Posted: 7/9/03

General Safety has city backing

Alice Pickering
Wyoming Area Reporter

Wyoming City Council adopted a resolution Monday night in support of entering into a tax abatement agreement with General Safety for purposes of helping it expand its business in the city. The resolution was passed unanimously.

General Safety builds custom fire trucks and rescue vehicles and has been buying the chassis that it uses for the trucks. Now it wishes to build them itself. This will allow the company to be more saleable and flexible.

The company has a long history in the area, operating in Lindstrom, North Branch and Wyoming. The company also has a plant in South Dakota.

City Administrator Dennis Coryell said it is highly desirable to have the company remain, in the city. It is good for the tax base and provides quality jobs for local residents, he said.

State tax laws apply perfectly to the situation Coryell described at the meeting. The basic premise behind this economic development tool is that a designated portion of new taxes, generated as a result of the increase in the value of a business, is returned to that business for an agreed upon period of time, to assist in defraying the cost of construction/expansion.

The current plant covers 40,000 square feet and generates taxes of just over $33,600 annually. The cityís share of this revenue is about $7700; the countyís is about $10,650. Other parts go to the state and school district, and some miscellaneous.

With the proposed expansion of 10,000 square feet, the estimated new, additional taxes would amount to about $19,150. Of this, the county would receive $6100 and the city about $4400.

City Attorney Tom Miller said money to serve this program comes from the taxes generated from increased property value. In the short term, the years of the abatement program, new tax money, up to a maximum of $4000 a year is returned to the company to help defray construction costs.

At the end of the agreement, the cityís share of the new tax revenue stays with the city. While state statutes allow a 15-year term, as that applies to General Safety, the time period would not exceed 10 years.

In the written description provided by Chris Eng: ìThe County Assessorís office has placed the new estimated market value of a 10,000 square foot addition at approximately $500,000.î

Business plan

Steve Reedy and Mary Kay Scheierl of General Safety also attended the meeting. Reedy told the council the company also has a manufacturing facility in South Dakota operating at about 70 percent capacity.

Reedy likes the caliber of the employees in Wyoming. The planned expansion would add 10-12 employees to the 60 already employed by the company. The addition would allow the company to assemble the frames and running gears for new trucks. The company markets its vehicles internationally.

Asked for his opinion, Paul Raduenz, EDA chair, told council the consensus of the EDA is the proposal would be beneficial to the city. The recommendation of the EDA was to grant the tax abatement. Doing so would not affect other tax increment finance districts.

County Commissioner Ben Montzka captured the essence of the proposed agreement as a short-term investment with long-term return. Right now about 5.33 percent of tax revenue for the county comes from commercial development. The state average is roughly 15 percent. He is supportive of this business incentive to increase commercial tax base for the county, if it is ìprudently and cautiously used.î

Montzka said the city would continue to receive tax revenue from General Safety, but that entering into a tax abatement agreement would give the company a partial break on new taxes generated.

A public hearing about the county portion of the proposal is scheduled for 7:15 p.m. Wednesday, July 16 in Center City.

Council support

Opinions of council were in support of encouraging General Safety to expand within the city. Council member Ted Phillips had his questions answered about the effect of taxes for other businesses.

Coryell said the maximum amount returned by the city to General Safety for each of the 10 years of the agreement would not exceed $4000. Administrative costs would come from the taxes collected over-and-above this amount. The county portion would be $6000.

He indicated the expected gain in property value would be about 7.5 percent annually, with a corresponding increase in commercial property tax generated. Anything above the $4000 return to General Safety would be retained by the city. There would be no impact on taxes of the cityís other businesses or on residential taxes as a result of entering into an agreement with General Safety.

Mayor Vern Haag said the arrangement would be good for the future. Council member Sandy Standridge echoed his comments, saying she was ìglad they came to the city.î

ìIt would cost us much more to let the business go,î said Council member Lynn Koalska. Speaking in support of the proposal, Council member Martin English said of the 10-12 new jobs projected with a premier company, ìitís a slam dunk for me.î

Raduenz concluded that having a tax abatement program with General Safety should not be viewed as a cost to the city, but a ìdelay of incomeî for a period of years. Haag also added, ìHow do you lose something you donít have?î

If the county accepts the proposal, the tax abatement agreement will involve General Safety, the city of Wyoming, and Chisago County.

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