Johnson City board recommends changing tax agreement to help company meet jobs requirements
Resource from: Johnson City Press Likes:264
Feb 17,2017
NN Inc. President and CEO Rich Holder unveils a rendering of the corporation's new Johnson City headquarters during a 2014 press conference.
After information requested by the Press showed a Johnson City company failed to meet jobs requirements outlined in an agreement for tax abatements, the city Industrial Development Board recommended extending the timeline to allow the company to meet those goals, saying the numbers in the original agreement were a mistake.
According to a press release sent Thursday by Northeast Tennessee Regional Economic Partnership CEO Mitch Miller, industrial development board members cited discrepancies between the resolution authorizing the payment in lieu of taxes agreement — or PILOT — with NN Inc. and an accompanying tax agreement.
The resolution, authorized by the industrial development board and the Johnson City Commission in April 2014, requires NN Inc. to maintain 80 percent of the 200 jobs promised by the company by the end of 2016 or make payments to the city proportional to the number of missed jobs.
NN’s mandated reporting, received by the Press after a Freedom of Information Act request made a week before the city’s development board meeting, shows 64 employees at the company’s Johnson City headquarters in 2016, 136 fewer jobs than the benchmark set in the PILOT documents. According to the agreement, the company’s payment, currently zero, should have been increased to 68 percent of full property tax assessment.
As per the tax abatement schedule, NN will pay no property taxes on its building, formerly the SunTrust bank building on Mockingbird Lane, through 2019, then payments will increase by 10 percent of the property’s assessed tax payments until 2025, when the company will pay full taxes. Taxes on equipment in the building will be abated through 2019.
The new schedule proposed by the development board will give the company until the end of 2019 to reach an employment level of 160, 80 percent of the 200 promised jobs. The development board release says the new schedule matches the dates in an agreement with the state for a $2 million grant.
In the press release, Miller commends the company for the $19 million annual impact NN’s expansion generates for the area and the regional labor income of $6.5 million.
“In our discussions about a PILOT, NN consistently talked about its five-year plan for growth,” development board chairman Gerald Thomas said in the release. “They didn’t even begin renovating the building until late 2014, so it’s rather unrealistic to think they would integrate their corporate jobs and reach the target within just a couple of years.”
In 2014, NN CEO Rich Holder announced plans to buy the bank office building and renovate it for the company’s global headquarters. NN planned to double in size and triple its revenue, he said, and needed more space for financial, legal and technology employees.
When the deal was struck, Miller said the 200 new jobs would pay an average of $75,000 per year.
NN produces metal bearings and rubber components for vehicles at plants worldwide, including in Mountain City and Erwin.
The improper documentation mirrors a similar situation discovered late last year in PILOTs held by the Washington County Industrial Development Board with Koyo Corporation USA, now JTEKT, and Nakatetsu Machining Technologies.
For a decade, according to county attorney Tom Seeley, the jobs goal in the Nakatetsu agreement for tax abatements was listed at almost double the number it was supposed to be. The county industrial development board is currently in the process of lowering that number.
That paperwork oversight was discovered after a Freedom of Information Act request filed by the Press as well, three years after Nakatetsu should have been paying penalties for missing the mark.
(Johnson City Press)
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