Fairfield amends tax incentive deal for one of its Fortune 500 companies

Veritiv had seen a 15% staffing reduction since moving to Fairfield in 2016, so the Property Investment Reimbursement Agreement (PIRA) was approved on Monday, June 13, 2022, by City Council to be revised to lower the threshold of the tax incentive's thresholds. MICHAEL D. PITMAN/STAFF

Combined ShapeCaption
Veritiv had seen a 15% staffing reduction since moving to Fairfield in 2016, so the Property Investment Reimbursement Agreement (PIRA) was approved on Monday, June 13, 2022, by City Council to be revised to lower the threshold of the tax incentive's thresholds. MICHAEL D. PITMAN/STAFF

One of Fairfield’s top businesses was not able to meet a tax incentive threshold due to restructuring, so City Council adjusted the deal.

In 2020, Veritiv Corporation instituted a restructuring plan that included a 15% company-wide workforce reduction. Though the restricting resulted in dozens of job losses in Fairfield, the branch office for the Fortune 500 company is still a top 10 employer in the city with more than 350 employees and a $26 million-plus payroll in 2021.

However, according to the 10-year Property Investment Reimbursement Agreement approved in January 2016, the company must have a $30 million payroll in order to receive reimbursements, or the city can adjust or withhold a payment, according to city documents. That PIRA was based on the then-employee base of 400 in Fairfield.

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“City staff recognizes Veritiv has been a good corporate partner and employer in the city and we’ve worked with Veritiv and their team to negotiate an amendment to the PIRA to reflect their current business model,” said Fairfield Economic Development Manager Nathaniel Kaelin.

The PIRA had established a gradient where a reimbursement could increase if at a higher rate for a higher reported payroll, so the greater the payroll the higher the reimbursement. This gradient will remain, but the amended agreement now includes two lower tiers.

To date, Veritiv, which is at Gilmore Pointe, 6120 S. Gilmore Road, has invested more than $5 million into their Fairfield office building, and the city has reimbursed just under $500,000, according to the city.

Combined ShapeCaption
Veritiv had seen a 15% staffing reduction since moving to Fairfield in 2016, so the Property Investment Reimbursement Agreement (PIRA) was approved on Monday, June 13, 2022, by City Council to be revised to lower the threshold of the tax incentive's thresholds. MICHAEL D. PITMAN/STAFF

Credit: Michael D. Pitman

Veritiv had seen a 15% staffing reduction since moving to Fairfield in 2016, so the Property Investment Reimbursement Agreement (PIRA) was approved on Monday, June 13, 2022, by City Council to be revised to lower the threshold of the tax incentive's thresholds. MICHAEL D. PITMAN/STAFF

Credit: Michael D. Pitman

Combined ShapeCaption
Veritiv had seen a 15% staffing reduction since moving to Fairfield in 2016, so the Property Investment Reimbursement Agreement (PIRA) was approved on Monday, June 13, 2022, by City Council to be revised to lower the threshold of the tax incentive's thresholds. MICHAEL D. PITMAN/STAFF

Credit: Michael D. Pitman

Credit: Michael D. Pitman

The amendment provides for an annual reimbursement to Veritiv that could range from $32,500 to $211,250 for the remainder of the agreement. Reimbursements are made in arrears, and the first payment was in 2018 based on the 2017 payroll. The last payment is scheduled to be made in 2027 for the 2026 calendar year.

“We believe the amendment is a good compromise to maintain a positive working relationship with one of our top employers and also to bring the agreement into compliance,” Kaelin said.

Council agreed as the board unanimously approved the amendment.

“It’s a good, creative way to work with them,” Mayor Mitch Rhodus said.

Veritiv Corporation is a Fortune 500 company that operates as a business-to-business provider of packaging, publishing, and hygiene products. The company was formed through mergers in 2014 and is headquartered in suburban Atlanta, Georgia.


COMPANY BIO

Headquarters: Atlanta, Ga.

Founded: Veritiv Corporation was founded in July 2014 following the merger of International Paper’s xpedx division and Unisource Worldwide

Employees: Company-wide, there are 6,400 employees as of 2020 with more than 350 working in Fairfield

Company description: Veritiv Corporation is a Fortune 500 company that operates as a business-to-business provider of packaging, publishing, and hygiene products. It has 125 operating distribution centers throughout the United States, Canada, and Mexico

2020 net sales: $6.345 billion, which is down from $7.66 billion in 2019, according to the company’s SEC filing

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