published Wednesday, July 2nd, 2014

Plastic Omnium wins Chattanooga tax breaks; questions raised about need for incentives

The Enterprise South industrial park hosts Volkswagen and Amazon facilities.
The Enterprise South industrial park hosts Volkswagen and Amazon facilities.
Photo by Dan Henry.

A new $70 million plant project on Tuesday won tax incentives from a Chattanooga panel, though questions were raised about how such breaks are offered to companies and whether they're really needed.

Plastic Omnium, a French manufacturer of fenders and bumpers that is planning to build an Enterprise South industrial park factory to service nearby Volkswagen and other automakers, will get a 10-year property tax break from the city Industrial Development Board. The company will pay the education portion of what it would normally pay in property taxes, however.

Charles Wood, the Chattanooga Area Chamber of Commerce's vice president of economic development, said the company is expected to see tax savings of $2.9 million over the decade.

At the same time, it is expected to pay about $2.1 million in school tax, he said. Also, the city will see $1.1 million in tax receipts from the project while Hamilton County will garner $700,000, Wood said.

"There's direct value back for the schools and the city and county," he said.

However, a local citizen, Helen Burns Sharp, questioned if Plastic Omnium would have come here if it had not received the tax breaks. She said that too often, such tax incentives appear nearly automatic.

"There ought to be some sort of test," Sharp said, suggesting there be a determination that the company will not come to Hamilton County unless it receives tax incentives.

She said that if all the tax breaks are tabulated for companies in Hamilton County, "there's a lot of money we're not collecting." Sharp noted that big companies such as Volkswagen, BlueCross BlueShield of Tennessee, Chattanooga Coca-Cola Bottling Co., FedEx, Amazon and others have received the tax incentives.

Sharp calculates there are at least 50 companies receiving property tax breaks in Hamilton County and collectively such tax breaks forgive about $3 million a year in city and county general property taxes.

"The public has very little idea who negotiates an agreement," she said. Sharp added that local industrial development boards appear to be put in a position of rubber-stamping the agreements.

Louann Prater Smith, an attorney for Baker Donelson who represents Plastic Omnium, said the company looked at Bradley County in Tennessee and Whitfield County, Ga., as well as Chattanooga.

"These incentives were crucially important to the company coming here," she said.

Smith said that such companies are responsible to their shareholders to try to get the best deal.

The company intends to create 184 new jobs by the time it starts production in 2015 and expand its payroll to include 300 people as early as three years after opening.

Plastic Omnium is purchasing about 27 acres at Enterprise South.

Contact Mike Pare at mpare@timesfreepress.com or 423-757-6318.

about Mike Pare...

Mike Pare, the deputy Business editor at the Chattanooga Times Free Press, has worked at the paper for 27 years. In addition to editing, Mike also writes Business stories and covers Volkswagen, economic development and manufacturing in Chattanooga and the surrounding area. In the past he also has covered higher education. Mike, a native of Fort Lauderdale, Fla., received a bachelor’s degree in communications from Florida Atlantic University. he worked at the Rome News-Tribune before ...

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