Area businesses deliver on job promises

Greater Dayton-area businesses made good on 88 percent of the jobs they pledged to create as part of $10.9 million in incentive agreements with counties between 2008-2012 and more than $4 million in tax abatements, some extending back nearly two decades.

The Dayton Daily News analyzed data on economic development incentives awarded to cities and townships for businesses by Greene, Miami, Montgomery and Warren counties.

Greene, Miami and Warren counties mostly use enterprise zone agreements, created by the state to give local governments a way to attract businesses and create jobs by abating or reducing property taxes. Montgomery County taxpayers pay an extra one-half percent sales tax to fund incentive grants to businesses that want to grow through its ED/GE program. Altogether, these incentives and tax abatements have led to the creation of about 4,205 jobs.

Some of the success of incentive programs can be gauged by looking at the employment rate for the community in question, said Richard Stock, director of the University of Dayton’s Business Research Group.

“If you’re close to full employment in an area, subsidizing employment in that area won’t be effective. The higher your unemployment rate, the more likely the tax credit is to help you,” Stock said.

Greg Lawson, a policy analyst for the conservative Buckeye Institute, said giving incentives to select businesses picks and chooses winners and losers, with awards going to companies that “appear” to be successful.

“That’s not truly a free market,” Lawson said. “In an ideal world, we wouldn’t need to give these things. Every tax incentive that is offered is only offered because we have an overall tax code that is cumbersome and problematic.

ED/GE grants unique to Montgomery County

Montgomery County’s ED/GE program awarded nearly $10.9 million in grants between 2008-2012. About 50 percent of the 4,384 new jobs pledged have been created. The county doesn’t tally jobs created and retained until after a project is completed, so data from recent awards isn’t reflected in that figure.

“What the ED/GE grants have done is help us grow faster,” Michael Casella, president and CEO of the Harrison Twp.-based, FC Industries said.

FC received grants in 2008 and 2012 totalling $400,000 for parking lot improvements and to replace an HVAC system. FC met it’s pledge to create 50 new jobs in 2008 and has hired 10 of the 40 jobs promised in late 2012, while retaining 250. Casella said the grants enabled him to spend his money on new equipment, instead of building improvements.

The five years of data studied by the Dayton Daily News showed job creation and retention falling short in 2008 during the recession, but exceeding expectations in 2009-10. Many of the projects that received ED/GE grants in 2011 and 12, are still works in progress, with facilities under construction, renovation and in one case, a study is underway. It’s too early to gauge their success.

“The market can be brutal. Sometimes companies do well. Sometimes they do not. That’s the nature of business,” Erik Collins, Montgomery County’s director of economic development said.

Two Miamisburg companies — manufacturer Kurz-Kasch and Iya Technologies, a chemical manufacturer — together received more than $514,000 in ED/GE in 2008 for building improvements, but later closed down operations and moved out of town.

Chris Fine, Miamisburg’s development director, said Kurz Kasch was heavily invested in the auto industry when it crumbled and Iya just didn’t need the space.

In 2009 and 2010 ED/GE grant awards outperformed expectations creating 1,774 new jobs, nearly 300 more than were pledged.

“There is no doubt that ED/GE has had a positive impact on Montgomery County and I would say, the whole region,” Collins said. “Each project is weighed before money is awarded to look at potential risks, but we have no crystal ball to look at the future.”

Greene, Miami, Warren use enterprise zones

Greene County has entered into just two enterprise zone agreements since 2005.

The state launched the Enterprise Zone program in 1982 to help communities attract new businesses and encourage existing ones to expand. In exchange for the tax abatements, which includes forgiving or reducing property taxes, the companies are expected to generate new local revenues in the form of municipal taxes and property taxes, once the agreement expires.

The program initially allowed jurisdictions to offer real and personal property tax abatements. Use of the agreement has decreased and is attributed to 2005 tax reforms which abolished the personal property tax. There were 268 new agreements in 2002 compared to 48 in 2011.

Greene County Commissioners have asked development directors for the county and the city of Xenia to make suggestions to improve the program, that could be posed to state legislators.

“We need to do something to tune up this tool so we can use it more in the county to attract businesses,” Bob Glaser, a Greene County commissioner, said.

An agreement with Jack’s Pets, in 2012 marked the first enterprise zone agreement in Greene County since 2005. The company is receiving a 36 percent break on property taxes for 10 years and has committed to creating 20 new jobs over three years.

In addition to enterprise zone agreements, the county also awards economic development grants. Aptima Inc., a Fairborn based engineering firm, and Wright Materials Research, based in Beavercreek, are the most recent recipients.

Aptima got a $15,000 grant in 2007 from the county and committed to creating 13 to 15 new jobs. The company created 14 jobs, according to an annual report it submitted to the county in 2011. Wright Materials Research Co. received a $15,300 grant from the county in 2008 and promised to create seven full-time positions. The company created five jobs.

In 2010 and 2012, Miami County, working with the city of Troy, approved two separate enterprise zone agreements with ConAgra Foods abating 100 percent of the company’s property taxes for 15 years..

“ConAgra is an important employer to us. They’ve practically doubled in size. We want to support that,” Justin Sommer, Miami County’s director of development said.

In the 2010 agreement, ConAgra committed to create 188 new jobs with a capital investment of $62.1 million. The project involved a building expansion and investment in machinery for the addition of a Slim Jim’s product line. The result: ConAgra created 276 new jobs at the project site and invested just over $63 million, Sommer said. For tax year 2012, ConAgra’s abated tax bill was $83,675.10.

Two years later, the county approved a second enterprise zone agreement for the company. This time, ConAgra committed to create 10 new jobs and invest $18 million in capital improvements. The tax abatement will be determined in 2014, according to the county auditor’s office.

Miami County approved no business incentives in 2008, 2009 or 2011.

Warren County has four active enterprise zone agreements, including two that are scheduled to expire later this year, according to state data. The most recent agreement was with Mane Inc. in 2007. The manufacturing company in Lebanon committed to creating 30 new jobs, but has more than tripled that number.

Mane received a 75 percent tax abatement for six years. The company has paid $69,884 in property taxes and $37,579 has been abated as of 2011.

Martin Russell, Warren County development director, said cities use enterprise zone agreements themselves, instead of relying on the county.

“The county won’t approve an enterprise zone agreement unless the underlying city will approve it,” Russell said. “We’ve only done one in the last five or six years. I think for the ones we have remaining they have been beneficial to the county.”