FedEx Supply Chain, Inc. has withdrawn its tax abatement from city of Greenwood, just as the city council was preparing to terminate it for noncompliance.
The company, located at 700 Commerce Parkway West Drive, voluntarily requested its $158,000 tax break be terminated Wednesday night, nearly a month after the city council unanimously voted on June 6 to find them in noncompliance with the terms of the abatement. The city’s resolution to end the tax abatement was still making its way through the legislative process when FedEx came forward Wednesday.
FedEx had originally applied for a tax abatement in August 2019. The company told the city the expansion was needed to meet one of their client’s growing needs for services. The client was Interdesign, Inc., an Ohio-based international housewares and home fashions company that uses FedEx for its shipping and receiving services.
The $158,000 tax break was for an investment of $4.4 million in machinery and other equipment, along with the company’s plans to lease a 235,000-square-foot speculative building in Greenwood. They were also expected to add 90 jobs to their local operations. The jobs would be full-time and pay, on average, $16.29 an hour, not including the cost benefits or training, officials said.
The company was two years into the five-year abatement and had missed both financial and employment targets they promised they would meet by this time under the terms of the abatement, council member and redevelopment commission president David Hopper told the city council last month. As of the company’s latest filings, the company had only hit 27% of the job commitment number and only 57% of the investment commitment, Hopper said.
FedEx explained why the company was off-target in a statement to the Daily Journal.
“In Greenwood, FedEx employs more than 1,000 individuals with nearly 70 job openings at FedEx operating companies. We are committed to supporting communities where our team members and customers live and work. Due to the pandemic and changing needs of our customers and operations, FedEx Logistics did not meet the estimated abatement target and voluntarily worked with the City of Greenwood to end the incentive agreement,” the statement says.
After finding the company noncompliant, the city council drafted a formal resolution to terminate the tax break, which was introduced on June 20. The council had planned to pass the resolution to terminate the abatement on both readings Wednesday, but changed the resolution when FedEx Supply Chain asked to withdraw the abatement. As a result, the council amended the resolution and unanimously passed on both readings a resolution to voluntarily withdraw, rather than forcibly pull the abatement.
The issue came up after completing during the city’s annual review process for tax abatement compliance. Each year, city officials review each tax abatement to make sure that the company is substantially on target with the promises for growth made to the council when the abatement was originally approved. Companies submit their progress annually for city officials to review in an SB-1 form.
The forms are reviewed by a committee that gives a recommendation to the city council on finding the company substantially compliant or noncompliant, said Mike Campbell, city council president and RDC member. The city council ultimately decides if a company is in substantial compliance, and typically, Greenwood’s gives companies a little bit of leeway if they are close to the target number, especially early on, Campbell said.
However, it was clear FedEx was not in substantial compliance, based on their metrics. The council rarely gets a noncompliance recommendations from the committee, he said.
“FedEx (Supply Chain) was woefully low on all of their commitments,” Campbell said.
The company was supposed to save $158,000 with the abatement over five years. The company was expected to pay about $87,000 in personal property taxes over the life of the abatement and more than $1.2 million in real property taxes during the same time frame, according to city documents.
With the abatement withdrawn, the company will have to pay the rest of the taxes that were originally to be abated —$54,003. However, FedEx won’t have to pay back taxes on the $103,997 in savings it has already realized through the abatement, Campbell said.
Editor’s note: A statement from FedEx was added to this story on July 14.
