Coun­cil voices sup­port of busi­ness in­cen­tive loans

Cecil Whig - - LOCAL - By JES­SICA IAN­NETTA jian­netta@ce­cil­whig.com

ELK­TON — Nearly nine months af­ter the Ce­cil County Coun­cil was crit­i­cized by some for its ap­proval of a busi­ness in­cen­tive loan to Ama­zon, the re­sponse to two new busi­ness loans has been more muted, with sev­eral coun­cil mem­bers ex­press­ing strong sup­port.

Dur­ing a leg­isla­tive ses­sion Tues­day night, two resolutions were in­tro­duced that au­tho­rize the ap­proval of Mary­land Eco­nomic De­vel­op­ment As­sis­tance and Au­thor­ity Fund (MEDAAF) loans to two Prin­ci­pio Busi­ness Park ten­ants: Lidl and an as-yetun­named com­pany dubbed Project Melo — pro­nounced “mel­low” af­ter the for­mer Univer­sity of Mary­land Ter­rap­ins bas­ket­ball player.

The resolutions, which will be voted on dur­ing the Oct. 17 meet­ing, ask for a $170,000 for­giv­able loan over 10 years for Project Melo and a $36,000 for­giv­able loan for Lidl, which is split into $20,000 in a con­di­tional work­force train­ing grant and $16,000 in a for­giv­able loan over 10 years.

MEDAAF loans are a com­mon tool in Mary­land for coun­ties, cities and towns to at­tract new ma­jor em­ploy­ers and re­quire a 10 per­cent county match, which Ce­cil County would pay out of the county’s Busi­ness In­cen­tive Fund that draws from video ter­mi­nal lottery (slots) rev­enue from Hol­ly­wood Casino Per­ryville. No tax­payer-based funds would be used, Chris Moyer, county eco­nomic de­vel­op­ment direc­tor, told the coun­cil.

“We are lever­ag­ing state dol­lars here,” he said. “We are not putting up much money for what the county is get­ting in re­turn, hon­estly.”

In the case of Project Melo, the county an­nounced last week that the re­turn will be sub­stan­tial with the com­pany ex­pected to build a more than 1 mil­lion-square-foot dis­tri­bu­tion cen­ter and hire 225 full-time em­ploy­ees at the site by the end of De­cem­ber 2021, with an ad­di­tional 225 full-time em­ploy­ees hired by the end of 2023. The com­pany also plans to in­vest about $16 mil­lion for land ac­qui­si­tion, $65 mil­lion for con­struc­tion and im­prove­ments and $3 mil­lion for equip­ment.

Moyer re­vealed few de­tails about the com­pany’s iden­tity Tues­day, re­fer­ring to it only as a “the largest pri­vately held man­u­fac­turer in its in­dus­try.” He told the Whig that it is not head­quar­tered in Mary­land, al­though it has a pres­ence in the state, and that Ce­cil County com­peted against one other Mary­land county for the project. In re­sponse to a ques­tion from coun­cil, he promised more de­tails prior to the fi­nal vote later this month.

Mean­while, the Lidl project, which aims to open in De­cem­ber, will have cost an es­ti­mated $105 mil­lion for the land ac­qui­si­tion and site con­struc­tion and $45 mil­lion in ad­di­tional costs for equip­ment and in­te­rior needs. The com­pany ex­pects to hire 100 per­ma­nent full-time em­ploy­ees by De­cem­ber 2018, and could even­tu­ally em­ploy up to 400. That project has al­ready gen­er­ated a sig­nif­i­cant re­turn on county dol­lars, Moyer said.

“The com­pany has paid $235,000 in per­mit fees to the county al­ready, which is a 650 per­cent re­turn on the in­vest­ment that we’re seek­ing right now,” Moyer said. “That’s out­side of prop­erty taxes of $12 mil­lion over the next 10 years, out­side of in­come tax rev­enue of $700,000 over the next 10 years.”

The Ama­zon project has also gen­er­ated a con­sid­er­able re­turn on in­vest­ment al­ready as well, Moyer said. Ama­zon has paid the county $550,000 in per­mit fees alone, which trans­lates to a 450 per­cent re­turn on the county loan of $120,000 to the com­pany, which was ap­proved last Jan­uary.

While the Ama­zon loan was heav­ily crit­i­cized by some con­ser­va­tives groups in the county as “cor­po­rate wel­fare,” only one cit­i­zen spoke against the two new pro­posed loans on Tues­day night and many mem­bers of the county coun­cil were sup­port­ive.

Vice Pres­i­dent Dan Sch­neck­en­burger call eco­nomic in­cen­tive loans “an ab­so­lute ne­ces­sity in to­day’s world.”

“Hon­estly, I think that we’ve had a lot of angst with our cur­rent bud­get and where our tax rate is now. We need these com­pa­nies,” he said. “These com­pa­nies pro­vide the buf­fer of tax base that we need to move for­ward in the county and hope­fully keep the taxes lower for ev­ery­body who’s a res­i­dent of the county.”

Coun­cil­woman Jackie Gre­gory added that even the state funds that the loans are drawn from are al­most self-sus­tain­ing and since they are con­di­tional loans, com­pa­nies are re­quired to pay part of the money back if they don’t hit tar­gets.

Gre­gory noted that the loans are of­fered through the Mary­land Depart­ment of Com­merce, which does a study in ad­vance to es­ti­mate the re­turn on in­vest­ment for the loans. A bill in­tro­duced in the state leg­is­la­ture a few years back would have seen a por­tion of taxes and other money that these com­pa­nies pay the state go di­rectly back into the fund, mak­ing it self-sus­tain­ing. Though that bill never passed, “if you make the cal­cu­la­tions, it ac­tu­ally is a self-fund­ing en­tity,” she ar­gued.

Coun­cil­man Bob Mef­fley was also sup­port­ive of the loans, quip­ping that “if I could see a re­turn like that on my money, I’d be re­tir­ing.”

But he also cau­tioned that the county needs to be vig­i­lant and make sure these com­pa­nies stay suc­cess­ful once they’re es­tab­lished.

“There’s al­ways a flip side to every coin and the only flip side I worry about is as the com­pany’s come in that ev­ery­thing does go well for them be­cause oth­er­wise you have a bunch of empty ware­houses and you don’t know what’s go­ing to go in them,” he said. “So I think we al­ways have to be cau­tious. It’s a great in­vest­ment but we al­ways have to look at both sides of the coin just to make sure we’re OK.”

CE­CIL WHIG PHOTO BY JES­SICA IAN­NETTA

Chris Moyer, Ce­cil County direc­tor of eco­nomic de­vel­op­ment, lis­tens as the Ce­cil County Coun­cil dis­cusses busi­ness in­cen­tive loans.

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