December 19, 2014

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Ohio OKs Republic tax break for $87 million expansion

LORAIN — Monday’s approval of $4.6 million in tax breaks by Ohio Tax Credit Authority members for Republic Steel’s $87 million expansion was expected but came as a relief to project supporters.

“We keep moving this project forward,” Mayor Chase Ritenauer said by phone after attending the authority meeting in Columbus. “This was another step in the process.”

The 75 percent, 15-year tax credit is for construction of an electric arc furnace at Republic’s plant at 1827 E. 28th St., creating about 450 jobs and $19.6 million in additional annual payroll, according to a news release from Stephanie Mennecke, an Ohio Department of Development spokeswoman. The approval comes on the heels of $5.9 million in local tax and water rate breaks for the expansion approved Feb. 27 by City Council.

An additional $500,000 taxpayer grant is expected to be approved by the Ohio Controlling Board soon. Assuming passage of the grant, the total local and state breaks work out to roughly $11 million or about $25,000 per job. The jobs, which must be created by the end of 2015, pay an average of $21 per hour and include benefits, according to Bob Clegg, a Republic spokesman.

The fact that the jobs pay well worked in Republic’s favor with state officials, Clegg said.

“They’re obviously granting these tax credits with the idea that this money’s going to be recouped in subsequent years,” Clegg said. “If you’re talking minimum wage jobs, it’s going to take a long time to recoup that money.”

The expansion is part of a rebound by the American steel industry tied to the revival of the American auto industry and the boom in underground natural gas drilling. Dan Voorhees, United Steelworkers Local 1104 acting president, said the rank and file has been hurt by the 30-year decline in the industry.

When Voorhees began working at the plant in 1998 — then known as USS/Kobe — there were about 1,600 workers, compared with about 550 at the end of last year.

Voorhees said the industry’s future remains volatile, but a commitment to increased domestic manufacturing and infrastructure repairs — the American Society of Civil Engineers in 2009 estimated that the U.S. needs $2.2 trillion in infrastructure improvements — will continue the rebound.

“We’re looking forward to the revitalization of steel making here in Lorain,” he said. “We’re glad that the state recognized, obviously, the abilities and talents of its workforce.”

Work on the furnace is expected to begin in August and be completed in early 2014. The furnace, which will nearly double Republic’s annual electricity usage, will be powered by the FirstEnergy Corp.’s new 138-kilovolt substation.

Ohio Power Siting Board members in Columbus approved the station Monday, according to Matthew Schilling, a board spokesman. Known as the Black River Power Station, the substation is to be built at the intersection of Clifton Avenue and East 30th Street.

Mark Durbin, a FirstEnergy spokesman, said construction could begin as early as next week, and the company hopes to have the station on line by April of next year.

“It’s a great project, and it’s something we can do to bring 450 good-paying jobs to the area,” he said. “We’re anxious to get started on it.”

Contact Evan Goodenow at 329-7129 or egoodenow@chroniclet.com.