Cummins gets OK on tax break

Cummins, Inc. has received a 10-year tax abatement from the city for more than $60 million worth of improvements to its Midrange Engine Plant on the city’s southwest side.

The company sought the abatement for a $26.1 million building renovation project and $36.4 million in new manufacturing equipment, according to Michael Day, executive director of capital management for Cummins, and Catina Furnish, Cummins real estate leader.

Workers at the plant produce diesel engines for trucks, buses and other large vehicles.

The 10-year abatement on both investments will follow a standard phase-in schedule, said Jason Hester, executive director of the Columbus Economic Development Board, who attended Tuesday’s Columbus City Council meeting.

The total cost of the project will be phased in over a three-year period, which means there will be a staggered start to when the total value is assessed, Hester said.

When one portion of the investment is made, then that portion can enter the 10-year tax abatement schedule. The subsequent two investments on the total project will enter the 10-year schedule as they are made each year, Hester said. That means the total abatement schedule will extend over a 12-year period, said Robin Hilber, the community development programs coordinator who manages tax abatements for the city.

The total savings to Cummins through the abatement will be about $5.1 million.

Hilber told council members that the plant at 2700 W. County Road 450S, which was built in the 1970s, has not been updated in more than 20 years.

Because of that, the building needs repairs and upgrades, particularly to its roof, Furnish said.

Cummins employees at the Midrange plant currently park on the roof of the building, but that practice is beginning to take a toll on the structure.

The $26 million investment will be used to construct a surface parking lot to move cars off the roof, Furnish said. Afterward, the roof will be assessed for needed repairs and updates and will be replaced based on that assessment.

In addition to relieving some of the pressure on the building’s roof, Furnish said moving to a surface parking lot will enhance security at the plant by funneling visitors into the building in a more unified, controlled way.

However, the façade and footprint of the building will not change, Day said.

The $36 million equipment investment will be used to make technological upgrades to the plant’s current equipment, Day said.

Cummins has been told that the Midrange plant needs to update its manufacturing equipment to keep up with the needs of its customers, Day said. The new equipment upgrades will allow Cummins and its customers to stay competitive in their markets, he said.

During a meeting of the incentive review committee prior to the council meeting, councilman Frank Miller asked if it was possible that Cummins would need to spend more on the project than it currently estimates.

Furnish said she could not answer that question definitively, but conceded that such a situation had occurred in the past.

While the project will not create any new jobs, it will enable Cummins to retain 722 full-time employees with an estimated payroll of $35.8 million.

Councilwoman Elaine Wagner abstained from the vote because she is employed by Cummins. The remaining council members approved the tax abatement unanimously.

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Cummins, Inc. plans to invest $26.1 million into renovations to its Cummins Midrange Engine Plant at 2700 W County Road 450 S. The investment will include moving parking off of the roof and instead constructing a surface parking lot, and then replacing the existing roof.

A $36.41 million investment will be used to purchase new manufacturing machinery and equipment. The new equipment will be a technological upgrade that will allow Cummins and its customers to stay competitive.

The total cost of the investments will be phased in over three years.