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