York and Adams Smart Growth Coalition

Tax incentive for Johnson Controls approved by county commissioners

Tax incentive for Johnson Controls approved by county commissioners
Hopewell Township supervisors are scheduled to hold a public hearing on the matter Jan. 3.
Daily Record/Sunday News
York, PA -
York County commissioners on Wednesday agreed to provide a 20-year tax incentive, aimed at attracting Johnson Controls to Hopewell Township.
The South Eastern School Board approved a similar agreement in November, and Hopewell Township supervisors are scheduled to hold a public hearing on the issue Jan. 3.
"We are at that critical juncture where it's time for the county commissioners to pass a resolution, pledging your participation," Darrell Auterson, president and CEO of the York County Economic Alliance, told commissioners before the vote.
Johnson Controls' Grantley plant in Spring Garden Township employs 440 engineers and workers with an average salary of $88,000 per year, according to a recently released report by the Redevelopment Authority of York County. The plant was built in 1951 and is at the end of its useful life, according to the report.
The Fortune 500 company is considering moving its Spring Garden Township-based operations to the Stonebridge Business Park in Hopewell Township or to Baltimore County, according to the report.
"It became very clear through this process that in order for Pennsylvania to be able to be competitive for this project that we were going to have to potentially implement ... a seldom-used tool," Auterson said Wednesday.
The seldom-used tool is tax increment financing. In September, commissioners appointed Auterson to serve as a representative for the county on a planning committee to examine the possibility of establishing such a district for a potential development project.
Adam Tkaczuk, vice president at a financial advisory firm that's been working with Johnson Controls, told commissioners Wednesday that efforts to create the district do not guarantee that the manufacturing company will build in Hopewell Township.
"There's still the due diligence process that is occurring," Tkaczuk said. "...There's still a lot of things that need to occur. This is one of the things that they will take into account."
When asked about a projected completion date, Tkaczuk said they expect it would take about five years "to fully ramp up the operations."
Afterward, President Commissioner Steve Chronister said he voted in favor of the tax incentive because jobs are important to the county. And Commissioner Doug Hoke said the infrastructure improvements "may spur more economic development."
About the plan
As part of a tax increment financing plan, Johnson Controls:
--- would spend $148 million to build a new site in Hopewell Township, with about $75 million of that earmarked for purchasing testing equipment.
--- pay property taxes into a $12 million bond that must be paid off in 20 years;
--- could use money from that $12 million bond to fund infrastructure around the plant, including a sewer system, an electrical substation and roadways. The money may not be used to build the facility itself.
"The idea is that this will help benefit the county, the industrial park, help others businesses move to the region ... as well as Johnson Controls itself," said Adam Tkaczuk, vice president at Duff & Phelps, a financial advisory firm that's been working with Johnson Controls.
He compared it to having an anchor tenant in a mall.
"That anchor tenant -- you might give an incentive to. ...And they would bring in other businesses," Tkaczuk said.
About tax increment financing
As part of the plan, South Eastern School District, York County and Hopewell Township would participate in the tax increment financing program.
Under the program, the property value of an area would essentially be frozen for tax purposes for a period of time even after improvements are made. Taxing authorities would continue to receive funds based off the frozen base level.
Additional money that would have gone to the entities had the property value not been essentially frozen could instead be used to pay debt connected to infrastructure around the plant.
Each entity would agree to allocate a percentage of this tax increment revenue to be used for infrastructure.
--- South Eastern School District: 70 percent
--- York County: 100 percent
--- Hopewell Township: 100 percent
Hopewell Township leaders have not yet approved participating.
Code of conduct proposed
York County commissioners are set to vote on a code of conduct for elected and appointed officials Dec. 19.
York County Commissioner Doug Hoke said the code was recommended by Donald Reihart, who was appointed acting solicitor for the county in July.
York County spokesman Carl Lindquist said in an email that, in many cases, information in the proposed ordinance is located in other ordinances or policies, or is the generally understood standard.
"The goal of this policy is to create an ordinance that clearly communicates all expectations in one unified location," Lindquist said.
York County President Commissioner Steve Chronister said it sends a message to all county employees.
"We've had some issues with some former directors. ...We're not going to allow management by intimidation," Chronister said.
Chronister declined to provide specifics about former directors.
To see a copy of the proposed ordinance, visit www.yorkblog.com/ydrpolitics.

Web Design and Hosting by Wide Open Communications