Chrysler seeks tax relief for plant expansionWritten by Duane Ramsey | | email@example.com
The anticipated expansion of the Toledo Assembly Complex (TAC) by the Chrysler Group LLC moved closer to reality when the City of Toledo’s proposal for tax abatements for the projects were submitted to Toledo Public Schools (TPS) and Washington Local Schools districts.
The potential expansion of the TAC could result in an investment of $357 million for machinery and equipment. The retention of 902 existing jobs and creation of 1,105 new jobs at the TAC would generate an estimated payroll of $36 million annually, according to the city’s proposals to the school districts.
About 60 percent of the potential TAC expansion would be within the TPS district and other 40 percent within the Washington Schools District, according to those proposals.
The finance committee for TPS met Aug. 11 to review the potential investment and tax abatement request. City officials attended the meeting to provide input.
Reportedly, TPS Board of Education President Bob Vasquez said TPS would support any proposed expansion by Chrysler in Toledo.
Vasquez later reported that the Finance Committee decided to submit and recommend approval of a resolution for the proposed tax abatement for Chrysler by the full school board at its next meeting Aug. 23.
Chrysler Group CEO Sergio Marchionne confirmed in January that the company was considering a possible investment in the TAC.
As part of the process, Chrysler Group is working with state and local governments to secure incentives that would support the business’s case for such an investment, according to a statement released by the Chrysler Group on Aug. 11.
“Any decision to invest in the Toledo facility would be contingent on final approval of state and local incentives and final acceptance of all agreements by the company,” the statement said.
UAW Local 12 President Bruce Baumhower said UAW members have made a business case to Chrysler for the expansion with their efforts to incorporate Fiat’s operating system, called World Class Manufacturing, for use in all Chrysler plants.
“The expansion has been in discussion stages for a year and a half now and we expect an announcement from Chrysler soon,” Baumhower said.
Baumhower said in April that the TAC could be getting production of new vehicles
from Chrysler. That anticipated expansion could add as many as 950 to 1,000 new jobs by the end of 2012, he said.
Baumhower said Toledo North Plant is underutilized, running only one shift with the capacity to run two more shifts.
He said it’s the UAW’s goal to expand to three shifts there.
The TAC produces about 200,000 vehicles per year, but could build as many as 400,000, Baumhower said. Approximately 2,400 UAW workers are employed at the TAC.
“Chrysler’s plan to expand operations here is music to our ears. As local government agencies continue to do their due diligence on the incentive package, I will continue to focus on helping Chrysler,” Congresswoman Marcy Kaptur said in a statement provided toToledo Free Press.
Toledo Mayor Mike Bell was out of the office Aug. 11 and unavailable for comment.
The City of Toledo has not received a formal commitment from Chrysler for any specific expansion or investment in Toledo, according to a statement provided by
Jen Sorgenfrei, public information officer for the mayor’s office.
The city submitted a proposal for incentives and benefits relative to possible expansion of the Toledo North Plant to Chrysler on April 20. That proposal was based on a confidential “2013 Product Feasibility Study” Chrysler provided the city as a guide.
The total amount of incentives provided by the City of Toledo could be in the area of $15 million to $16 million, according to the proposal.
The city’s proposal includes the municipal job creation tax credits program, offering the maximum allowable credit of 40 percent of new payroll taxes withheld. The credit would be given for the maximum allowable term of 10 years for a potential total of $2.9 million.
The proposal also included a community reinvestment area real property improvement tax abatement to be negotiated with TPS and Washington Local. The total amount for improvements contemplated is estimated at $9.5 million in 15 years.
The city would enter into an agreement with Chrysler to grant it a
30 percent credit on additional withholding income taxes paid to the city by Chrysler employees resulting from the expansion during a 10-year period.
The proposal also offered Chrysler a reduction and or freeze of water and sewer rates. The Toledo North Plant currently pays the lowest water rate in the city, according to that proposal.
The city offered to work with Chrysler on expediting an Ohio EPA Air Permit through the Division of Environmental Services. That division has expended about 100 labor hours at an estimated cost of $3,500 and expects to expend many more
hours on it, according to the city.
The city would work with Chrysler to make infrastructure improvements on and around the TAC property to accommodate the potential expansion.
“We are excited about the potential for further investment at the Toledo Jeep Assembly Complex. The prospective expansion is a positive sign that our local economy is starting to move in the right direction,” Sorgenfrei stated in an email to Toledo Free Press.