HomeMy WebLinkAboutItem 12 Swanson Group Manufacturing LLC Request Regaring EZ Extension in Springfield
AGENDA ITEM SUMMARY Meeting Date: 4/6/2015
Meeting Type: Regular Meeting
Staff Contact/Dept.: John Tamulonis/CMO
Staff Phone No: 541-726-3656
Estimated Time: 10 Minutes
S P R I N G F I E L D
C I T Y C O U N C I L
Council Goals: Community and Economic
Development and
Revitalization
ITEM TITLE:
SWANSON GROUP MANUFACTURING LLC REQUEST REGARDING
ENTERPRISE ZONE EXTENSION IN SPRINGFIELD
ACTION
REQUESTED:
Approve/Not approve:
A RESOLUTION AUTHORIZING THE CITY MANAGER TO SIGN
AGREEMENTS WITH LANE COUNTY AND THE SWANSON GROUP
MANUFACTURING LLC TO EXTEND THE PROPERTY TAX EXEMPTION
TWO YEARS FOR A VENEER PEELING AND PLYWOOD LAYUP MILL IN
THE DOWNTOWN SPRINGFIELD AREA.
ISSUE
STATEMENT:
As co-sponsor of the Springfield Enterprise Zone II with Lane County, consider
approving the resolution to extend property tax benefits for an additional two years
to the Swanson Group Manufacturing LLC for its proposed $44.85 – $54.75 million
veneer peeling and plywood layup operation to replace the facility lost to fire in
July 2014.
Swanson Group has requested that both sponsors (Lane County and the City of
Springfield) of the Springfield Enterprise Zone approve extending enterprise zone
benefits. In Swanson Group’s decision to replace the facility lost in July 2014 with
a $44.85 – $54.75 million veneer peeling and plywood layup operation to replace
the facility lost to fire in July 2014, Swanson Group needs to know if it will have an
additional two years (five years total) of enterprise zone benefits to ensure
compensation and hiring meets the zone requirements. A three-year exemption
requires the firm to merely increase its employment level by 10% and maintain it
throughout the exemption period. The extended five-year exemption also requires
that the Average Annual Compensation level for new hires be maintained above
150% of Lane County’s average wage of $38,353 or above $57,530 throughout the
five-year exemption.
ATTACHMENTS: 1: Council Briefing Memo
2: Enterprise Zone Request from Swanson Group Manufacturing LLC
3: Resolution
4: Agreement for Enterprise Zone
DISCUSSION/
FINANCIAL
IMPACT:
See Attachment I: Council Briefing Memo.
Attachment 1, Page 1 of 2
MEMORANDUM CITY OF SPRINGFIELD
_________________________________________________________________________________________ DATE: April 2, 2015
TO: Gino Grimaldi, City Manager FROM: John Tamulonis, Community Development Manager
SUBJECT: Swanson Group Manufacturing LLC Request for Extended Enterprise Zone Exemption
__________________________________________________________________________________________
ISSUE: Swanson Group has requested that both sponsors (Lane County and the City of Springfield) of the Springfield
Enterprise Zone approve extending enterprise zone benefits. In its decision to build its proposed $44.85 – $54.75
million veneer peeling and plywood layup operation to replace the facility lost to fire in July 2014, Swanson Group needs to know if it will have an additional two years (five years total) of enterprise zone benefits.
BACKGROUND: The Swanson Group is eligible and has begun the process of being authorized by the Springfield Enterprise Zone
Manager and Lane County Department of Assessment and Taxation for three years of enterprise zone benefits. In
addition, the authorization application requests approval of the investment for an additional two-year exemption, if the Enterprise Zone sponsors--the City of Springfield and Lane County--agree with the firm in writing on
extending those benefits and the firm meets the terms set by the sponsors. The Swanson Group has begun planning for construction of a 330,000 square foot building to house the veneer
peeling and plywood layup mill. The firm expects to finish constructing the facility in fall 2016 and employ about 190 employees at full operation. (The application indicates the firm’s employment averaged 78 employees
over the previous 12 months based on nearly 250 full-time employees before the fire and since then just 4
employees most recently at the facility.) The firm anticipates its employees, on average, would receive compensation that will exceed 150 percent of the Lane County average annual wage. The most recent data on prevailing Lane County average annual wage at the time of applying for authorization was $38,353 and 150% of
that figure is $58,530.
Enterprise Zone Requirements:
Expanding firms operations in the zone must increase by at least 10% the average number full-time employees over the last 12 months to receive Enterprise Zone benefits. Swanson expects to exceed this minimum increase. In
addition, Swanson Group must have a first source agreement with the Oregon Employment Division. In effect
until the end of the tax exemption period, this agreement requires that Swanson Group’s Springfield operations first consider qualified candidates forwarded by the Employment Division from publicly funded employment
agencies. The waiver of property taxes for a three-year period is the primary benefit to the applicant. However, for the firm
to qualify for extended property tax exemptions, the sponsors of the zone and the firm must agree in writing that: (a) The firm will compensate during the entire five-year property tax exemption period all newly hired employees at an average rate of not less than 150 percent of Lane County's average annual wage prevailing at the
time of approval; and (b) The firm will meet any additional local requirements that the zone sponsors may reasonably request.
If the applicant does not meet these conditions, it cannot obtain the additional two years of tax exemption benefits. As co-sponsors, both the Springfield City Council and the Lane County Board of Commissioners would
need to approve resolutions that extend benefits under the terms described above.
DISCUSSION:
The Swanson Group has requested such approval from the Zone sponsors with its authorization application. (See
Attachment 1, Page 2 of 2
Attachment II.) The Springfield Enterprise Zone Manager has forwarded the firm's request to the Lane County
Tax Assessor and informed the Lane County Administrator of the request. The Board of Commissioners would consider this only after the Springfield City Council has considered the request and approved it. The proposed
project is eligible for the extension of benefits. In return for the extension, the City has, for some time, required that firms developing sites to pay the City the
equivalent of providing public services during the two-year extended EZ period for Police, Fire and Life Safety, and other services generated by the new facility's operations. In this case, the proposed facility is replacing the
mill lost to fire last July with a substantially newer mill meeting current building, fire, and specialty codes and
would therefore likely require fewer service calls and public services than the old facility. Consequently additional fees have not been included in the extension period of two years.
Financial Impacts: Prior to the mill’s fire the approximate value on the Lane County 2014 tax roll, excluding land value, was about
$23,217,260 paying about $343,624 in property taxes to all the public taxing districts in the Swanson Group area.
The financial impacts of extending Swanson Group’s property tax exemption on the City estimated using the
value range of the investment in the new mill facilities ($44.85 – $54.75 million) and the current tax code area
rate of $18.1590 per $1000 valuation, excluding appreciation or depreciation of improvements, would indicate an annual range of property tax exemption for years one through five of about $814,400 to $994,200 to all the public
taxing districts in the 01999 Tax Code Area. Estimated Property Tax Exemption Range: (Annual Estimate $814,400 to $994,200)
Low High Years 1 to 3 $2,443,200 $2,982,600
Years 4 to 5 $1,628,800 $1,988,400
Total Years 1 to 5 $4,072,000 $4,971,000 REQUESTED ACTION:
Approve the resolution extending the property tax exemption period an additional two years beyond the initial three years for the Swanson Group and authorize the City Manager to sign agreements with its co-sponsor Lane
County, should the Commissioners approve a similar resolution, and with the Swanson Group to be effective
throughout the extended Enterprise Zone tax exemption period.
Attachment 2, Page 1 of 5
Attachment 2, Page 2 of 5
Attachment 2, Page 3 of 5
Attachment 2, Page 4 of 5
Attachment 2, Page 5 of 5
Attachment 3, Page 1 of 2
Attachment 3, Page 2 of 2
Attachment 4, Page 1 of 2
Attachment 4, Page 2 of 2