Officials are offering a series of tax breaks to a South Korean auto parts manufacturer to induce the company to locate its first United States production facility in Grove City, although the company has not yet bought the property and negotiations remain ongoing.
On Monday, Feb. 3, Grove City Council unanimously approved an ordinance authorizing City Manager Chuck Boso to enter into a jobs development and incentive agreement with S&T Automotive America.
The agreements cover property at 3900 Gantz Road, which S&T plans to purchase. The company will use the site near the intersection of Stringtown Road and Interstate 71 to manufacture shock absorbers.
According to the approved agreement, the project is expected to bring 80 jobs to the city with an estimated total annual payroll of $2.2 million, along with a capital investment of $6.5 million.
Boso said landing S&T Automotive is a good development for the city. Nearly all of the 80 jobs are expected to be filled by new hires from the region.
"Any new job created within this municipality is a good thing," Boso said. "Whenever you have new employment, it helps."
The agreement was passed by council Feb. 3 as emergency legislation, bypassing a second reading and putting it into effect immediately.
"(The company) is looking to get started hiring people," Boso said.
The agreement comes with the stipulation that S&T move into the property as soon as "practicable" and be in operation within 12 months.
The existing building S&T is purchasing was built in 1991 and has 175,000 square feet. Boso said it was originally used by a pharmaceutical company for manufacturing and research. Most recently it was used by the defunct book and music retailer Borders, as a distribution facility.
"It's been vacant upwards of five years," Boso said. "It's really a shell now."
In addition to a $25,000 grant from the Grove City Community Improvement Corp., which already has been approved, S&T will receive from the city payroll tax sharing and a real property tax abatement as part of the agreement. For the first two years of the agreement, the city will pay 75 percent of the company's net payroll tax payments and will pay 50 percent in years 3-7.
The site is within an existing community reinvestment area, although the previous property tax abatement has expired, Boso said. If the company's capital investments increase the property's market value based on the county auditor's assessment, then S&T also will receive a 10-year, 100-percent tax abatement for the existing structures and a 15-year, 100-percent abatement for any new structures it builds, but Boso said he thinks that's unlikely to happen.
The company already has received a six-year, 50-percent tax credit from the Ohio Tax Credit Authority, which approved the credit Jan. 27.
Boso said the city has been working on this deal for approximately six months, adding that Columbus 2020 -- a regional economic development organization that works to bring new companies and expand existing ones in the region -- was instrumental in making it happen.
"They really aided us," he said. "I think it's worked out well."
Deborah Scherer, director of global markets for Columbus 20/20, said S&T approached Columbus 20/20 and looked at at several facilities in the area before choosing the Grove City location. The company, she said, is still negotiating and looking at other locations in Pennsylvania, Michigan and Kentucky. A decision is expected by the end of February, she said.
"While this deal is not done yet, we feel with support from the city of Grove City, this (incentive package) would potentially win us the deal," Scherer said. "We're very excited about the possibility."