CULLMAN, Ala. – The Cullman City Council on Monday, Oct. 28, approved tax abatements for three industrial projects:
- “Project Vance” for a major addition to the local REHAU facility with a capital investment of $43 million. The Cullman Economic Development Agency said this is “an equipment purchase/upgrade expansion for REHAU for new Mercedes Benz production. REHAU won the contract to supply parts for a new SUV. The investment provides continued employment for an estimated 63 associates.” This will allow the local facility to retain jobs that would have been moved to one of REHAU’s multiple other plants. CEDA Director Dale Greer said, “Project Vance abatement approval would waive $2,465,190 in taxes over 10 years but generate $2,352,100 for city schools over the same time frame.”
- PGI Holdings, LLC, for a new industrial project with a capital investment of $1.05 million. CEDA said Hayden-based Precision Graphics, Inc. is buying out Modernistic Printers on Main Avenue in Cullman, and that the investment “in building upgrades and equipment to increase printing capacity” will create from three to five new jobs. Greer added that an estimated $56,475 will be generated for city schools over the next 10 years.
- Inland/Schulte Building Systems to extend a 2021 abatement until May 1, 2025, as it increases its capital investment from $3.4 million to $4 million. CEDA said, “The original abatement led to the creation of 50 new jobs on the $3.35 million investment. Inland/Schulte requested the extension due to construction delays, supply chain issues and rising cost.” CEDA estimated that $210,320 in taxes will be collected from Inland, beyond what has been abated.
Tax abatements involve temporary forgiveness or refund of a portion of a company’s annual tax debt, to offset the cost of that company’s investment in its local production or business activities that create jobs and boost the local economy.
Property taxes are measured in millage: one “mill” equals 1/10 of one cent. The State of Alabama assesses property taxes at 6.5 mills, or $6.50 per $1,000 of value. Cullman County assesses at 26 mills or $26 per $1,000, half of which is earmarked for education. The City of Cullman assesses at 38.5 mills or $38.50 per $1,000, with 20.5 earmarked for education.
Tax abatements cannot reduce the education portion of the tax. That must be paid, regardless of other incentives. This means that on a $100,000 property, the County can abate $1,300 dollars in property taxes per year for 10 years while continuing to collect and keep $1,300 per year in taxes to be sent to schools. On comparable property the City can abate $1,800 per year, and will collect and distribute to schools $2,500 per year on that $100,000 property.
Greer told The Tribune about abatements:
- They offset or help offset the cost of constructing or expanding facilities that create jobs and bring more income to the community.
- They forgive or refund a portion of certain taxes (usually property taxes) that the business or industry pays for a certain amount of time. Cullman’s standard is 10 years. After 10 years, the company must pay the tax. Even if the company asks for and gets another abatement for a new project or expansion, it must still pay the full tax on its previously abated facilities and equipment.
- They do not take away any responsibility the company has for paying taxes that support education.
- They are commonly used by communities across the country to compete for businesses and industries. If one community does not want to offer financial incentives, plenty more will.
- They do not involve the City giving away to the company any money paid as taxes by residents. The abatement refunds to the company a certain amount of the taxes it has to pay. If the company does not earn enough to pay much in taxes, it does not get much abated. If it does not meet certain standards set forth in the agreement, it sees no abatement.
- CEDA only recommends an abatement after a study has shown that the construction or expansion will create a definite benefit to the City.
Other council business
The council approved ordinances to:
- Rezone property located at 916 Parker Ave. SW from R-3 to R-2 Residential District
- Annex Pioneer Land Acquisitions, LLC property located on U.S. Highway 31 and County Road 715 as a B-2 Business District
- Adopt an electronic records management policy for the City of Cullman
- Vacate and surplus a portion of Lot 1, Block 5 of the Ratliff Hancock Subdivision, Bauers Addition, which is owned by the City
- Confirm and ratify the levy of taxes for educational purposes in the city of Cullman. This ordinance did not create new taxes or raise existing taxes, but renewed the City’s standing plan for support of the city school system.
The council also approved a resolution to award a bid for a 4WD crew cab work truck to Mitch Smith Chevrolet in the amount of $51,250.
The Cullman City Council meets on the second and fourth Mondays of each month at 7 p.m. in the Cullman City Hall auditorium. The public is invited to attend.
Copyright 2024 Humble Roots, LLC. All Rights Reserved.
