published Thursday, September 16th, 2010

Whirlpool incentives on agenda

CLEVELAND, Tenn. — Local governments are planning an in-lieu-of-taxes payment plan for Whirlpool as the largest local employer begins construction on an entirely new manufacturing plant.

Officials also are addressing what will happen on the huge, century-old current plant site, which will be vacated in about three years.

Payment in lieu of taxes agreements, also known as PILOTs, are routinely made between local governments and new industries or existing industries making expansions.

Governments often forego property taxes for a set length of time to entice a company to build, and PILOTs are meant to compensate the government for some of that lost revenue.

“Because of the complexities of the financial market today, we have weighted the incentive on the front end,” said Doug Barry, vice president of economic development for the Cleveland/Bradley Chamber of Commerce.

The terms were negotiated with Whirlpool before its announcement two weeks ago that it was building a new plant. They extend to 2033.

The company plans to build an entirely new $120 million factory. Whirlpool, Cleveland’s largest employer with more than 1,500 jobs, will add 130 more jobs when the 1 million square foot plant is built.

“We are not giving up any net tax revenue,” Barry said.

Over the life of the PILOT, there is expected to be $10.6 million in county tax revenue from Whirlpool, compared to $5.4 million under the existing tax plan. For the city of Cleveland, the PILOT is expected to generate more than $8.8 million through 2033, compared to $4.5 million under the existing plan.

“We are in essence, over that period of time, doubling the income stream to the local community for taxes,” Barry said.

The PILOT agreements are on the agenda for a Bradley County Commission vote on Monday. The Cleveland City Council will be asked to vote later.

Jeff Yarber, the county commissioner whose district includes the current plant site, said he is concerned that a “ghost town” will be created when Whirlpool moves.

Whirlpool’s plans are great news for the county, he said, but he wants planners to find ways to fill the huge empty footprint left behind.

Local governments and the Chamber are seeking a $500,000 state grant to study redevelopment of the current plant neighborhood, said Gary Farlow, Chamber president and CEO. That application is due Oct. 15.

The Cleveland Planning Commission is already organizing a citizens group to look at development of the current plant site when Whirlpool moves.

Local governments are also working with the state to redevelop the road from the Michigan Avenue Road and Benton Pike intersection back to APD 40.

Redeveloping the area will have an impact on several hundred other properties in the current Whirlpool neighborhood.

Over time, local officials expect several public meetings on the future of the site.

Contact Randall Higgins at rhiggins@timesfreepress.com or 423-314-1029.

about Randall Higgins...

Randall Higgins covers news in Cleveland, Tenn., for the Times Free Press. He started work with the Chattanooga Times in 1977 and joined the staff of the Chattanooga Times Free Press when the Free Press and Times merged in 1999. Randall has covered Southeast Tennessee, Northwest Georgia and Alabama. He now covers Cleveland and Bradley County and the neighboring region. Randall is a Cleveland native. He has bachelor’s degree from Tennessee Technological University. His awards ...

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