Mix results for tax abatements

ALPENA – The City of Alpena has granted eight tax abatements to companies over the last 13 years, but in order to get the tax breaks the businesses commit to certain terms regarding capital investment and hiring.

During Monday’s Alpena Municipal Council meeting City Clerk/Treasurer Karen Hebert informed the council that a majority of the businesses are meeting or exceeding the expectations placed on them and only two have fallen behind due to the current economic climate.

Hebert said two companies, Panel Processing and Conveyer System Inc, filed their final reports for the 12 year abatements which will expire. Panel Processing easily exceeded its capital investment amount by pouring $3,469,109 in real and personal investment. It had exceeded its mandate to employ 58 workers, but the number slipped to 53 in 2012.

Conveyer Systems Inc. also has done well to meet the obligations agreed upon in the abatement agreement. Hebert said it has surpassed the minimum investment amount and the number of employees it agreed to employ. It was supposed to have 38 employees and at the end of 2012 it had 53. She said overall most of the companies receiving abatements have done well in complying with the terms of the abatement.

“Overall this is very positive because I have seen some of the companies go through a dip, but it seems like they have come out of it and held on,” Hebert said. “There are some cases where the employment is lower than what they said it would be, but they are trying to fight through that and come back and hopefully do more hiring.”

On the other side of the spectrum ATI Casting Servicing has not come close to meeting its obligations and Hebert said it looks as if the plant, which has been closed for about a year will not reopen. The city entered into a nine-year abatement in 2007 and this was the sixth report.

The agreement called for ATI to invest $10.5 million and it eclipsed it by spending $14,356,349. It also was expected to hire 100 workers in the abatement’s first year, but soon after entering into the deal the economy collapsed and operations never fully took off. At one point it employed 66 people, but that dipped to13 at the end of 2008 and six in 2009. It looked as if things had turned around and ATI began production and pushed the employee numbers to 12 in 2010, but after filling the orders it had, business dried up once again. Currently ATI has zero workers at its Alpena facility and it does not expect to reopen the plant. Hebert said there is little the city can do to force ATI to reopen its doors, or reimburse it the money it has saved in taxes.

Lafarge filed its sixth report in a nine-year abatement and it also was impacted by the recession. It was to invest $68,780,000. It surpassed the investment in real property by over $4 million, but fell short in the personal property category by $31,610,206. Lafarge was to retain 230 jobs, but not hire any new help. As the economic times turned sour the number of workers dipped from 235 jobs at the end of 2008 to 199 at the end of 2012. Hebert said 11 new workers were hired in 2012 and the plant anticipates more hiring this year. Hebert said it is unfortunate the numbers aren’t what was predicted, but the city must move past it.

“I have spoken with Lafarge and it looks as if they are going to hire some back this year, so I think they will get back to the level they were at,” Hebert said. “ATI is a disappointment for everybody, because there was high hopes when they came in. Now unfortunately we don’t see any future there.”

There were three companies that submitted their first reports. Dean Arbour Ford (seven years), Dave Kneeshaw (10 years) and Douville Johnson (nine years) each submitted investment and hiring numbers. Hebert said Dean Arbour surpassed its investment and hiring commitments and Douville Johnson exceeded investment and met hiring numbers. Kneeshaw surpassed investment parameters and in jobs, although several workers were laid off during the winter.

In other business:

  • Alpena Combat Readiness Training Center’s Col. Bryan Teff updated the council on the status of the base and what it hopes to achieve in the future.
  • Huron Undercover Narcotics Team Commander Frank Keck submitted its year end report. Keck said in 2012 the team took 168 complaints, 91 of which were in the city.
  • the council approved a request from the Alpena County Veteran’s Council to install a monument recognizing Alpena’s fallen in the Vietnam War.

Steve Schulwitz can be reached via email at sschulwitz@thealpenanews.com or by phone at 358-5689. Follow Steve on Twitter ss_alpenanews. Read his blog, Upon Further Review … at www.thealpenanews.com.