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Tyler reviews progress of its tax abatement agreements

Faith Harper - Tyler Morning Telegraph

Published on Wednesday, 26 April 2017 17:09 - Written by FAITH HARPER, fharper@tylerpaper.com

Half of companies currently receiving a tax abatement from the city of Tyler are meeting their job creation goals.

On Wednesday, the Tyler City Council received its annual update on the status of abatements.

The city has four current tax abatements with Centene, Hood Packaging, VME Process Systems and Fresenius.

 

Tax abatements are an agreement between the companies and local government, where the company doesn’t pay property taxes to the entity for a designated time frame in exchange for creating jobs and investing in the community.

 

Each company has a unique abatement deal, with differing terms, job goals and infrastructure investment.

Hood Packaging and Fresenius met their goals for this year, while Centene and VME Processing fell short.

 

The companies will have to pay a designated percentage of property taxes next year based on those shortfalls.

VME Processing’s 100 percent abatement will be reduced to 85 percent, meaning it will pay 15 percent of its property tax bill. Centene will go from a 100-percent abatement to 89 percent, meaning it will pay 11 percent.

The city of Tyler Reinvestment Zone Committee determined the percentages and then made recommendations to the Tyler City Council.

The committee found that 429 jobs have been created and over $45 million has been invested in new plant improvements and equipment purchases in Tyler, according to the city.

 

CENTENE

Centene operates core medical claims processing center, according to the Tyler Area Economic Development Council.

Employees moved into the 51,650-square-foot facility on Earl Campbell Parkway in November 2013. The company originally projected 327 new employees and an annual payroll of $13.4 million within four years, but there were 292 full-time employees as of the end of 2016. Since 327 employees were required under the terms of the abatement agreement, Centene was not in compliance, according to the EDC.

The problem for Centene is space - it physically can’t fit more employees in the building, said Tom Mullins, CEO of the EDC.

“The national office said that should be able to hold 327, but they were wrong,” Mullins told councilmembers. “They modeled it on a center in Montana.”

Councilman Mark Whatley said he didn’t have a lot of sympathy for the company.

“I don’t have a lot of sympathy for someone who built something too small,” he said. “It’s not like someone built it for them.”

The company, however, has exceeded the infrastructure goal of $15 million. At the end of 2016 it had invested $16.7 million.

Mayor Martin Heines commended the company for being a good corporate citizen in Tyler. The Centene Charitable Foundation donated $325,000 to help renovate the amphitheater in Bergfeld Park.

 

VME PROCESS SYSTEMS

VME Process supplies systems for onshore and offshore customers in the oil and gas industry, according to the EDC.

The company had 82 full-time employees at the end of 2016, but 96 were required under the terms of the abatement agreement and VME was not in compliance, according to the EDC.

VME had average employment of 109 during the first half of 2016, but due to the volatility in the oil and gas market, the company made reductions in the second half of 201, according to the EDC.

VME was founded in 1985 in Tyler and is now an international company. Its tax abatement was offered in 2013 as part if its fabrication expansion.

The company has exceeded its investment goal of $3.6 million, with $5 million invested.

 

HOOD PACKAGING

This abatement was offered in 2013 for a $12 million expansion project.

The company added new equipment and increased warehouse space, according to the EDC. Hood’s agreement was amended by the city in March 2015 to add an additional year of abatement for tax year 2017 for the city of Tyler. Since then, the company has created 24 new jobs, and Hood is planning another expansion to its production lines to create four new jobs and retain four existing jobs.

The abatement agreement required 123 jobs, and as of the end of 2016 it had 140 jobs. It also exceeded its infrastructure investment requirement of $12 million with an investment of $16.6 million.

 

FRESENIUS

Fresenius Medical Care is the world’s largest integrated provider of products and services for people undergoing dialysis due to chronic kidney failure, according to the EDC.

In 2016, the company completed construction on an 80,000-square-foot facility at the northeast Corner of South Southwest Loop 323 and Earl Campbell Parkway. Fresenius projects the creation of 350 net new jobs for medical billing and office support functions, according to the EDC. Fresenius created 75 new jobs in 2016.

Twitter: @TMTFaith