Wednesday, July 11, 2001
Some fail to keep tax-break promises
21% of companies haven't met job creation, investment goals
By Dan Klepal
The Cincinnati Enquirer
Businesses have failed to honor their obligations to add jobs or invest money in more than 21 percent of the tax-break deals given by Hamilton County government.
A new audit, prepared by the Tax Incentive Review Council on behalf of the county's Office of Economic Development, looked at all 121 active tax-abatement deals in the county.
The report found 26 companies did not meet their job or investment targets.
OUT OF COMPLIANCE
According to an audit by the Hamilton County Tax Incentive Review Council, these companies are not in compliance with the terms of their tax abatement contracts:|
Cincinnati Electric Inc., Reading
General Tool Co., Reading
Vulcan Oil and Chemical Products, St. Bernard
Siemens Energy and Automation, Norwood
US Playing Card Co., Norwood
Ohio Valley Flooring, Fairfax
Champion Screen Printing Corp., Fairfax
Steel Summit-Ohio, Forest Park
OKL Can Line, Forest Park
Grow LLC/DEI Inc., Forest Park
Corporate Document Solutions, Forest Park
Paper Manufacturers Co., Forest Park
Edwards Products, Forest Park
Besse Medical Services Inc., Forest Park
UTM Distributing Co., Springdale
Amko/Ampac Plastics, Springdale
Ohio Machinery, Sharonville
Federated Corporate Services, Sharonville
Jorgensen Steel & Aluminum Company, Woodlawn
Mohawk Machinery, Woodlawn
Alex Fries and Bros. Inc., Woodlawn
Watkins Manufacturing, Evendale
Gold Medal Products Co. Inc., Evendale
RPC Mechanical Inc., Evendale
Bayer Corp., Addyston
Stop Stick Ltd., Harrison
Companies that did not respond to requests for information from the council were:
General Tool Corp/Southland Properties LLC, Reading
Meridian Diagnostics (three contracts), Newtown
Direct Source International Inc., Newtown
Henkel Corp./Cognis Corp., St. Bernard
Procter & Gamble Co., St. Bernard
A.F. Schuerman Co., Elmwood Place
C.W. Zumbiel Co. (three contracts), Norwood
Texo Corp., Norwood
Faxon Machining Inc. (three contracts), Forest Park
WNJ Properties Inc., Forest Park
GTE Mobilenet Inc., Springdale
International Paper (three contracts), Springdale
Ford Motor Co., Sharonville
S.K. Rigging Co., Sharonville
Fisher Controls International Inc., Sharonville
Hollaender Manufacturing Co. (two contracts), Woodlawn
CDC Distributor, Inc./Medallion Drive, LLC, Evendale
Cincinnati Color Press Inc., Evendale
Durham Business Forms Corp., Lincoln Heights
Another 19 companies, representing 28 tax-break contracts, didn't respond to requests for information. An additional 11 companies were out of compliance but are still within a three-year grace period to meet their obligations.
County commissioners say they will crack down on companies that don't fulfill contracts. They may rescind the agreements and, in some cases, demand the companies pay back some of the tax money they would have paid if not for the tax breaks.
To me, it's a question of saying: This is what you've agreed to. We'll give you an extension, but if you don't live up to it, we'll take it back, Commissioner John Dowlin said.
The tax incentive review committee has suggested rescinding two agreements, reducing exemptions for six companies, sending out seven warning letters and 18 reminder letters to those companies out of compliance.
Most of the companies flagged in the audit had trouble creating the jobs they promised.
Ted Wahl, president of Champion Screen Printing Corp. in Fairfax, said the economy had a lot to do with his company falling 30 employees short of its promise to retain 60 full-time permanent positions and create 10 more.
We were doing all right until two years ago when companies we do business with starting leaving or going bankrupt, Mr. Wahl said. We didn't lay anyone off, but we couldn't hire new people even when we lost some due to attrition.
The council recommends cutting Champion's real estate tax break from 50 percent to 40 percent.
Fritz Grevlich, president of Watkins Manufacturing, said his Evendale company is in the same boat as Champion.
Mr. Grevlich said the slowing economy is to blame for his company being nine employees short of its goal to create or retain 29 full-time positions.
I'm grateful we're doing as well as we are. We haven't had to lay anyone off, Mr. Grevlich said.
Watkins Manufacturing received a 75 percent tax break on a $905,000 investment. Watkins will receive a warning letter.
Commissioner Todd Portune said the audit calls into question the validity of the entire program.
The fact is, many of these companies are just putting their hands out to get what they can get, and shifting a greater percentage of the burden on citizens who don't have political clout to ask for special treatment.
Commissioners Dowlin and Tom Neyer say Hamilton County is competing with the rest of the world to lure and keep businesses.
Tax abatements have resulted in $1.8 billion in investments since 1985, said Harry Blanton, the county's economic development manager.
Tax breaks are a necessary evil, Mr. Dowlin said.
I wish there was no such thing, but there is, Mr. Dowlin said. In most cases, we're playing a game of chicken the company says if they don't get (the tax break) they'll leave the area.
Mr. Neyer said the agreements will be enforced.
A deal is a deal, Mr. Neyer said. I understand that sometimes business plans don't pan out. But we gave those benefits expecting a certain return.
Commissioners are expected to draft a policy on how to handle companies not in compliance in the coming months.
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