COLUMBIANA - The city is looking into creating an enterprise zone to offer incentives such as property tax abatements to non-retail businesses interested in locating here, or existing businesses looking to expand.
City Manager Lance Willard said he met with Columbiana County Port Authority CEO Tracy Drake and county Development Director Tad Herold after the last council meeting to discuss economic development.
"This really would be a helpful tool when prospective businesses call and ask us what incentives we have to attract them," Willard said.
He has also already spoken with Duane Reichard of Reichard Industries about how a zone would affect his company, which is looking to add a new facility to its South Main Street location. The company also has a facility in Niles.
"We would like to build in Columbiana. From a cost standpoint currently it is actually cheaper to build at our Niles facility, because the ground is already ready, you don't have to move sewers. Another option is to go down south," Reichard said.
The company wants to add to its Columbiana location mainly because the city has been "great to work with," he explained.
The creation of an enterprise zone would help the company expand, he added.
Reichard employs 62 people between both locations and is looking to add 20 more after the expansion, which includes the construction of an 18,000-square-foot facility near the existing one in Columbiana.
The industrial equipment company offers many imported and domestic products like blast furnaces, bottle cars, ductwork, electric furnaces, fan housings and gear boxes, to name a few.
Reichard said the company has experienced 300 percent growth since 2004. He and his brother Keith took over after their father's retirement in 2003. It has been a family-run business since the 1980s.
"We are in a position where we have no choice but to grow. Our biggest competition right now is China, and not because their prices are better, but their facilities are better," he said.
Should the city establish an enterprise zone that would encompass the Reichard area the company could receive a property tax abatement.
Commercial and industrial businesses located in an enterprise zone do not automatically receive benefits, they must enter into individual agreements with the city first, Herold said while giving a brief presentation to council Tuesday.
Tax incentives are negotiated between the city and business once an agreement is in place.
Herold said the city could establish a zone anywhere it chooses within city limits, although once a zone is established more cannot be added later, and suggested establishing the entire city as one zone to cover every area.
Enterprise zones have been established in Wellsville, St. Clair Township, Leetonia, East Liverpool, East Palestine and Center Township, according to his information.
Of those, only two agreements are currently active, and both are for Pennex Aluminum in Leetonia.
Herold said Leetonia officials were wary of creating a zone at first.
"At that time everyone was hesitant, council and the school board especially. By the time I was a prosecutor they got to the point where they were wanting to extend that agreement. Now Pennex Aluminum, they are making a $30 million investment out there," he said.
The zone was created in 2000.
School boards only become involved if a city opts to establish a zone that is upwards of 75 percent property tax involved and a 10-year duration.
In order for a zone to be created council must pass legislation that would then be forwarded to county commissioners for their approval.
"I would think that commissioners would be on board," Herold said.
The zone would also need to be certified by the Ohio Development Services Agency before it can be established and that process typically takes 60 days.
If the city enters into an agreement with a company the company is required to send reports to the county development department showing they are fulfilling the agreement, and those reports are also provided to the county's tax incentive review council.
"You folks have a say in that and we will advise the state whether or not we believe the agreement should continue in full force," Herold said to council members.
The city is not obligated to enter into any agreements with companies located in a zone, he added.
Following some questions as to whether the portion of the city located in Mahoning County should be in a zone and whether Fairfield Township could be involved, council approved a motion to authorize Willard to continue researching the matter.
Herold said once legislation is passed, should council agree to that, the whole process would take about five months.
Reichard said his company is looking to have the new facility constructed by the end of this year and council members were in favor of getting the ball rolling soon to help with that process.
No action was taken on creating a zone that evening, however.