A handful of tax abatements approved by the Knox County Council are paying off, members learned this week during an annual review.

President Bob Lechner offered the results of the review, which takes a closer look at active abatements to ensure the companies who received them are keeping up their end of the bargain.

If not, they risk losing the tax abatement altogether.

But ones awarded to Futaba Indiana of America, Farbest Foods Inc. and its sister company, JFS Milling in Bruceville, have paid greater dividends in terms of employment and payroll than the council originally hoped.

“I think it shows a great level of success from these employers,” Lechner told his fellow members. “I give them the credit. And I give our workforce the credit in that they've been able to find a good niche here in our community.”

Among the abatements reviewed, FIA earned two, one in April of 2013 for a $27 million investment in personal property and a second granted in 2017 for another $12.8 million investment.

In return for the 10-year abatements — which means the personal property taxes are paid in incremental increases over the 10 years — FIA promised total payrolls of $24 million and $27 million respectively.

Currently, the manufacturing company's payroll sits at a greater $32 million, Lechner read from the annual report.

“They've been here for 15 years, built a factory and have increased the size in terms of square footage, equipment and number of employees 10-fold,” he said. “Yet they never asked for a tax abatement until the ones here.

“I think that says a lot about them and the kind of community partner they are.”

To encourage Farbest Foods Inc. to build its turkey processing plant in the U.S. 41 Industrial Park — not far from FIA — in 2012, the county council offered the company a tax abatement on $48 million in personal property.

In return, Farbest promised at least 300 jobs. It currently employs 437 people, Lechner said, and has a total payroll of nearly $10 million.

JFS Milling, too, was granted a real estate abatement on its $12.7 million building. That investment, however, ended up being closer to $15 million, Lechner pointed out.

They promised 18 employees in return.

“But they surpassed that,” he said. “Today, they have 28.”

In granting these kinds of abatements — the council just granted another, a 5-year abatement, to Sunrise Coal for $60 million in new equipment — thee focus has been more on the jobs created rather than the potential tax revenue.

A few years ago the state relaxed the structures for property-tax abatements, allowing local governments to be more creative with the agreements they approve.

In the past, most abatements were for either seven or 10 years in duration, with the usual schedule of declining (or increasing, depending on which side you were on) payments.

In return for its abatement, Sunrise is to quickly add 25 Knox County workers at the Oaktown facility. They also must increase its total employment at the Oaktown mine to 635 in year four and to 645 in year five in order to receive the additional tax breaks for those final two years of the abatement.

“It's really become about employees and payroll,” Lechner said of the council's approach to abatements. “That's why this last one with Sunrise Coal was structured the way it was. We wanted to emphasize to Sunrise Coal that we're interested in them hiring people, putting more people to work here.”

Lechner said he meets people all the time who believe tax abatements are “handed out like candy” or that those companies pay no taxes at all — which isn't the case — so he stresses that local officials do pay close attention to ensure these companies are holding up their end of the bargain.

And they do have an impact, he said, a big one.

“We're looking at jobs, payroll, and whether these companies are providing family-supporting jobs,” Lechner said. “Once we lure a company here, we want to make sure they understand that growth is very important.

“That's the function of a tax abatement.”

Copyright ©2019 Vincennes Sun Commercial