A five-year, 100 percent tax break for parts manufacturer Protomet was approved in a 4-1 vote by the Oak Ridge City Council on Monday.
The tax break could be used to help Protomet more than double the size of its 15,000-square-foot plant in the Bethel Valley Industrial Park, consolidate operations with a Blount County facility, and add 20-30 workers.
Also Monday, the City Council agreed in a voice vote, with no objections, to end the RecycleBank Reward Program and determine later what to do with the savings of $0.84 per household per month. The savings are expected to add up to about $124,000 each year.
The program’s end means citizens will no longer receive rewards for recycling that can be redeemed for discounts at local businesses. But the city will still collect recyclables.
The city staff would like to use the savings to offset an increase in the contract with garbage collector Waste Connections. That contract was recently amended to include an additional 654 homes at an extra $111,000 per year.
Oak Ridge City Council member Anne Garcia Garland unsuccessfully proposed refunding the $0.84 per month to residents. She voted for that amendment, and so did City Council members Charlie Hensley and David Mosby.
Mayor Tom Beehan and Mayor Pro Tem Jane Miller voted against it.
Council members Chuck Hope and Trina Baughn were absent.
The recycling rewards program has been in Oak Ridge since March 2009.
The tax break for Protomet is officially known as a payment-in-lieu-of-taxes agreement, or PILOT. It had been endorsed by the Oak Ridge Industrial Development Board and Oak Ridge City Mark S. Watson. It will be used for the second phase of Protomet’s expansion.
Protomet’s first expansion was in 2005. Since then, the company’s sales have grown by a factor of five, Protomet President Jeff Bohanan said. The company received a four-year, 100 percent tax abatement for its first expansion, but the city’s policies on tax incentives have changed and the new abatement had to be considered by Watson and City Council.
City officials said the value of the abated taxes could be about $125,000.
Garcia Garland, who voted against the PILOT, said she was proud of Protomet, but she wanted to know what taxpayers were getting in return for the tax break.
Bohanan said Protomet has saved jobs in Greenback, Tenn., that would be moving here and has spent more than $400,000 on utilities in Oak Ridge. He outlined the tough times his company and the marine industry—Protomet’s biggest customer—have weathered, citing wage cuts and layoffs. Based on financial considerations, he would seriously consider leaving Oak Ridge and moving to an area with a lower tax rate such as Knox or Loudon counties if the company didn’t get the abatement, Bohanan said.
Watson said Protomet has been encouraged to hire local employees, and 40 percent of its workers are from Oak Ridge. The company will continue to pay its existing property taxes through the new abatement period, or roughly $26,000 per year.
The PILOT agreement will apply only to new investment at Protomet’s eight-acre site in the Bethel Valley Industrial Park. Plans call for another 21,000 square feet of space, an enlarged assembly area, and more space for machining tools. The expansion will 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.
Protomet started in 1997, and among other things, it makes uranium detection devices for homeland security and mirror assemblies for tow boats.
Oak Ridge Public Works Director Gary Cinder said RecycleBank recently notified Waste Connections that it will end the individual recycling reward program on April 15 and convert to a community-based program. Waste Connections had offered to let the city stay with RecycleBank as a community-based program or drop it.
Cinder said residents will still be able to access their accumulated reward points until they have either used them all, or the account has been inactive for one year.
Jason Allison says
Thank you Anne Garcia Garland, Charlie Hensley and David Mosby for the thought but I’d rather see the funds go to the city.
Charlie Jernigan says
I agree, the flaw in the recycling funding is that only half of it is tied to the cost of living. The part that is paid on the utility bills is fixed until adjusted by the City Council. It would be nice if that was balanced so that each side of the cost equation was adjusted in the same way.
We have too many stories of good programs that go awry because the funding adjustments are not well thought out.
Questions, if they do away with that recycling rewards program,
1. We will still be able to cash in our points we have saved?
2. Will the recycle fee that was added to our electric bills be removed?
Skirnir Hamilton says
Yes, you can earn points at recyclebank by doing all kinds of things online, even if your local community does not do recyclebank. Keep your account active and you can turn in your points anytime. Now as the city ends the program, I suspect we may begin to see less in the way of local businesses available in the coupons obtained via rewards, though.
This is my understanding: You can use your points until they are gone or your account has been inactive for one year. I think the garbage fee was $5 per month before the recycling rewards and went up to $7 per month when the program started, a $2 increase that paid for the equipment and large recycling bins, etc. It’s my understanding that the residents’ fees cover about half of the garbage collection cost. The other half is paid for by property taxes. I think your fee might drop by $0.84 per month at most, depending upon what council decides to do with the money saved by canceling the recycling rewards. Council might discuss that next month. City staff would like to use the savings to cover an increase in the cost of the Waste Connections contract.
Dave Smith says
“Based on financial considerations, he would seriously consider leaving
Oak Ridge and moving to an area with a lower tax rate such as Knox or
Loudon counties if the company didn’t get the abatement, Bohanan said.”
There we have it. Oak Ridge has nothing to offer Protomet other than a tax abatement. At present, even though the business is sited here, we have been able to fulfill only 40% of their employment needs. In five years, when the abatement ends, and if they are still in business, they will need another inducement to stay or they will relocate to the county to save municipal property taxes.
Denny Phillips says
We’ve got Aubrey’s and that new Kroger coming. Shouldn’t that be enough?
Anne Garcia Garland says
Just saying. No one wants to say so on the public record but my position is that it is time we led the country in halting the acquiescence to emotional blackmail from commercial development. Nice for Protomet to have gotten public support toward their success THREE times but when do companies grow up and pay their own way? To believe the threat that Protomet would actually pick up and move somewhere else, where they would have to buy more property and build more buildings or rent some expensive existing buildings to avoid paying, what?, half the property tax that Oak Ridge would expect when their building expansion is finished? Sorry. I don’t believe it and neither does any business owner I have talked with.
Denny Phillips says
You are spot on Mrs. Garcia Garland.
Steve Turpin says
The question is not would Aubrey’s have opened in Wartburg over Oak Ridge without the tax abatement, the question is would they have opened in Oak Ridge at all. Any answer to that question is just guesswork.
Jackson Smith says
In 2009, you and your husband took a 30% “tax break” for the installation of a solar system in your home. Now you’re selling power to TVA. Nice of the rest of us government taxpayers to help you out, wasn’t it? To paraphrase a question that you asked the Protomet CEO, when am I going to see a return on my investment?
TJ Garland says
Sorry,Jackson Smith- I did not take ANY tax breaks for my solar system. The 30 % could only be applied as a deduction off my, and Anne’s federal tax liability for the installation year Do you know what a 10K is?
I will swap tax returns with you for that year. By accepting a thousand dollars from TVA, I was required to hire only licensed, trained installers approved by TVA. Three of the together cost me $175 hr, including travel time.
My house had to be rewired since I was now a power generator into their system.
In effect I had an additional cost of at least $10,000 in my system. I personally put in a 32 panel system in OK 14 years ago that cost less than this 8 panel system.
You should ask before making off the wall assumptions.
I would be delighted to show you the system.
TVA are idiots, swept up the hyped green power craze. They are paying RSI 21.9 cents a kilowatt/hr for 800 panels at Y12.
TVA makes electricity for about 3 cents and we pay OR 9.9 cents. I get the same 12 cent delta as RSI for extra power I don’t use.
My panels would have paid off in about 10 years in power savings if I had not joined their Green Power program. At the 9.9 rate the pay out is about 16 years.
Protomet’s owner does not live here, and most of his employees do not live here. All of their raw materials are bought out of town, and their product is sold out of town.
It is a pass thru business. He has taken advantage of at least three other federal and state give aways.
We are writing him a check with the hope he will be here five years into the future to begin to pay us back.
He says(like they all do) that he will provide a great number of jobs for OR for this $125,000 tax gift.
If a measly $25,000 a year keeps him from doubling a million dollar business, he is doing it wrong.
TJ Grland says
Sorry, meant K1instead of 10k. Hay fever is frying my brain.