COLUMBUS, Ind. — Columbus City Council has approved tax abatements for two manufacturers, though council members were split on one of the requests.
The council voted Tuesday to approve a personal property tax abatement for Applied Laboratories, Inc. They also approved Nikkei MC Aluminum America’s request for real and personal property tax abatements in a 5-2 vote.
Council members Elaine Hilber and Grace Kestler voted against the measure due to concerns about Nikkei not fully meeting its promised headcount from a previous abatement request.
Nikkei, which is a secondary aluminum ingot manufacturer, is planning to grow its operations at 6875 South Inwood Drive, said plant manager Dean Trapp.
“Our proposed project calls for the installation of new manufacturing equipment, calling for a Personal Property investment of $2,041,775,” he wrote in a letter to city officials about their latest request. “In addition, we will expand our facility by 9,990-square-feet, calling for a Real Property investment of $2,318,224.”
Plant engineer Chris Smith told city council that Nikkei plans to purchase shredding equipment and conveyors that will allow the company to increase its storage capacity while also reducing its carbon footprint.
“The ‘Shredder Project 2023’ includes the purchase and installation of a new conveyor, wheel shredder and accompanying infrastructure, as well as building expansion providing adequate space for the additional equipment,” the company wrote in its application. “This investment will result in a more efficient operation while increasing the recycling of wheels, reducing forklift movement and diesel fuel usage by 60% for the overall wheel usage process, in turn reducing our carbon footprint.”
The company expects the project to be complete by the end of November.
Trapp wrote that the expansion will result in the retention of 90 jobs with an average wage of $25.88 per hour and the addition of eight new sorting jobs by March of 2024 with an expected average age of $16.87 per hour.
“Nikkei’s last request was for both real and personal property (abatements) in October 2020 with 85 jobs to be retained and 10 new jobs which were expected by July 2021,” Assistant Director of Community Development Robin Hilber stated in a memo to city officials.
At the time, the council approved abatements for Nikkiei’s $1.25 million facility expansion and $4.85 million investment in new manufacturing equipment.
“Unfortunately, we’re at 90 individuals right now,” Smith acknowledged. “Some of that being economic conditions, and the other portion of it being we’ve had some bottlenecks with … the new equipment for that 2020 abatement. We are working through those equipment issues still and looking at some resolution to those issues end of this year, early next year, so we can get those efficiencies back up.”
Elaine Hilber said that the Incentive Review Committee — which she sits on, along with fellow Democrat council members Kestler and Tom Dell — sent the request forward with an unfavorable recommendation due to the headcount issue.
Every granted abatement is an agreement on not only the amount a company will invest but also the number of new jobs they will create, and companies have to annually fill out forms on their progress regarding headcount, said Hilber.
“So we’re keeping all of the other companies accountable to add that headcount in exchange for the abatement, right?” she said. “And so in this situation, the headcount was not delivered, and so that’s where I struggle with moving forward with another abatement at this time. That doesn’t mean that there won’t be future situations would be approved, but maybe just not this one at this time, because the one that we have in the pipeline right now hasn’t been delivered on.”
Kestler expressed similar sentiments, but other council members felt differently about the case.
“I don’t think, in my years sitting here, it’s the first time a company’s missed employment,” said Councilman Frank Miller. “But we have to look at all the factors and we have to weigh all those factors between retained employees, new employees, investment in the community, and I think there’s enough boxes checked.”
Dell acknowledged that the creation of new jobs helps balance what the city loses from phasing in property taxes. However, he felt that approving the abatement would not set a precedent, as the case is unique. He added that he feels the company is acting in good faith.
According to city documents, it’s estimated that the approved abatements will save Nikkei about $180,000 on real property taxes and $68,000 on personal property taxes over 10 years. During that same time, it’s calculated that the company will pay about $185,000 in new taxes for the facility expansion and $45,000 in new taxes for the equipment.
While Nikkei’s request was approved in a split vote, Applied Laboratories received unanimous approval.
President Jeff Logston wrote in a letter to city officials that the business is continuing to grow and is “in need of growing its equipment capabilities and capacities at 1600 Brian Drive, Columbus.” The company therefore plans to invest approximately $2 million into new manufacturing equipment.
“When they came before council last August (with an abatement request), they had 149 employees and estimated the addition of 10 employees once the expansion was complete,” Robin Hilber wrote in a memo. “Those real and personal property tax abatements have not been assessed and the company is already at 167 employees. With this tax abatement, 10 new jobs are to be added by June 2024 at an average wage of $18.77.”
Logston added that 167 is only their full-time headcount.
According to Applied Laboratories’ application, the company was previously awarded local abatements or other incentives in 2014, 2015, 2017, 2020 and 2022.
“We underwent a facility expansion in 2018/2019 and additional expansions are currently underway (subject of abatement requests in 2022) to support additional manufacturing operations,” company officials wrote. “Due to continued growth in demand for our blending, filling, and packaging capabilities, we need to purchase $2,000,000 in additional filling and related packaging equipment to be installed in our Applied South facility located at 1600 Brian Drive.”
It’s estimated that the company will pay about $73,000 in personal property taxes for the new equipment over 10 years and save $109,000.
