KENDALLVILLE — A request for a new tax break on an expansion by Kendallville’s oldest industry raised several questions from council members, but ultimately the board OK’d the new abatement.
Flint and Walling is planning a $1.24 million expansion at its Oak Street plant, adding new manufacturing equipment including CNC, lathe, motor winding, inserting and gauging equipment. The company will also be refurbishing a varnish oven originally installed in the 1950s.
The company plans to add no new employees, but will retain its current workforce of 260 through the expansion, according to paperwork filed with the city.
On the recommended five-year tax abatement, Flint and Walling is estimated to save $45,427 in property taxes, while paying out about $78,000 over a 10-year span.
Two pieces of that request drew some questions from council members — the fact that no new jobs were being added and also whether refurbishing existing equipment was allowable.
“No jobs?” Council President Jim Dazey asked simply.
Matt Brinkman, executive director of the Region 3A Development and Regional Planning Commission that prepared the paperwork, said the company didn’t pin any new jobs to this expansion, but noted that Flint and Walling had significantly expanded hiring beyond original expectations after its last expansion in 2018.
“Very seldom do we get a tax abatement that doesn’t get some additional openings for positions and that jumped out at me right away that there were zero employees additional,” Dazey said.
Despite there being no new jobs, the abatement request does fit guidelines that were updated by the city in December 2018.
While previously the guidelines put additional weight on the number of jobs created — at the time the city was deep in the throes of the Great Recession so jobs were badly needed — the city significantly de-emphasized job creation, especially after hearing many industries were struggling to find workers to fill already vacant positions, much less new ones.
The new guidelines require industries to meet minimum investment levels and set minimum wage requirements for new jobs, but do not actually require any new positions be created.
Mayor Suzanne Handshoe noted that change, stating that for a five-year tax break, a company must meet a minimum investment of $1 million, which the Flint and Walling project does.
Councilman Regan Ford also raised questions about part of the $1.24 million total, which included refurbishing the old varnish oven and whether that qualified as a “betterment” under the definition of state law. Ford asked how the improvements to the over would rise to a different level than typical maintenance.
Brinkman said he checked with the state and that any significant improvement to existing structures or equipment can be abated.
Doug Overy of Flint and Walling also stepped in to explain a bit more about what was occurring. The varnish oven was a piece of equipment from the 1950s and breaks down frequently. Due to its age, getting replacement parts and making repairs have become a problem.
The company is planning on hiring a contractor who will come in and retool the machine with modern electronics to not only get it working more often but improve efficiency of the old system.
“We could buy a new oven or we could revitalize the oven we have,” Overy said. “All of the electronics will be replaced … plus the gas train.
“The oven, when it’s completed, will be doing the same exact thing, hopefully more days out of the year than it is doing now,” he said.
Those explanations satisfied Ford, although he also raised some issues with how the forms had been completed and whether they would actually allow Flint and Walling to collect the benefit the city was granting.
“I certainly appreciate Flint and Walling and their history in the city. Maybe code has changed and things are different now. When a company comes to us for a tax abatement and we grant one, I want to make sure they get the benefits under Indiana Code,” Ford said. “And sometimes when I look at these things I wonder if they’re going to get the things they actually ask for. Forms are incomplete and that bothers me.”
With those questions answered, the council voted 5-0 to approve the abatement.
The new equipment is the latest in a string of upgrades Flint and Walling has made in the last few years.
The company received a 10-year tax abatement on $1.6 million in new equipment in January 2016. Flint and Walling then received a seven-year tax break on $1.5 million in new equipment and promising 13 jobs in January 2018. Shortly after, another seven-year tax break was OK’d in May 2018 for a $1.56 million expansion creating at least 18 new jobs.