The future location of Arbonne International is seen in April 2006, a few months prior to the company moving into Greenwood.
The Greenwood Common Council could revoke a tax break granted 16 years ago after officials say a skincare company failed to meet its promise to bring more than 400 jobs to the city.
Arbonne International, LLC, 800 Commerce Parkway West Drive, received a $379,356, 10-year tax abatement on personal property, including heavy machinery, in 2006. There was also a 10-year real property abatement granted for the original landlord of the building, Quadrangle Development Co. for $662,000.
As part of the Arbonne tax abatement agreement, the company agreed to hire 435 workers over a 10-year period, along with a certain amount of wages and capital investments, in exchange for the tax break, according to city documents. The company was supposed to maintain or surpass these numbers as part of the agreement, as well as file an annual CF-1 form explaining how much equipment was purchased, how many employees were hired and the average wage at the facility.
However, Arbonne has not held up to its end of the agreement, city officials say. When the company submitted its CF-1 form for next year’s tax benefits, it reported a significant drop in the employee count.
An Arbonne spokesperson did not respond to a request for comment before deadline.
Significant drop in employees
In the company’s most recent CF-1, representatives reported 46 employees. This is nearly 90% below what the company committed to hiring, said Adam Stone, chair of the city’s CF-1 compliance committee and a financial consultant who routinely works for the city.
“Off the top of my head, they are hundreds of jobs off and on a percentage basis, that’s like 90%,” Stone said.
Earlier this month, the committee recommended the city council find Arbonne in noncompliance and to terminate the abatement. It was the committee’s opinion that doing this would be better than attempting other actions, Stone said.
With this recommendation, city officials have given notice of their intent to terminate the abatement. The city council will ultimately have final say on the termination after the company has the chance to respond, he said.
Issues found in review process
The discovery resulted from a review conducted by the CF-1 compliance committee. The compliance issue was not discovered sooner because it “slipped through the cracks,” Campbell said.
“The committee that reviews these is fairly new,” Campbell said. “… And apparently the county never said anything about it. It’s one of those things that slipped through the cracks.”
Through the review process, the city also discovered the company still had four more years of its abatement left.
“Somehow, according to information from the county … they have four more years of an abatement coming,” Campbell said Wednesday.
The reason the company still has four more years of its abatement is because of phased construction at the site. The company had new construction reported within the periods that were still below the abatement cap, Stone said.
The cap is for the capital investments the company promised to invest in the warehouse. The company promised an investment of $7,864,500. The actual amount of investment on the CF-1 for next year is not publicly available at this time, as information concerning the cost of new equipment is considered confidential, officials said.
Issues have happened before
This is not the first time Arbonne has been noncompliant with what it has promised the city.
In 2008, officials discovered that the company had failed to provide the city with evidence it had met its metrics for job creation. Officials at the time said the company had not filed compliance forms for the first years of the abatement.
This discovery was made after a request had come in for the report after the company announced layoffs that year. The failure to file went unnoticed at the time because the first compliance form was never filed in 2007, according to previous reporting from the Daily Journal.
Arbonne did not give a comment on the issue at the time, according to reports.
In the past, there have been times when the company filed documents with the county, but not the city. The city is supposed to review the paperwork, sign it and submit it to the county, Stone said.
Due to the misfilings, the county was continuing to apply the abatements in years where the city was not receiving the required documentation. Arbonne’s past CF1 filing and compliance process issues are “water under the bridge” for the city, and are not the reason behind why the abatement is facing termination, Stone said.
The city also has no issues with how county officials have approached Arbonne in the past. The outstanding issue right now is the job numbers reported by the company, he said
The city typically tries to be business friendly by giving companies the benefit of the doubt, but in this case, the committee recommended that the abatement be terminated, Stone said.
“It was the committee’s recommendation that ‘Hey, the taxpayer has already benefited, they’ve made the investments,’” Stone said. “At this point, if council wants to continue that abatement agreement in the future, that job performance really needs to be weighed more carefully.”
Committee now polices compliance
Issues like this are part of the reason the review committee was formed, Campbell said.
The committee is made up of city staff and Stone. On behalf of the city council, the committee reviews abatement compliance and is responsible for organizing and maintaining all of the compliance and agreement records over the years, Stone said.
“Essentially, we call out observations and things that we think the council should consider as a part of reviewing a company’s compliance,” he said.
For years the city council, which is responsible for approving the CF-1 forms each year, just rubber-stamped them without asking many questions. However, as time went on council members began to see there were issues with this, and after talking with Mayor Mark Myers, members became more vocal about a need for a fix, Campbell said.
“We saw that this was becoming an issue,” Campbell said. “If the companies are not living up to the obligations, they shouldn’t benefit from them.”
The abatements are complex and typically are in place for five to 10 years. Because of this, there are a lot of documents and requirements embedded in each review. The committee’s job is to make sure that the companies’ abatement files are complete, and that the spirit of what the city council approved for each abatement is being executed correctly, Stone said.
“We’re trying to actively try to help monitor any kind of discrepancies and differences to try to help make sure that those abatements are given and monitored appropriately,” Stone said.
Arbonne officials were asked to appear before the city council during its next regular meeting on Oct. 3. During that time the company will be asked to provide information as to why the abatement shouldn’t be terminated, Campbell said.
If the company fails to provide the information, or fails to show up to the public hearing, the abatement could be terminated, he said.
