Protomet could use tax break to double plant size, add workers

A tax break recommended by an Oak Ridge board on Monday could help a parts manufacturer more than double the size of its plant and add 20-30 workers, an executive said.

The Oak Ridge Industrial Development Board endorsed the five-year, 100 percent property tax break for Protomet—which makes marine, automotive, and homeland security equipment—in a special meeting Monday.

But Oak Ridge City Council member Anne Garcia Garland suggested there could be some opposition later. She said residents want to know why Protomet, which has become successful with the help of one tax abatement, should receive another.

“They are not going to going to understand any 100 percent abatements of anything,” Garcia Garland said, referring to some Oak Ridge residents. “We helped these people become successful.”

IDB members, though, called Protomet’s expansions a success story and recommended the tax break to Oak Ridge City Manager Mark Watson, who will review it before sending it to City Council. There was no opposition from the six IDB members present at Monday’s special meeting.

“It’s a tremendous success story,” IDB member Chris Johnson said.

The abatement, or payment-in-lieu-of-taxes (PILOT) agreement, would apply only to new investment at the eight-acre site on Larson Drive in the Bethel Valley Industrial Park. The request has to be approved by Council because it falls outside the city’s standard tax incentive matrix.

Protomet President Jeff Bohanan said the company’s Phase II expansion would add about 21,000 square feet at the 15,000-square-foot plant, enlarge the assembly area, and provide more space for machining tools. It would also allow the company to consolidate with 4FinalFinish, an aluminum finishing business that Protomet took over in 2008. 4FinalFinish now operates independently in Blount County. That adds a half-dozen extra steps, and parts have to shipped back and forth between the two plants, Bohanan said.

Protomet’s first expansion was in 2005. The company received a four-year, 100 percent tax abatement then, but the city’s policies have since changed.

Bohanan said Protomet would continue to pay existing property taxes through the new abatement period if the tax break is approved. This year, he said, the company will pay $38,000 in taxes.

At a time when many manufacturing jobs are going overseas, Protomet could invest up to $6 million in Oak Ridge during the next three years, Bohanan said. He said more than 30 employees would start working in Anderson County, including those who are now working at the aluminum finishing operation in Blount County.

Protomet started in 1997, and among other things, it makes uranium detection devices for homeland security and mirror assemblies for tow boats.

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  • Sam Hopwood

    At some point in time, enough is enough. Protomet has done well and should finance this expansion on their own dime. But I will be amazed if City Council does not cave in.

  • http://www.facebook.com/denny.phillips.3956 Denny Phillips

    Lol. If the COR is willing to grant me a five year tax abatement, I’ll consider putting an addition on the house and having a couple more kids.

    • Charlie Jernigan

      Consider it done. COR will not charge you property taxes on your home for the next 5 years.

      • C Kelsey

        What about the kids ,they are getting the bill for ALL future payments on present spending aren’t they ?

        • Charlie Jernigan

          Depends on whether he has to take out a loan or pays cash. Besides with more of them, the burden would be less per kid.

          • C.Kelsey

            Oh the “New” math ,forgot about that .LOL

  • http://www.facebook.com/denny.phillips.3956 Denny Phillips

    Variance: n. a political device used by officials to decide when and where laws will be ignored

    example: The law strictly forbids giving this company another tax abatement but I have a pocketful of these variances I can use to ignore it.

  • Dave Smith

    By what criteria is the IDB judging Protomet to be “a tremendous success story” for Oak Ridge? Beyond the provision of a property tax abatement, what unique Oak Ridge assets have contributed to Protomet’s success? What has been the COR’s return on investment?

    How many of Protomet’s employees live in Oak Ridge or Anderson County? (Please correct me if I’m wrong, but I suspect that Jeff Bohanan is himself not a resident of Oak Ridge.) If Protomet moves the 4FinalFinish operation to Oak Ridge, which seems to be the impetus for the enlarged Oak Ridge plant, won’t we essentially be subsidizing the retention of jobs for the Maryville residents who will begin commuting to Oak Ridge? From what is reported here, I see nothing but an unremarkable ROI for the COR, now and in the future.

    “Oak Ridge – Providing jobs for residents in the Knoxville Metropolitan Area through land grants and property tax abatements.”

    • http://www.facebook.com/johnhuotari John Huotari

      IDB member Harold Trapp asked about residency on Monday. Jeff Bohanan said about 40 percent of Protomet’s 33 employees live in Oak Ridge and Anderson County. That’s equal to about 12-13 who live here.

      The Protomet reps pointed out that the project would bring jobs that are now in Blount County to Oak Ridge. I don’t know if they’ve estimated how many of them could live here.

      I believe Jeff said he lives outside the city.

  • Joe V.

    Let’s see…the abatement was successful the first time…giving them an opportunity for expansion…now they are asking for an abatement on ONLY the expansion, which could lead to even more growth…Sounds good to me as long as we will now be receiving property taxes on the first part…

  • Anne Garcia Garland

    Denny, would you mind pointing me to the law for which this request is in violation. I am definitely not arguing toward any abatement. I seriously would like the reference before the request is brought to council. Thanks.

    • http://www.facebook.com/denny.phillips.3956 Denny Phillips

      Anne, probably a poor choice of words on my behalf. I recognize a “standard tax incentive matrix” to be the equivalent of a “law”, which I suppose it is not.

      I liken this situation to zoning issues. Some people call them “zoning laws”, but I suppose they are “ordinances”.

      My issue with this is, if we having zoning “laws” which can be wished away on an as needed individual basis, then they really aren’t “laws”.

      Likewise, if we have “standard tax incentive matrices” that we just work around any time we want, they aren’t really standards. It’s like we make it up as it goes along to fit our whimsy.

      So I will apologize to you for the snide tone in my posts, but it is very frustrating. I have spent a lifetime in this area watching my father, developers like John Chilton and others receive the white glove inspection and sent to the planning commission star chamber where they were strong armed into relinquishing private property for green belts and the like for the “privilege” to invest their own money and lives to try and improve the community. I’ve watched thousands of citizens voiced ignored on the Parcel A debacle. I’ve watched the lumber companies, Downtown Harwares, Ace Hardwares last struggle and in many cases fold up shop while Home Depot gets “tax incentives” to bury them. I’ve watched the COR bend over backwards for new to the area restaurants while stallwarts of the community like Applebee’s and Ruby Tuesdays pay the light bill.

      And so it is again today, where nebulous guidelines are excused away at the drop of a hat. I have nothing against this company. What I oppose is the violation of equal protection of all businesses and families in this city. Businesses and families that struggle mightily to make their way and meet their obligations under threat of property tax foreclosure and bulldozers.

      I mean how do we really look our residents in the eye and tell them “Well, we are all gonna have to suffer a little in the wallet to pay for these sewers” and then walk into a CC meeting and vote to exempt a flourishing business from paying its taxes.

      I don’t lay this at your feet, Anne, it’s the way this town has been run as long as I have been alive. But I would ask you, and I think you already are, to think about giving the people of this community a little faith that our leadership doesn’t just pick winners and losers.

      • Charlie Jernigan

        Denny, I understand that a lot of your questions come from being associated with a home-built small business in a fast changing world but, in this country, everybody’s got to compete. And that does not always mean it’s you against a chain or a franchise that are operating unfairly. Rather it means that you have to find a way to compete, just like someone formed the company in the first place and carved out a living from it. That must continue.

        Today, even cities compete. You mentioned Home Depot and a quick Google search returns almost a quarter of a million examples of “Home Depot” “tax incentive” from all around the country. I don’t see that it is unreasonable for Oak Ridge to compete if we need locally what Home Depot sells. And the only way to measure that is whether our sales tax dollars for those products were flowing out of the city then, compared to now. And the question is whether a tax incentive will change that balance. Remember that the risk is low since the land on which the property tax incentive was granted was next to nothing to begin with. So for a few years of reduced increased property taxes after the property was improved in exchange for changing the sales tax flow out of the city is the judgement call made by the city and its boards.

        Now if local firms were fulfilling the sales needs for the city, there would be no need to increase it more. There would be no gain. But mostly, local businesses do not grow to fulfill a community’s needs in its segment, but they fulfill part of it. A city’s decision to attract a company must be measured and the existing companies must expect to compete differently after the newcomer arrives. But how can they compete against such a large organization?

        For decades, small companies banded together to improve purchasing power and sharing marketing and sales costs. IGA is the first one I remember to allow independent grocers with the A&Ps of the world and its replacements. It still exists today almost 90 years, helping small grocery stores compete.

        Small stores also compete by specializing. Rather than just a hardware store in a town with a Home Depot, it might become one which offers tool repair and rental. And there are other ways of remaining profitable.

        Ultimately the city needs a balance of income from property taxes and sales taxes if we want to remain viable. The sales tax side of the equation is our current problem and that is why the city emphasizes that half of the balance in the recent decade.

        But ultimately, all companies come and go. Family businesses rarely last for generations. Those that last longer almost never remain the same throughout their lives.

  • Anne Garcia Garland

    I really appreciate the serious discussions in these comments. “Economic development” seems to be the byword on everyone’s lips these days and too often positions are taken with little consideration of the complexity involved. Business trends swing through the gamut from “bootstraps” to “hand up” and back again. While I am pleased that Protomet has made smart business decisions and thrived here, I also believe that the current custom of incentives across the commercial board looks more and more like bribery. I have been mightily impressed by Kroger’s position to not ask for any incentives whatsoever in its latest move. I have been satisfied that council made a good decision in approving the TIF for Woodland Center. We took a very small bet based on well-presented evidence for ROI and it appears that it will proceed successfully. I have not seen whatever numbers were presented to the IDB in the Protomet request for additional tax abatement. Given the national climate on incentives, it would be amazing if they didn’t ask. But part of what I had hoped council would discuss in its recent meeting was a set of policies that would guide both the city administration and the businesses toward consideration of ROI for the citizens.

  • http://www.facebook.com/jason.allison.37 Jason Allison

    I’m surprised so many people are against the growth of Oak Ridge.Me personally, I haven’t seen any negative repercussions of the new businesses that have received the breaks. I’m still, more or less, paying the same as in property taxes and sales taxes. Oak Ridge so far has benefited from the new business. I would like to see, on paper, what we have lost. I bet that we really wont see any major losses, sure, we’ll see some little losses but compare those to what we have gained. In the end it’s going to boil down to who wants to cry the most.

  • kay williamson

    why not 50% reduction, why always 100%, why not split with the company asking, giving tax abatement are a way for companies to consider coming in, but existing company seeking growth should seek less and not full benefits. If this was a new company we would jump through hoops, lets not stall this.. We need to build more manufacturing jobs and less restaurants. We need to repair the houses and offer incentives to build new homes here. Lets expand our community as much as possible and try to show that business growth may effect more than one business.

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