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Aspen incentive package could reach $4.25 million
Officials: It was what we had to do to get this industry
aspen aerogels logo

To help convince Aspen Aerogels to locate its new factory in Bulloch County, county commissioners, the development authority and the city of Statesboro provided an incentive package valued at roughly $4.25 million.

Besides land from the development authority, site work by county employees and water and sewer lines to be extended at the city’s expense, the package includes a 10-year abatement of the county government portion of property taxes, worth a projected $2.3 million.

"We think that this package that we offered is very reasonable and it's based on the market for industrial recruitment,” said Benjy Thompson, CEO of the Development Authority of Bulloch County. “This is what communities do when they recruit industry.”

As part of a deal, the company will also get the 43.2-acre site in Gateway Industrial Park by paying for the factory that is built there and the equipment that is installed, but not for the land itself. With the development authority valuing land in the park at $30,000 an acre, this is an almost $1.3 million portion of the $4.25 million total.

Not included in the local total are the authority’s and county’s help in applying for $730,000 worth of grants, which Thompson notes would be state rather than local inducements. These could make the eventual value of the enticements almost $5 million.

It’s an investment Thompson and other local officials say will repay the community with jobs and economy activity.

Aspen Aerogels Inc., which makes ultra-lightweight thermal insulation used in the petroleum industry, announced earlier this week that the planned factory would require a $70 million investment and initially employ about 106 people. However, that would include only the first production line, and John Fairbanks, Aspen Aerogels’ chief financial officer, said the company intends to add two more lines in the future.

"We're confident that Aspen will prove to be a great investment, short-term and long-term, for the community and the region,” Thompson said.

 

Will pay school tax

The tax abatement applies to county property taxes on real estate and “personal” property, a category that includes industrial equipment. However, the portion of tax that goes to the Bulloch County Board of Education is exempt from the deal, with Aspen promising to make annual payments equal to what would be required to pay in school taxes. Also, Aspen will make payments in lieu of taxes for what would be its share of the taxes to the city for its five-mile fire protection district.

The Board of Education was simply not part of the discussion for tax abatement, Thompson said. He also said he preferred not to negotiate a break on school taxes unless one was necessary.

"We didn't include the board in the negotiations because they were never impacted by any of the negotiations,” Thompson said. “Had they been, we certainly would have been involved with them, but it never came up."

 

City’s role

Because the industrial park is outside Statesboro’s city limits, the plant would not be subject to city property taxes, anyway. However, it is in Statesboro’s fire protection district, and so would incur the fire protection tax, which is collected by the county but turned over to the city.

County Manager Tom Couch said he did not attempt to convince city officials to take part in a tax abatement, but informed them because he thought it should be the city’s decision.

"I felt since the money passed through to them, it's essentially their money for fire protection and it would be up to them whether or not they chose to make a similar inducement on that tax, but I believe they chose not to do so,” Couch said.

Interim City Manager Robert Cheshire presented the PILOT, or payment in lieu of taxes, agreement along with the city’s part in the industry inducement package to Statesboro City Council on Nov. 3. At that time, the name of the company was not public.

By unanimously approving the package, the council agreed to extend water and sewer and natural gas pipelines to the plant, at a cost to the city of $415,800, and to waive the connection fees. With the company to pay the regular utility bills based on volume of use, the city should recoup the installation cost in three to five years, Cheshire said.

“I think it would be in the three-year range,” he told the council. “We would have cash flow from day one because they would be paying their typical fees.”

 

County approval

The Bulloch County Board of Commissioners approved the industry inducement package as part of a “consent agenda” that evening.

Officially, the tax abatement is not called that, because direct tax abatements are illegal in Georgia. Instead, it is structured as a “bonds for title” arrangement. The development authority, which is a tax-exempt public agency, will retain formal ownership of the property, including the factory and its equipment, for the 10 years, while the company makes payments toward owning it.

The payments go to lenders, with the development authority serving only as a pass-through, Thompson said. These arrangements are used in neighboring counties and throughout the state, and the effect on taxes is the same as an abatement.

"The county did give 10 years at no tax payments for real or personal property,” Couch said.

The county commissioners also agreed to provide up to $195,000 worth of work to prepare the site, Couch said.

Additionally, the county or development authority will apply for a $480,000 Employment Incentive Program grant toward construction of a railroad spur onto the Aspen Aerogels site and also a $250,000 EDGE Fund grant from the OneGeorgia Authority. EIP grants are federal money channeled through the states. The EDGE grant could be used for additional site preparation, Thompson said.

The Georgia Department of Economic Development worked with the Development Authority of Bulloch County, Georgia Quick Start and other agencies on the recruiting effort.

Beyond training that the state Quick Start program provides for new Aspen Aerogels employees, the development authority agreed to spend up to $20,000 providing additional training at Ogeechee Technical College. Also, the development authority offered to provide the company office space during construction, and valued this at up to $24,000.

A clawback provision would allow the local governments to reclaim part of the incentives if the company does not meet 80 percent of its goals for job creation and investment. However, this is based on a formula and does not require meeting strictly 80 percent of both measures, Couch and Thompson said.

 

You have to’

Benjy Thompson said the development authority does not enjoy giving inducements of this kind and would prefer to “roll out the red carpet” and welcome industries to Bulloch County for its inherent attractions as a great place to live and do business.

"These companies can locate anywhere in the world, and there are a lot of great places to work and live and have a business,” Benjy Thompson said. “So for us to compete, we have to be in a position to be competitive, and this is the kind of package that makes us competitive."

The vice chairman of the Bulloch County Board of Commissioners, Roy Thompson – who is not related to the development authority CEO – made a similar statement about why the commissioners approved.

"Do I like to give away tax abatements or tax incentives and things? Absolutely not,” Commissioner Thompson said. “But in today's world, to compete to get industry into Bulloch County, it's something that you have to do."

He thought that the $70 million investment is great, that the 106 jobs are even better, and that 10 years will pass quickly after which Aspen Aerogels will be paying taxes on that property, he said.

“We're doing everything we can, looking into every avenue that we can to bring jobs into Bulloch County,” Thompson said. “So, do I think it was the right thing to do? I think it was what we had to do to get this industry to come into Bulloch County."

The Statesboro Herald has not obtained the written agreement, but will request it.

Al Hackle may be reached at (912) 489-9458.

 

 

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