A $700,000 effort to keep a local company with a long history in Franklin is a done deal.
The Franklin City Council on Wednesday unanimously approved two tax breaks to facilitate the development, and the Franklin Redevelopment Commission preliminarily approved a $100,000 incentive.
Without the incentives, the city could have lost 134 jobs and missed out on 116 additional jobs, Mayor Steve Barnett said.
G and H Orthodontics, also known as G and H Wire, and Westfield-based Patch Development plan to invest $4.9 million to expand a Franklin-funded shell building at 40 Linville Way. The $2.8 million building was a public-private partnership between the city’s redevelopment commission, Runnebohm Construction and GM Development, built as a starting point for businesses wishing to locate in Franklin.
Patch plans to spend $3.8 million to build the shell building to G and H’s specifications, and G and H will invest another $1.16 million in equipment.
The 10-year real property tax abatement will save Patch $508,000 in taxes, but the developer will still pay $631,000 in taxes during that time, according to city documents.
The 10-year personal property abatement for G and H comes with an alternative schedule, which allows the company to pay no taxes on its new equipment for the first two years, and just 5% the third year, city documents show. A standard schedule abatement usually only allows one tax-free year.
Under the alternative schedule, G and H will save $84,800, while paying $37,400 in taxes on the equipment. Much of the taxes will be paid near the end of the abatement period, as G and H would pay less than half of the taxes owed on the equipment until year eight.
Because there is already an abatement in place on the building, the city council finalized the abatements with one vote, instead of the two that are typically required.
The two real property tax abatements run side-by-side essentially. The redevelopment commission abatement is for the exterior of the building, while the new abatement for Patch is for interior improvements, said Dana Monson, Franklin’s community development specialist.
Instead of being considered stacked, they should be looked at more like pieces of the whole, Barnett said. If it had been new construction, the abatement would have been on the full $6 million.
The $100,000 cash incentive provided by the redevelopment commission will use funds collected in a tax-increment financing (TIF) district. Barnett says he expects the sale of the building to add about $350,000 to the same fund.
The redevelopment commission did not approve an economic development agreement attached to the $100,000 incentive, but said they support it. The agreement is still in negotiations and is expected to be signed following a special meeting next week.
Barnett asked for approval at the meeting, hoping the commission would approve the agreement, pending final details. However, the commission opted to approve the idea of the incentive, but meet again to consider the agreement.
If the agreement is signed, the commission plans to release funds for the incentive at its March meeting.
The city pulled out all the stops to keep the company in Franklin, Barnett said. The company wanted to expand and was notified that its lease would be up at its current location at 2165 Earlywood Drive, he said.
G and H, opened in 1975 in Franklin, and has grown into one of the leading suppliers of orthodontics products worldwide, said Charlie Wemhoff, the company’s vice president of operations.
The company manufactures components for braces including bands, brackets, tubes and wires.
“They made it clear that their first choice is Franklin,” Barnett said. “Even though they were out shopping and doing their due diligence they did want to stay here. However, Franklin was not the best economic option for G and H.”
The incentives became necessary because the company could go elsewhere and pay less in taxes, Barnett said.
“With this incentive package, we are hoping to fill the gap in the difference of operating here and what it would be in the other communities (where) they shopped around,” Barnett said.
On its abatement application, G and H said taxes and operating costs are a major part of their decision-making process, and the incentives would be a deciding factor.
The company plans to add 116 more jobs, for a total of 250 jobs by 2025, including five office jobs and 30 production jobs by the end of 2021, according to city documents.
Employees make about $23 an hour, on average, and the new jobs will pay about $25 an hour, on average, city documents show.
