But nearly $1 million has already been promised locally and more is on the way.
Last month, Montgomery County commissioners approved the city’s Moraine’s request for $700,000 in development funds — called “ED/GE” funding, for pooled Economic Development/Government Equity funding — to attract Fuyao to the plant, renamed by IRG as “Progress Park” nearly three years ago.
Often, an ED/GE committee of local officials either cuts funding requests or breaks up large requests across more than one funding cycle. (ED/GE funding grants are awarded twice a year.) But this time, the committee awarded Moraine’s full $700,000 request, citing the strength of the proposed development at the former GM plant.
Kristi Tanner, a managing director of JobsOhio, the state’s private development arm, told the Dayton Daily News this week that it was too soon to detail the likely state incentives package Fuyao will be offered. But there’s little doubt state and local incentives will be approved.
“It’s going to be substantial,” Dave Hicks, Moraine city manager, said Friday.
Hicks expects the city to offer its package, as well, but like Tanner, could not offer details.
Fuyao Chairman and Founder Cao Dewang and Stu Lichter, principal of Industrial Realty Group (IRG), signed a pact Friday at the Ohio Statehouse affirming Fuyao’s plans to buy 1 million square feet of space at the plant in Moraine. After the company begins operations in late 2015, the state expects it to hire 800 workers and managers.
And while those involved in the deal express optimism, a package of incentives and the company’s “due diligence” research into the site still remain as the some of the main work ahead.
Lichter and Cao downplayed any possibility that the deal may come unraveled. Lichter said Fuyao officials have already done extensive research and review and he expects the sale to close in April.
State Sen. Bill Beagle, R-Tipp City, who was at the Statehouse on Friday, said that he is watching the “fruits of JobsOhio’s success” in the Miami Valley with the Fuyao announcement as well as Abbott Labs decision to build a beverage production plant in Tipp City.
State incentives packages can take weeks or months to come together. When Bob Evans Farms moved from Columbus to New Albany, it was more than two months between the first official announcement in early 2011 and the then-Ohio Department of Development approval of incentives to keep the company in the Buckeye State.
Bob Evans got a 70 percent, 10-year tax credit for pledging to add 150 jobs, and $7.2 million in additional payroll, for staying in Ohio instead of moving Texas.
Greg LeRoy, executive director of Good Jobs First and Corporate Research Project, a Washington D.C.-based advocate for government accountability in economic development, cautioned against seeing incentives as more important than they are.
Incentives are one in a mix of factors that draws a company to a site, and no company will negotiate with a state or a city on incentives unless the “business basics” of a decision — geography, labor costs, logistics, infrastructure — are already sound, he said.
“It’s not likely that incentives are decisive, because they almost never are,” LeRoy said.
The state has several tools at its disposal.
JobsOhio can offer loans and grants to companies who are moving, expanding or “revitalizing” sites. A “Growth Fund Loan” is available to projects ranging in size from $500,000 to $5 million. Established companies, however, may be expected to get more than half of total financing from private capital sources.
Ohio also offers tax credits to companies who add workers. The Ohio Job Creation Tax Credit is a refundable credit to companies generally creating at least 10 new jobs in three years, with a minimum annual payroll of $660,000 that pay at least 150 percent of the federal minimum wage.
The tax credit is measured as a percentage of the state income tax withholdings for all new employees hired under the program, and is applied toward the company’s commercial activity tax liability.
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