NILES Tax break OK'd for HM Steel; plant will hire 49 workers

Council also passed legislation to send a portion of MCI income tax to Howland schools.
By DENISE DICK
VINDICATOR TRUMBULL STAFF
NILES -- City council has granted a 10-year, 75 percent property tax abatement to enable a steel processing plant to hire 41 full-time and eight part-time people within 18 months.
HM Steel bought the former Hunter Steel building on Hunter Avenue and estimates a $1.5 million investment is needed to renovate the building. Spokesman Kelly Jordan told council Wednesday the company has offices in Cleveland, but the Niles facility is its only plant.
Twelve people have been working there since February. He estimated payroll at $326,000.
"Based on our projections, we're expecting that to be $960,000 to $970,000 within three years," Jordan said.
The company has a sufficient client base. "We know the market will support us," Jordan said. "All we need now is your support. This area is prime for steel and it always has been."
HM Steel will be a nonunion shop, but the company representative said employees will be paid prevailing wage. The lowest-paid employee will earn more than $7 per hour, he said.
"This will be a great asset to the community and it's nice to have a new company come in," Mayor Ralph A. Infante Jr. said.
He estimated the company would bring in $20,000 per year in city income tax.
School funds: Council also approved a resolution giving $200,000 to the Howland School District from income tax generated by MCI Worldcom.
A 10-year tax abatement for that firm was approved in 1999. The agreement called for MCI to get a 100 percent abatement in the first three years, 75 percent the next four years and 50 percent the final three years.
Under Ohio law, when a company with an annual payroll of $1 million or more receives a tax abatement, the municipality and the affected school district must work out an income tax-sharing agreement.
If no agreement is reached within six months, the income tax is split 50-50.
Infante said he wanted to negotiate a graduated income tax-sharing agreement, but he and the school district weren't able to come to an agreement.
The school district sent a letter to the city requesting its portion of the 2000 income tax revenue. Infante said the city planned to send the money to the school district, but he wanted to wait until it had all been collected to enable the money to accumulate interest.
City officials say they don't know how much the company has paid in income taxes. Janet Rizer, tax director, said income tax information is confidential and she can't divulge it.
If the company's 2000 income tax amount is larger than $400,000, council will have to pass another resolution.
Law Director J. Terrence Dull said state law regarding city income tax is strict but he is reviewing the statute to determine what can be divulged.
Infante said the company estimated an $18 million annual payroll when it initially proposed the tax abatement.
"Based on the $18 million payroll, we'll have to come back and do this again," he said.
dick@vindy.com