Two tax breaks totaling nearly $600,000 and $100,000 in public funds are on the table to keep a local company with a long history in Franklin.
G and H Orthodontics, also known as G and H Wire, is headquartered in Franklin, and has been since 1975. Once the lease was up on its building at 2165 Earlywood Drive, it considered moving its entire operation elsewhere, Mayor Steve Barnett said.
G and H was looking at other locations inside and outside the county, Barnett said, so the city made a competitive offer to try and keep the company in Franklin, partially because Franklin’s tax rate is higher than other communities, he said.
Proposed incentives include both real and personal property tax abatements, and $100,000 in tax-increment financing (TIF) funds from the Franklin Redevelopment Commission.
G and H, in its abatement application, said taxes and operating costs are major parts of its decision-making process, and incentives would be a deciding factor.
G and H, which also has a facility in Mexico, manufactures components for braces including wires, brackets, bands and tubes in Franklin, said Charlie Wemhoff, the company’s vice president of operations. At its current capacity, the Franklin factory makes about 25 million spools that are sold in more than 100 countries, he said.
“I think it is the right thing, We want to keep a company like this here. They are a class act and they have quality, high-paying jobs,” Barnett said.
Employees make $23 an hour on average.
With the incentive package proposed, the company would not only retain 134 jobs in Franklin, but expand operations, adding 116 more at $25 an hour on average for a total of 250 jobs by 2025, according to city documents.
The new jobs are expected to pay $25 an hour on average. G and H plans to add five office jobs and 30 production jobs by the end of the year, city documents show.
The new jobs will come online after G and H and developer, Westfield-based Patch Development, invest $4.9 million in the city’s shell building at 40 Linville Way.
Patch plans to spend $3.8 million to customize the shell building to G and H’s specifications, and G and H will invest $1.16 million in equipment to outfit the facility.
Both tax abatements and the $100,000 in additional funds would facilitate the expansion.
A 10-year real property tax abatement would save Patch an estimated $508,000 in taxes over the life of the abatement, and the developer would pay $631,000 in taxes, according to city documents. The abatement also benefits G and H in that its lease payments to Patch would be lower over the life of the abatement, Barnett said.
A 10-year personal property tax abatement for G and H would be on a different-than-usual schedule, which allows the company to pay no taxes on its new equipment the first two years, and 5% the third year, city documents show. A standard abatement schedule typically allows one tax-free year.
Under the alternative schedule, G and H would save an estimated $84,800 over the life of the abatement, and pay $37,400 in taxes. Much of that will be paid toward the end of the abatement period, as G and H would pay less than half of the taxes it owes on the equipment until year eight.
Both Barnett and Dana Monson, the city’s community development specialist, said the alternative abatement schedule and $100,000 gift, essentially, are necessary to keep G and H here. A similar deal was used to attract Energizer to the city, Monson said.
“Economic development is not always bringing new companies with new jobs. It is also about helping current companies with expansion and creation of new jobs,” Barnett said.
The newly proposed abatements are in addition to an existing 10-year tax abatement already on the shell building. The $2.8 million, 50,040-square-foot building was a public-private partnership between the Franklin Redevelopment Commission, Runnebohm Construction and GM Development, that was aimed to provide a starting point for businesses wishing to locate in Franklin.
The two real property tax abatements would run side-by-side. One is abating taxes for the exterior of the building, while the other is for interior improvements, Monson said.
Rather than looking at them as stacked abatements, they should be looked at as pieces of the whole, Barnett said. If it had been new construction, the abatement would have been for the full $7 million, he said.
The Franklin Economic Development Commission on Tuesday sent the proposed abatements to the Franklin City Council with a favorable recommendation. The council will consider the request at its next meeting at 6 p.m. Wednesday.
The redevelopment commission will consider the request for $100,000 in additional funds at its next meeting at 8 a.m. Tuesday.
