May 27, 2016

Partly sunny

Lorain readies $5.9 million in tax breaks for Republic

LORAIN — Approximately $5.9 million in payroll tax and water rate breaks for Republic Steel are expected to be voted on by City Council members tonight.

The agreement calls for a 12 percent discount by Lorain on the approximate water usage by Republic — up to 40 million gallons annually for 15 years — worth approximately $2.5 million. It also includes a 75 percent rebate on Republic’s payroll withholding taxes for new jobs created in the first five years and a 40 percent rebate in the ensuing 10 years with a total value of about $3.43 million.

The breaks work out to about $13,000 per job. The breaks are in exchange for Republic creating 450 jobs by building an electric arc furnace at its plant at 1827 E. 28th St.

The furnace, which Republic officials said in November is part of an
$87 million investment, is expected to be built in about 18 months. Republic employs about 343 hourly employees and 30 salaried workers at the plant. Republic, owned by the Guadalajara, Mexico-based Grupo Simec, employs about 1,600 hourly and salaried workers at its plants in Canton; Massillon; Gary, Ind.; Blaisdell, N.Y.; and Hamilton, Ontario.

In 2008, Republic shuttered its blast furnace, relocating 200 jobs. Mayor Chase Ritenauer said he didn’t know if some of the 450 jobs could be jobs relocated back to the Lorain, and a Republic spokesman didn’t return a call for clarification Sunday.

However, the tax breaks focus on Republic increasing its yearly Lorain payroll of $30 million to about $37.5 million annually within three years of the project beginning, rather than on the specific number of jobs created.

“The end result is more Lorain residents working, more people in our region working,” Ritenauer said Sunday. “Those dollars will multiply within our local economy.”

The deal, which was supposed to have been negotiated by former Mayor Tony Krasienko’s administration and sent to Council members in December, ended up being handed off to Ritenauer, who took over Jan. 1.

While desiring to bring jobs to Lorain, which has been racked by high unemployment for years, Ritenauer said he didn’t want to give away the store to seal the deal. The agreement gives city officials the right to audit Republic’s employment and tax records.

Republic would get $4.6 million in state taxpayer credits over 15 years and a $500,000 state taxpayer grant as part of a separate proposed agreement with the state.

Kristi Tanner, chief operating officer of JobsOhio, the state’s economic development arm, said in November that the credits were contingent on new hires, not relocated workers. Tanner didn’t return calls for comment last week or Sunday about the status of the agreement.

Ritenauer said Lorain’s agreement is not tied to the state deal, and he is hopeful that Council members approve it tonight so that construction work can begin on the furnace.

“What’s being presented to Council is a very good deal for the city, and it’s a very good deal for the residents,” he said. “And for keeping a corporate partner in Lorain and expanding in Lorain.”

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