Unit 5 Reluctantly OKs Tax Breaks For Canadian Manufacturer Brandt | WGLT

Unit 5 Reluctantly OKs Tax Breaks For Canadian Manufacturer Brandt

Nov 13, 2017

Unit 5’s school board on Monday reluctantly approved around $400,000 in property-tax breaks for a Canadian manufacturer in exchange for the promise of hundreds of new local jobs.

Before their 5-2 vote, board members weren’t shy about concerns about the agreement with Brandt Industries, which wants to buy and expand the Kongskilde plant between Normal and Hudson for its first U.S. manufacturing site. Already facing lean budgets and uncertain state funding, Unit 5’s board questioned what Brandt would do for students—other than taking away valuable tax revenue.

“I really don’t like this deal,” board member Joe Cleary repeated several times Monday.

"I really don't like this deal."

Ultimately, Cleary and four others on the board voted to approve the agreement. It would give Brandt a property tax break of between 50 and 100 percent over 10 years, beginning next year. But to get the money, Brandt would have to meet certain hiring milestones, escalating to 300 jobs by 2024. Brandt would also have to provide in-kind contributions to Unit 5, such as student mentorship or donated equipment.

The McLean County Board will vote on the agreement Tuesday. Heartland Community College will also vote on the deal Nov. 21. Four other smaller taxing bodies are also impacted, but officials say Brandt would move forward if Unit 5 and the county government sign off.

Between all seven taxing bodies, the tax breaks are worth at least $600,000 based on the property’s current assessed value, according to terms of the agreement. Unit 5 currently receives around $80,000 per year in property taxes from the Kongskilde facility.

Cleary said he was compelled to vote “yes” because it will add new jobs to the local economy. Superintendent Mark Daniel, who recommended approval, noted that the state’s new school funding formula ties enrollment to funding—meaning more students could mean more money in the future. Alternatively, Kongskilde’s planned shutdown of the plant could hurt Unit 5’s enrollment.

“If you’re not growing, you’re dying,” Daniel said.

That point resonated with board member Meta Mickens-Baker.

“As hard as it is to me to look at an agreement that might mean we’ll have to make some changes in how we offer things to students … I’m going to vote yes,” said Mickens-Baker. “Bottom line, I don’t want our community to be one of the school districts where we decline and decline and decline because we don’t have people employed who are bringing new revenue to our community.”

At the Eleventh Hour

Mickens-Baker and other board members said they were unhappy to have so little time to review the agreement. Although it was in the works for months, the agreement was only finalized late Sunday. Board members recalled a similar tax-break agreement Unit 5 approved in December 2016 with Rivian Automotive.

“It feels like it’s being shoved on us at the eleventh hour, and here we go again. It’s not a fun process to go through, I’ll be honest,” said board member Mike Trask. “It feels a little pushy.”

“It was literally still being negotiated over this past weekend,” replied Kyle Ham, CEO of the Bloomington-Normal Economic Development Council, which helped craft the agreement.

Brandt was also considering similar sites in Ohio and Iowa before choosing McLean County. “If they are at 300 (jobs), it puts them in the Top 20 of employers in our community,” said Ham. “These opportunities don’t come along very often. And I know there are other communities vying for this project. I’d hate to see an opportunity like this slip (away) when we’re experiencing other challenges in the state of Illinois, that we can bring quality manufacturing jobs back to our community.”

Board members David Fortner and Taunia Leffler—both elected earlier this year—voted against the agreement. Fortner said he welcomed Brandt to the area but wanted economic development officials to consider pursuing other incentives that wouldn’t negatively impact Unit 5’s budget.

“I’m trying to understand, from the perspective of a board member protecting our children, how is this a good deal for us?” Leffler said. “I’m not understanding why this should be on the backs of our kids.”

If Brandt moves onto the Kongskilde property as planned, the first hires would be made by the end of the year, said Brandt President Shaun Semple. Production of agriculture equipment—the company’s first-ever manufacturing in the U.S.—would begin by March 2018, he said.

Brandt currently has 2,000 employees. It wants to grow from $1.5 billion in sales today to $5 billion in sales by 2025, Semple said, largely through its expansion into the U.S. market.

“This is the first phase of that expansion plan,” said Semple.

To get the tax breaks, the Brandt jobs would have to pay an hourly wage “equal to or greater than the mean hourly wage for the most comparable occupational group and title” in federal jobs data, according to the agreement. Brand would have to report its hiring stats to the EDC each year.

“These are good-paying jobs,” said Ham.

Because the Kongskilde plant is in a county enterprise zone, Brandt could also receive a 6 percent sales tax on materials they use for future expansion, Ham told Unit 5’s board.

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