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Macy's incentives Macy's gets array of incentives to locate center in Tulsa County

Help comes from state and county programs, plus Owasso and the Cherokee Nation.

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Posted: Sunday, January 5, 2014 12:00 am | Updated: 2:57 pm, Tue Jul 29, 2014.

Macy's Inc. could receive as much as $21 million in tax breaks and other incentives over the next 10 years as part of its deal to construct an order fulfillment center in Tulsa County, records indicate.

The largest incentives would come in the form of two tax-abatement programs, one to be established by Tulsa County and the other from an existing state program.

County commissioners recently agreed to pursue the creation of a Tax Incentive Finance District that would exempt Macy's from property taxes on new construction at the 72-acre site of the distribution center from 2016 to 2020.

The Tulsa County Assessor's Office has estimated the company could save $1,748,979 a year — or $8.75 million over the life of the abatement — under the program. The figure is based on estimated construction costs provided by the company.

The retail giant's property-tax exemption will be extended another five years — from 2021 to 2025 — through the state's Manufacturing Exemption Program.

Kenny Chuculate with the Oklahoma Tax Commission said the state's exemption would likely be slightly less than the county's exemption due to depreciation.

"We would automatically depreciate those (properties) by one year," he said.

Under the state's incentive program, established in 1985, the property tax a business would have owed to the county is paid by the state. The money comes from a fund supported by individual and corporate income-tax payments and legislative appropriations.

In 2012, the state program paid $46.3 million to counties statewide, including $5,780,357 to Tulsa County for the 32 local companies in the program that year.

Cincinnati-based Macy's announced last month that it plans to build the $170 million distribution center on unincorporated land east of U.S. 75 on 76th Street North.

As part of its memorandum of understanding with Tulsa County, the company states that it intends to employ "at least 1,020 full-time equivalent employees and at least 367 full-time employees." An additional 1,000 associates will be hired annually during the holiday shopping season, company officials have said.

Tulsa Regional Chamber officials have said the jobs created by the center are expected to have a total economic impact of $800 million through 2023.

Critics of property-tax abatement programs say they shrink the pool of taxpayers, leaving counties — which are funded primarily with property taxes — to collect more from nonexempt property owners to meet the growing cost of operations.

County Commissioner John Smaligo, who represented the county in talks with Macy's, said that argument doesn't fly in the case of the company's distribution center.

He noted that Macy's will be obligated to pay property taxes — estimated at about $10,000 a year — on the base value of the land at the start of the project, meaning the county is not out any money.

The tax-abatement program is a good short-term investment in a project that will pay millions of dollars in salaries and taxes for years to come, county officials contend.

"The situation is simple: a successful company was going to expand somewhere in our region, and we were able to convince them to choose our community in large part due to these incentives," Smaligo said.

The next largest incentive also will come from the state — up to $1.5 million from the Governor's Quick Action Closing Fund to invest in developing a qualified workforce through the state's CareerTech program.

Joyce McClellan, economic development officer of Tulsa Tech, said in an email that the school will help design and facilitate a training program for new Macy's employees. Services provided by Tulsa Tech could include pre-production technical training, job analysis and development of instructional materials, she said.

Michael McNutt, press secretary for the Governor's Office, said that "before reimbursement is made (to Macy's), the company must provide verification that the training offered resulted in industry-recognized certification."

The state — joined by the Cherokee Nation and perhaps Tulsa County — will also help pay to construct an access road to the facility and other needed road modifications.

The state Department of Transportation and the Cherokee Nation each have promised up to $500,000 for the work. ODOT's contribution is separate from the $1.5 million the state is providing from the Governor's Quick Action Closing Fund.

Tulsa County, meanwhile, has agreed to oversee the roadwork and promised that it would pursue additional funding, if needed, from surplus Vision 2025 sales-tax revenue.

County Engineer Tom Rains said he does not expect any of his road crews to take part in the construction project.

"My concept of it is that we will be coordinating and administering the work, if you will," Rains said, "because most of these improvements will become part of the county road system."

County officials also say they will seek to exempt Macy's from the county's 0.85 percent sales tax the company would otherwise pay for construction materials and equipment for the project — a figure estimated at $400,000.

The county uses its sales-tax collections to fund Vision 2025 and operations at the Tulsa Jail.

The city of Owasso, which figures to benefit from the nearby project, is also pitching in. The Owasso Economic Development Authority has agreed to provide $500,000 in incentives.

Owasso Economic Development Director Chelsea Levo said the city will establish guidelines for how the money can be spent.


INCENTIVES

A number of government entities are providing or pursuing incentives for Macy's as part of the company's agreement to construct a $170 million distribution center east of U.S. 75 on 76th Street North. The company has pledged that the center will have at least 1,020 full-time equivalent employees and at least 367 full-time employees by the end of 2017.

The incentives are:

TULSA COUNTY

Incentive Annual value Years Total value
Property-tax abatement $1.75 million 5 (2016-2020) $8.75 million
Sales-tax abatement $400,000 (1 time) $400,000
*Road construction funding N/A N/A N/A

STATE OF OKLAHOMA

Incentive Annual value Years Total value
**Manufacturing tax exemption $1.75 million 5 (2021-2025) $8.75 million
Governor's Closing Fund $1.5 million 1 $1.5 million
Department of Transportation $500,000 (1 time) $500,000

OWASSO ECONOMIC DEVELOPMENT AUTHORITY

Incentive Annual value Years Total value
TBD $500,000 1 $500,000

CHEROKEE NATION BUSINESSES

Incentive Annual value Years Total value
Road construction funds $500,000 (1 time) $500,000

*County officials have told Macy's that they will pursue using excess Vision 2025 sales-tax revenue for road construction near the facility if the money is needed.

**Oklahoma's Manufacturing Tax Exemption incentive program includes property-tax exemptions for call centers and distribution centers; figure based on projected Tulsa County tax abatement for 2016-2020; State property-tax exemption for 2021-2025 likely to be slightly less than county's tax abatement due to depreciation.Sources: Tulsa Regional Chamber, Tulsa County Assessor's Office, state of Oklahoma, city of Owasso, Cherokee Nation, Owasso Economic Development Authority


Property tax impact

The Tax Incentive Finance District being proposed by Tulsa County for the Macy's distribution center must be approved by the six taxing entities that receive taxes from the property on which the center is to be built. The TIFD would exempt Macy's from paying property taxes on new construction on the property from 2016 to 2020.

Here are the estimated annual property-tax receipts the six taxing entities would have received if Macy's did pay property taxes on the improvements to the property. The figures are based on construction costs provided by Macy's.

Owasso Public Schools: $1,123,615

CareerTech: $215,013

Tulsa County: $166,623

Tulsa Community College: $116,297

Tulsa City-County Library: $85,812

Tulsa City-County Health Department: $41,615

Total: $1.75 million

Source: Tulsa County Assessor's Office


Manufacturing Exemption Program

The state's Five-Year Manufacturing Exemption Program was established in 1985. Under the program, qualifying companies are exempt from paying county property taxes, and the state refunds the counties for the lost property tax. The program is funded through individual and corporate income taxes and allocations from the Legislature.

In Tulsa County, 32 companies took part in the program in 2012. The companies were exempted a total of $5.8 million in property taxes.

2012 TULSA COUNTY EXEMPTIONS

Company 2012 property-tax exemption
AG Equipment Co. $134,600
Aaon Inc. $402,566
Advanced Metal Recycling $44,214
Ameristar Fence Products Inc. $68,699
Arrow Engine Corp. $15,433
Baker Petrolite Corp. $41,250
Bama Frozen Dough $45,155
Bearwood Concepts Inc. $5,700
Bizjet International $18,800
Chart Cooler Service Corp. $4,037
D&L Manufacturing Inc. $55,771
Eagle Redi-Mix Concrete LLC $37,749
Flight Safety International $551,426
Heater Specialists Inc. $41,165
Holly Refining & Marketing Co. $1,603,624
H.P. Enterprises Services LLC $806,873
Kimberly-Clark Corp. $838,508
McKissick Products Co. $27,149
Metals USA Plates & Shapes $15,522
National Steak Processors Inc. $9,664
Navistar Inc. $15,205
NORDAM — I&S $64,865
RDS Manufacturing Inc. $57,645
Ruhrpumpen Inc. $2,499
SW United Industries $8,864
Spirit AeroSystems Inc. $693,936
Tulsa Winch Inc. $10,547
Valmont Industries $12,849
Waldens Machining Inc. $23,355
Webco Industries Inc. $28,131
Whirlpool Corp. $76,334
Willbros Downstream LLC $18,222
Tulsa County total exemptions $5,780,357

Source: Oklahoma Tax Commission


Kevin Canfield 918-581-8313

kevin.canfield@tulsaworld.com

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Welcome to the discussion.

20 comments:

  • Kirby Crowe posted at 7:45 am on Mon, Jan 6, 2014.

    khcrow-153 Posts: 15

    How, a TIF abatement effects no other tax assessment.

     
  • Bounty Hunter posted at 7:01 am on Mon, Jan 6, 2014.

    dave_s-142 Posts: 3285

    Lots of comments made by people who seem to be against any form of industry that might put food on a lot of peoples tables etc. Just because you wouldn't work for the amount of money that Macy's will be paying, doesn't mean that someone else would jump at the chance. Same reason goes for hiring legal immigrants. Those hard working people are doing the jobs that you lazy overpaid white people refuse to do. So keep sitting back in your easy computer chair and criticize all you want, but lets face it, your envious, jealous, underworked, overpaid, and most of all uninformed as usual.

     
  • THOMAS BENDER posted at 12:42 am on Mon, Jan 6, 2014.

    tfb86-811 Posts: 216

    And you belief in trickle down economics too don't you?

     
  • THOMAS BENDER posted at 12:40 am on Mon, Jan 6, 2014.

    tfb86-811 Posts: 216

    I totally agree not only is it bribery, but how many people at some other Macy distributing center will lose their jobs, in some other state? Just like Whirlpool cut jobs in Ohio to lower their labor cost , and provide a barely living wage here. We are fools to elect people that lower wages by shifting production and/or jobs to another state. This state to state shift of facilities, jobs to lower labor costs is wrong. This is cheating the public out of the American dream and feed the 1% American Aristocracy.

     
  • Dana Asher posted at 7:58 pm on Sun, Jan 5, 2014.

    dana-a-179 Posts: 4229

    property taxes are heading up

     
  • Ron Denton posted at 5:42 pm on Sun, Jan 5, 2014.

    aRdent Posts: 321

    It's a good thing we have this great public transit system to get people to the forthcoming low wage, no benefit, mostly part-time jobs way out there. How much will people spend on gas just getting back and forth for a warehouse/shipping/order picking job?
    Hopefully some quick-thinking entrepreneur will put together a shuttle service for this facility, if they are allowed to do so. Only difference between these jobs and jobs from "river development" is that it will be a shorter drive and you'll probably need a health card for the river jobs. Gotta love this economic development with tax bribery.

     
  • Lonnie Lamb posted at 5:18 pm on Sun, Jan 5, 2014.

    lambei-148 Posts: 11539

    These are not incentives. Let's call them what they are, bribery. We are bribing this company to build here, using public funds.
    The TIFD program is limited by state law to 5 years, in this case 2016 thru 2021. What about the taxes for 2014 thru 2016? Are these going to be paid? Are the use taxes for equipment brought in from out of state going to be paid? I paid taxes from the time I put a footing in the ground, so aren't they subject to these same taxes from 2014 thru 2016? If not is there another program that covers this two year period, or is it just not addressed at all. These type of programs should be outlawed nationwide, they are nothing more than blackmail and bribery of the public and should never have been allowed in the first place. They are totally out of control.

     
  • John Sakelaris posted at 4:34 pm on Sun, Jan 5, 2014.

    johns-241 Posts: 3345

    The depressing question we come to this afternoon, after many have commented, comes down to this, is the Macy's center as planned, with its high-turnover, no benefits, part time jobs better than nothing? Or will it end up being worse than nothing?

    We shall see.

     
  • John Elwell posted at 3:40 pm on Sun, Jan 5, 2014.

    tulsap-200 Posts: 13568

    To all who may be against the tax breaks.

    Maybe Macy's should take their warehouse somewhere else. We wouldn't be out any money. But, we wouldn't have any jobs either.

     
  • Debra King posted at 1:21 pm on Sun, Jan 5, 2014.

    kingbe-157 Posts: 8

    300 full time jobs is what we get for millions in incentives? Not a very good deal. Part time work for Christmas money? Please. How about those who need to pay for housing, medical expenses, food? As far as bribery being "necessary", it's a very sad state of affairs and one we can change. We are going to have to put our propaganda-based differences aside and look at the real criminals in this scenario, and at the real victims.

     
  • Debra King posted at 1:17 pm on Sun, Jan 5, 2014.

    kingbe-157 Posts: 8

    What middle class? That is a dying breed. These tax abatements are paid for by the citizens of this county and this state. In return for building a facility (which was going to be built SOMEWHERE) Macy's gets enough tax incentives to pay for most of the cost of construction and will continue to rake in the profits while it's largely parttime employees won't be making enough to support themselves, much less a family and will be paying taxes pretty much straight to Macy's. I guess this is the way "business" is done, but I surely wish we and our state and local governments would all stand together and just say NO. If you want to do business in this country, you need to pay your fair share.

     
  • RonW Ballew posted at 10:43 am on Sun, Jan 5, 2014.

    ronba-149 Posts: 2556

    Yes, John. But it creates over 300 full time jobs, and the part time work is a bonus for people who want to work part time to make extra money for Christmas gifts.

     
  • RonW Ballew posted at 10:40 am on Sun, Jan 5, 2014.

    ronba-149 Posts: 2556

    Harry, This is not corporate welfare. It brings new jobs into the County that provides welfare to the people and the County. It gives people jobs, and it gives government the income and sales taxes generated by those jobs.

     
  • RonW Ballew posted at 10:37 am on Sun, Jan 5, 2014.

    ronba-149 Posts: 2556

    Herbert, On a good day, we can sleep past 7:30. On a bad day we wake up at 4 or 5 and can't go back to sleep. The Tulsa World used to post its daily articles by 4 AM but not anymore; you may, or may not see the new articles by 8 AM. No point in getting up early.

     
  • RonW Ballew posted at 10:32 am on Sun, Jan 5, 2014.

    ronba-149 Posts: 2556

    You can't collect property taxes on property that is not there, so you are not losing anything by waving property taxes on new property. If you will build it here, we won't tax it seems reasonable.

    We still get to tax the income and property of the people who work there, and that is all new money that we would not get otherwise.

     
  • Mert Rozman posted at 10:26 am on Sun, Jan 5, 2014.

    myrtle-214 Posts: 12901

    $21 million in givebacks to buy 367 full-time jobs. That's over $57,000 per job!

    If you count all 1,020 full-time equivalent positions (mostly likely part-time, low-wage and benefit-free), that's over $20,000 per position. How will those part-time positions allow anyone to support a family? Own or rent a home? Buy a car?

    Harry Willis is exactly right. Corporate welfare is the kind to which "conservative" deficit hawks turn a blind eye.

    All that tax money, squandered to attract an employer seeking low-wage workers. Oklahoma is winning that race to the bottom.

     
  • Tony Schmidt posted at 10:07 am on Sun, Jan 5, 2014.

    tuschm-169 Posts: 317

    You are exactly correct, Harry. Unfortunately, the middle class is getting smaller everyday. It is always good for the area to get more jobs, but 1,021 part time jobs will not grow the middle class. All big American corporations hire as few full time workers as they can. They can then avoid providing any benefits to these part time workers. The strong middle class that built this country after WW II is disappearing fast. We can thank corporate greed for that. Without a strong middle class, the tax base will continue to shrink and our infrastructure and schools will continue to crumble.

     
  • harry willis posted at 8:55 am on Sun, Jan 5, 2014.

    hurric-188 Posts: 88

    I don't want to read any comments from readers complaining about food stamp recipients and people collecting unemployment. Corporate welfare dwarfs the assistance provided to our citizens who are in dire need. How much was it going to cost the state to accept Medicaid funding to provide healthcare access to over 200,000 state citizens? Oh, that's right. Nothing. And, as our infrastructure needs grow and our schools continue to lack funding the burden of taxation falls on the middle class.

     
  • John Sakelaris posted at 8:08 am on Sun, Jan 5, 2014.

    johns-241 Posts: 3345

    Only 367 real full time jobs are promised. And beware the phrase "at least 1,020 full-time equivalent employees." Here are some ominous words of clarification from another Tulsa World article today:

    "A full-time equivalent position is not the same as a full-time position. The company's commitment to provide at least 1,020 full-time equivalent positions means the number of hours worked at the distribution center will equal what would be worked if 1,020 employees worked 40 hours a week every week of the year. It does not mean those jobs will be done by 1,020 full-time employees. The work could be split among part-time workers."

    So...we get lots of part time workers; probably their "benefits" will need to come from the government.

    I know that bribing companies with tax breaks is necessary these days, but couldn't the state drive a harder bargain than this?

     
  • Herbert Rogers posted at 7:29 am on Sun, Jan 5, 2014.

    hrroge-166 Posts: 593

    What..it's just about 7:30...and NO comments? I mean..what can you say except, ThisBetterWorrrrrrk!

     

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