By Collin Brooks
During its Thursday night meeting the Johnson City Commission will hear a resolution that will modify a previous agreement between the city and NN Inc., and provide the company additional time to meet job number requirements in a payment-in-lieu of taxes, or PILOT, agreement.
The original agreement was passed in 2014 and was questioned by current Johnson City Commissioner Ralph Van Brocklin at the time, but was ok’d and approved.
Johnson City Commissioners Joe Wise and Todd Fowler seemed more in line with Van Brocklin, who wasn’t in attendance at the meeting on Thursday night.
Wise prefaced his statement by saying that he was, “fundamentally supportive of economic development initiatives that leverage dollars in the small for returns in the big.
“However, in this instance, it’s not a dating discrepancy. When you go back to the meeting, commissioner Van Brocklin expressly asked about the dates and how were you going to ramp up to your employment numbers if you were renovating this building and so forth?”
Wise said that Van Brocklin was told that everything was fine, which didn’t seem to sit well with Wise.
“So the difficulty for me is, sitting in a position of public trust, to go back to citizens to say, ‘Hey, I know you can’t renegotiate every deal you enter into, but if you’re big enough and rich enough and powerful enough, you can.’ And so I am very conflicted about this…Because these things sully the very reputation of the instruments to what the IDB is doing.”
He said if that makes the industrial development board seem carefree and able to just adjust future deals, its public trust will be shattered. The resolution would amend the deal approved in April 2014, which required NN to maintain 80 percent of the 200 jobs promised in the agreement by the end of 2016. It currently only has 64, according to an annual performance report to the IDB dated Jan. 31, 2017.
Under the original agreement, that means the company owes approximately $60,000 in property taxes, but members of the industrial development board are calling the date errors in the contract a simple mishap. That’s not what Wise is grappling with.
“(It’s) not whether NN is a responsible corporation, not whether that $100,000 a year jobs in Johnson City aren’t something we would want,” he said. “There is a degree in which I am concerned with how it begins to look, and that’s not to be oppositional that is to be straight up with you.”
He said he would have a hard time in the grocery store when questions came about reworking the deal. Members sitting across from him were sympathetic in their offers to escort him to the store, but admitted making what some called an “honest mistake.”
Tommy Burleson, member of the IDB said that the group just overlooked the date error.
“We just made a mistake and I’ll be the first one to admit it,” he said. “We went through these documents. I’m not an attorney, but I spent a lot of time reading these documents and I missed some things.
“What we were trying to do and what we did, was get a great company to come in here and invest a lot of money and stay here. This is not costing the city any money, the city will still get the money.”
He and several other members of the board said they would take the hit for the city, because Burleson said he would hate to see NN be punished. Not granting the amendment, Burleson said, might make it more difficult for the city to recruit new industry.
The discrepancy comes in the date in which NN was supposed to meet certain job marks. In the original agreement, NN agreed to have 160 employees by Dec. 31, 2016.
But the error lies in that NN thought the job growth dates were set to coincide with their state incentives that give them a timeline of March 10, 2019. Another change includes the jobs report from a January 31 deadline to a “within 60 days after March 9,” in order to sync the agreements.
Northeast Tennessee Regional Economic CEO Mitch Miller apologized to the commission for them having to be in this situation, but said he would like to see it taken care of so that all parties can move on.
“From that end, it’s on us to make sure it doesn’t happen again,” he said. “As Tommy (Burleson) said. This is the first abatement that the city of Johnson City has done in 20 years and the city obviously had some trouble with it.”
He then referred to the $20,000 in personal property taxes that were supposed to be abated but the company paid anyway to avoid any tax trouble.
Robbie Atkinson was at the table on behalf of NN Inc. and said that the company is where it expected to be in 2017, noting it will add another 30 employees this year.
“We’re adding positions in 2017, then add the rest in 2018 and 2019,” he said. “Those are senior management positions with people making well above the average wage in Johnson City.”
Many of those jobs will start with pay in the $100,000 range.
“What I had asked for, was we have talked numbers of jobs, but what about payroll?” Tomita said. “So if these jobs truly are that much higher paid, how about we talk in terms of aggregate payroll, not numbers of jobs…I think those are meaningful numbers.…That’s real economic impact, that the average person can understand.”
Wise echoed Tomita’s comments. “harmonizing your reporting scheme with this and the state, to me, those are things that start to make an argument that the average person can relate to.”