A Greenwood company has requested tax breaks and money to help fund a new business and add up to 50 jobs in three years.
National Trade Supply LLC asked Greenwood for a five-year property tax abatement on equipment, which would save the company about $38,500, and $50,000 in cash to pay for equipment for the new company, Midwest Purification LLC. Midwest Purification would manufacture residential water filters that National Trade Supply will sell.
The company estimates the new business is a $6 million investment to start the filter maker and hire 40 to 50 new employees within three years. The jobs will be full time with wages of $13 to $20 per hour, plus medical, dental and retirement benefits.
The company asked for a lump sum of $50,000 cash in tax-increment financing, or TIF, money to pay for equipment. TIF dollars are collected in special taxing districts, which capture property taxes on new development and growth in property values to spend on economic development projects in a specific geographic area. The city redevelopment commission oversees how TIF money is used.
Redevelopment commission members Thom Hord and Bryan Harris said they wanted to find ways to protect the city in case the new company doesn’t keep its promises.
The redevelopment commission agreed to recommend the tax abatement to the city council for approval. The company and commission have not negotiated the specifics of the cash incentive, such as how the city would safeguard itself in the deal and what would trigger Midwest Purification having to pay back the cash.
One concern members raised was how long the business would stay in Greenwood. The two companies will neighbor each other at 2011 Southtech Drive in Greenwood. Midwest Purification has committed to a one-year lease on a 14,000-square-foot space.
The protections could include an agreement requiring Midwest Purification to pay back the cash if, for example, the company moved its operations out of Greenwood within a certain period of time, Harris said.
“We have been burned with some startup businesses. We have to be more prudent,” he said.
The city in 2013 attempted to recoup its losses from investing in pharmaceutical startup company Elona Biotechnologies, which failed without getting approval to manufacture and market generic insulin. The city has lost nearly $10 million on Elona.
National Trade Supply is an online vendor of heating, ventilation and air conditioning products, such as filters. It has more than $40 million in annual revenue, 40 employees and no debt, chief financial officer Michelle Straumins said.
About 45 percent of National Trade Supply’s business is selling water filters that currently are imported from China. Once the startup company can make the refrigerator water filters, Midwest Purification will immediately have a built-in customer in its parent company, she said.