs to work together to devise a good budget.
Staff Reporter Chris Menees may be contacted by e-mail at email@example.com.
Published in The Messenger 3.22.11