Stamp of approval: Washington County committee ok’s tax incentive for 200-job, $144 million auto-related project

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JONESBOROUGH, Tenn. (WJHL) – More than 200 jobs and $140 million in investment from an auto industry company may be coming Washington County’s way after a county board-approved property tax incentives that would benefit the manufacturer.

The former Alo building at the Washington County Industrial Park is the target for the 44-year-old multinational company, Northeast Tennessee Regional Economic Partnership’s (NETREP) Alicia Summers told members of the Commerce, Industrial and Agriculture (CIA) committee.

“They really liked the building, particularly the size of the building but more important to that was the available workforce that we have here,” Summers told News Channel 11 after the meeting.

The 375,000-square-foot building was last used by Alo, which closed its operation here in late 2019.

The committee voted 4-0 in favor of a payment in lieu of tax (PILOT) deal that would abate county property taxes on both the equipment and, after the planned building expansion, the additional real estate value of the property.

The location is the top choice after a search that eventually narrowed to sites in Michigan, Ohio and Tennessee. Summers said the outfit would begin hiring people for Phase I of its plan in 2022 — bringing on 37 jobs next year and another 65 in 2023.

An illustration showing some of the types of products the facility will make once it settles on a location. (Courtesy NETREP)

“They anticipate being in full production in January of next year,” Summers said. “They supply direct to the (vehicle manufacturers) like Nissan, Hyundai, GM. We expect to have a decision sometime in May.” 

CIA committee member Ken Huffine praised Summers’ work on the recruitment and NETREP’s collaboration with TVA, the Tennessee Department of Economic and Community Development and others.

“For us to be able to recruit something at that level in the environment that we’re in is pretty incredible, and it really goes to demonstrate the cooperation of all the different entities within the county,” Huffine said. 

Preparation for the highly automated work — production of stamped metal car parts like fenders, doors, trunk lids and the like — would be expensive. $46 million of machinery, equipment and building upgrades would occur this year, with another $69 million of machinery and equipment going in next year.

A second phase envisions an expansion to the 375,000-square-foot building and further equipment additions that would add $29 million of investment and create a further 89 jobs. The bulk of those jobs would come in 2026 and 2027.

The proposal projects an average wage for workers hired of $35,000 per year.

“I think that’s a competitive wage scale and again just by the sheer number and volume that’s over $4 million worth of wages on an annual basis,” Huffine said. “That’s pretty big to the county.” 

The agreement includes “clawback” language if the company fails to create at least 90 percent of its job and wage targets. Non-performance would require repayment of half the PILOT.

“As we’ve developed these PILOTs we’ve realized the need to have metrics included within those, and then timelines to evaluate the performance,” Huffine said.

In fact, County Attorney Allyson Wilkinson reviewed several existing PILOTs with the committee prior to the new company discussion. It’s part of an annual reporting program the commission established.

“We have to have those metrics again in there that ensure that these are good investments,” Huffine said. “Then we have these annual reports that we’re able to communicate back to the citizens to demonstrate to them that we are making correct decisions and they are getting a return on their investment.” 

The deal also “carves out” the portion of property tax that’s earmarked for education — about 42 percent of the total. The company will pay full taxes on the building’s current value and once the estimated $8 million building expansion is complete, it will pay about $26,000 of the estimated $69,000 in new additional tax due.

The company would have to meet at least 90 percent of its job targets or risk forfeiting half the tax incentive.

“I think the key is, this company is interested in our education, which tells me they’re looking for long-term growth in this county,” Huffine said. 

“They want to be invested in our youth, making sure that they have a solid workforce supply for many many years to come and that’s the type of industry we need to be recruiting.” 

The other $43,000 — the non-education portion of county property tax — will be fully abated for two years. The tax break would then decrease by 10 percent each year until phasing out.

The “personal property” tax on the company’s nine-figure investment in equipment and machinery also would be abated. The first phase’s estimated $115 million would not be subject to any personal property tax for three years, after which the company would pay full property tax.

The same PILOT would apply to the smaller personal property investment in the second phase.

The company has agreed to pay all legal costs that the Washington County Industrial Development Board would incur to document the incentives and prepare and file closing costs.

The proposal now goes to the full county commission for consideration at its April 26 meeting.

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