Money that was set aside to buy land as part of an agreement between the city and a developer is now being given to a company moving to Franklin.
In addition to tax breaks on equipment and land, the city approved up to $405,000 as a forgivable loan for Hetsco Inc. to help purchase and renovate a building.
The cash, which will come from the city’s tax-increment financing, or TIF, districts, is the second part of an incentive package offered to the company.
The city plans to give Hetsco about $122,000 to help pay for the 11 acres of land located off Graham Road around the building, as well as $250,000 to help with construction costs to customize the building, Mayor Joe McGuinness said.
McGuinness did not expect to spend the entire $405,000 because the city is paying for less land.
If Hetsco purchases and builds out the building within two years, the company will not be required to pay back any of the money. Hetsco also plans to hire 40 employees with average wages of about $28 per hour over four years.
The company will be required to file annual reports with the city so officials can track its progress, McGuinness said.
Redevelopment commission members approved the loan 4-0 on Monday. Commission member B.J. Deppe was absent.
Hetsco, which primarily does service work on aluminum heat exchangers, has outgrown its facilities in Greenwood and will consolidate its work sites into the single building in Franklin. The city council already has approved tax breaks for Hetsco, which will save the company about $400,000 in property taxes over the next 10 years.
The company is moving into a shell building on Graham Road. The city partnered with Runnebohm Construction to develop and erect that building, helping cover interest, taxes and utility costs and pledging to buy the land if the building didn’t sell within a certain time period. The cash incentive the city offered to Hetsco is coming from money that had been set aside to buy the land.
Hetsco grew steadily while in Greenwood and plans to nearly double its workforce when it moves to Franklin. The new jobs will have an average wage of about $28 per hour, not including benefits, and the company is investing $4.4 million in its new building and equipment, which is why the city was willing to offer the forgivable loan on top of the tax breaks, McGuinness said.
“I think this is a very reasonable and very safe investment. I think it’s a very small investment from the city that will reap large benefits,” he said.
McGuinness reviews the number of jobs and total investment companies plan to make before making an offer for incentives. Tax breaks typically are the first incentive offered, but the city also has offered cash incentives for projects, he said. For example, the city provided $150,000 to Mitsubishi Heavy Industries Climate Control in 2013 when the company expanded to add more than 70 jobs.
The city also has given forgivable loans to Heartland Machine and Engineering and Electro-Spec in the past when those companies were moving into new buildings.
Those business incentives all have terms similar to Hetsco’s forgivable loan. If companies spend what they promise on a building or new equipment and meet hiring goals, the city does not require them to pay back the money.
Franklin already had set aside money to pay for expenses for the shell building, which is instead being used to help Hetsco. If the shell building didn’t sell by September 2015, the city would have had to pay $450,000 for the land the building sits on. The city redevelopment commission also had planned to spend up to $100,000 this year to pay for utilities, taxes and interest payments under an agreement with Runnebohm Construction.
The money going to Hetsco is less than the city would have had to spend if the shell building hadn’t sold and will go to support a high-paying and well-established business, redevelopment commission member Rob Henderson said.
“We have a nice fit for our community, a company with local roots and international reach,” Henderson said.
“I think it’s a good trade-off for us. The city has consistently and historically provided assistance for companies making those types of investments and bringing those types of jobs.”
The money that’s being given to Hetsco comes from taxes collected from businesses and set aside in the city’s TIF districts for economic development. The shell building is located in a TIF district, so property taxes Hetsco pays in the future will go back into that same fund.