Auburn company adding $8 million in equipment

November 27th, 2017

By Mark Murdock | KPC News - The Star

A resolution granting a tax abatement to a city manufacturer passed on first reading at Tuesday’s Auburn Common Council meeting.

Specialized Component Parts Ltd. is seeking a five-year phase-in on $8.02 million in new manufacturing equipment.

The resolution passed 6-1, with Councilman Mike Walter against. A second reading and a public hearing are planned for the next council meeting Dec. 5.

DeKalb County Economic Development Partnership Executive Director Anton King also attended Tuesday’s meeting.

SCP makes ignition components for furnaces, gas ranges and other appliances. About 150 people work at its facilities at 1620 and 1700 S. Indiana Ave., said its director of finance, Ryan Criswell.

All of the equipment would be exempt from taxation in the first year of the phase-in. The exemption would decrease 20 percent each year thereafter.

Criswell said he joined SCP in 2015 when the company was a $1 million business. In just two years the company has grown to eight times that much, he said.

“This next round of investment will help us turn the corner to be more competitive with our international competitors and will bring a new level of technology and sophistication to our manufacturing process,” Criswell said.

Criswell said the new investment includes furnaces, cooling systems and automation equipment.

Walter moved to amend the resolution to require employees to be hired directly by the company and to be full-time workers with at least 1,750 hours per year and receive health insurance, pension benefits and paid vacations.

His amendment also included clawback procedures requiring the company to reach 90 percent of the level of wages and/or number of employees established in its Statement of Benefits for the abatement. Failure to reach those levels would allow the city to require the company to pay back an amount proportionate to the deficiency in wages or number of employees, he said.

Walter also proposed that the abatement would constitute a contract between the company and the city, effective when the tax benefits are accepted.

Councilman Wayne Madden seconded Walter’s motion. The amendment was defeated 5-2, with Walter and Madden in favor.

“I’m all for the tax abatement, but I think we give it quite freely,” Madden said. “From what I understand of what Councilman Walter proposes here, I don’t see that as being unrealistic.”

Mayor Norm Yoder said he has seen many economic cycles, and a downturn could force industries to fall short of the abatement terms through no fault of their own. He said the council has the option of denying the abatement if the company is found to be not in compliance.

“The auditing and the paperwork (on requiring full-time employees with health insurance, pension benefits and paid vacation) would just be astronomical,” Councilman Kevin Webb said. “Somebody has to pay it. I imagine businesses would balk a little bit on the cost of an audit.

“On the clawback, we don’t really collect the tax. I’ve heard comments that it’s maybe not enforceable. The county actually collects the tax.”

“Under home rule, we have the power to require certain things,” Walter said. “It’s a contract if we say it’s a contract. It’s a contract if they accept the benefits. We are giving something, and we’re requiring something in return.

“If somebody defaults on a contract, for that period in which they’re not in compliance, they should risk a proportional repayment. That, I think, is running government like a business.”