Toledo to revoke firms' tax abatements
10/29/2001The Seaway Pattern Co. hoped to expand its business and hire employees. As an incentive, Toledo city council gave the Angola Road manufacturer a property tax abatement in 1998.
But the economic bubble has burst, and Seaway Pattern couldn't follow through on its expansion plans. As a result, the toolmaker will lose its tax abatement with the city.
Termination of Seaway's tax abatement is one of five on tomorrow's city council agenda.
“We just couldn't meet the expansion and the hiring of additional people. There was no sense in keeping [the tax abatement] open,” said Polly Rubel, office manager of the company at 5749 Angola.
Toledo has made 197 tax abatement agreements since 1983. One hundred twenty five of those agreements are active.
The number of terminations appears to be increasing. In 1999, eight agreements were terminated. Last year, 14 agreements were terminated. This year, 18 agreements are in various stages of being terminated, according to John Sherburne, commissioner of economic development.
“We see companies somewhat reluctant to put money in machinery and equipment,” Mr. Sherburne said.
In Seaway's situation, the company was to retain 34 jobs and add 41. However, the number of jobs stands at 30, Ms. Rubel said. The company makes tools for other manufacturers who supply the auto industry.
Property tax abatements up to 10 years are issued to companies that undertake capital investments that will retain or add jobs. If they don't meet the promised goals, the tax abatement is supposed to be revoked.
Mr. Sherburne recently faced tough questions from council when it was learned that seven terminations were recommended last year by the tax incentive review committee, a group of city council, school district, industry, and administration officials.
The committee reviews tax abatements and then advises the mayor's administration on them. It is up to the administration to bring terminations to council.
At the time, none of the termination recommendations had been brought before council by the Finkbeiner administration.
“It's inexplicable for [the department of economic development] to receive the recommendation from the review committee and then wait over a year to pass them along,” Councilman Gene Zmuda said.
Councilman Peter Gerken, a member of the tax incentive review committee, said the economic development department is reluctant to terminate tax abatements.
That may be out of fear that terminating a tax abatement could help push a company out of business, or out of Toledo.
Indeed, questions have been raised about the March, 2000, termination of a 10-year, $1.8 million tax abatement for General Mills, Inc.
Last week, the company announced that it would close the cereal line in Toledo and idle 460 workers, the result of a planned sale of the plant to International Multifoods Corp.
However, General Mills has said the closing is the consequence of the planned purchase of the Laskey Road plant by competitor International Multifoods, General Mills' purchase of Pillsbury Co., and the need to satisfy anti-trust provisions of the Federal Trade Commission.
“Neither the buyers nor the sellers has given any indication that the tax abatement was a consideration,” Mr. Gerken said.
Other agreements slated to be terminated tomorrow are with: