Abatements creating good jobs
By Kevin Kelley
Published March 26, 2008
the end of 2007, tax abatement agreements made with Westlake businesses
over nine years have created 746 jobs, according to a city report.
An additional 367 jobs were retained as the result of the tax incentive
agreements, the report said.
The report was created by the city’s Economic Development
Department in preparation for the annual meeting of the Westlake
Tax Incentive Review Council held March 19 at City Hall. The council,
which is an advisory body only, reviewed the tax abatement agreements
the city has with nine companies.
The council took two votes on each agreement — first,
whether each company is compliant with its part of the agreement
and then whether the agreement should be continued.
The council, which was chaired by Joseph Micciulla
of the Cuyahoga County Auditor’s Office, consists of Mayor Dennis
Clough, City Council President Michael Killeen, Ward 5 Councilman
Ken Brady, Ward 2 Councilman James Connole, Finance Director Anne
Fritz and Westlake Board of Education Vice President Tim Sullivan.
Westlake City Council has the final decision on whether
an agreement should be terminated.
Westlake Economic Development Director Bob Parry,
who reported to the committee on each agreement, said the number
of jobs created thanks to the agreements rose substantially over
the past year, thanks primarily to hirings at Hyland Software and
Q Panel Lab Products.
The increased payroll from new jobs was $58.9 million
in 2007, up from $35.2 million in 2006, the report said.
The abatement agreements with the nine companies lead
to a net gain of $620,427 in property taxes and income sharing payments
paid to the Westlake City Schools, Parry said.
The city saw a gain in income tax of $114,734 in 2007
thanks to abatements, but these were offset by sharing of income
tax with the school district totaling $124,158.
The council found all nine companies in compliance
for 2007 with their original agreements and recommended that the
Companies have five years to meet the requirements
of the agreement. Parry said Struers Inc., a manufacturer of measuring
and controlling devices, was in the third year of a tax abatement
deal but did not look like it would be compliant as the number of
retained and new jobs at the company was below what it had promised.
The review council recommended continuing the abatement
subject to adjustments and discussions with the company, which recently
added new management.
Another company, Sweet Pea Properties, formerly Controlco
Inc., had fallen out of compliance in 2005. As a result, City Council
suspended its abatement. The review council found that the company
returned to compliance in 2006 and 2007 and recommending restoring
the abatement for those years.
Abatements are only offered on new development on
industrial or office buildings located in the city’s community reinvestment
area and enterprise zone.
“Some of these (companies), they could have gone elsewhere,”
Parry said. “There’s a lot of competition to go to other cities
or outside the area.”
The city fought tax abatement for many years, Clough
said, but had to offer it when other cities did.
“We’re very pleased with the investment that continues
to be made in the city of Westlake,” Clough said at the March 19
Westlake added tax abatement in the mid-1990s, Parry
said. The first company to receive abatement was Viking Sewing Machines,
which relocated from Lakewood. The company became the first tenant
of the city’s industrial district, Parry added.
“We had been hit pretty badly with companies going
out of the county and out of Westlake being lured by abatement,
so we had to create (incentives) to be competitive and to provide
and incentive for businesses to stay in Westlake and expand,” Parry
The city also held off on abatement until the state
law changed allowing cities to negotiate separate agreements with
individual companies, Parry said.
No abatements are offered on land, income tax or corporate
The typical agreement offers 50 percent abatement
of real property taxes over a ten-year period, Parry said. For companies
in the community reinvestment area, the abatement can be 100 percent
on real property taxes for up to 15 years, he said.
In abatement cases where a new employer has a payroll
above $1 million, the city shares 50 percent of its income tax with
the school district until the foregone property taxes are matched,
Parry said. In all abatement cases, the district is guaranteed 50
percent of all property taxes it would have received if there was
no abatement agreement, Parry said.
“The city and schools both win,” Parry said. “We’ve
been able to keep some growing businesses and industry in Westlake.”