Auditor: Project adds up for county
In recent weeks, I have heard and read some debate about whether local communities are getting a fair deal out of the economic development agreement reached with PTTGC America for the proposed ethane cracker complex in our community.
This debate is both healthy and important.
As county auditor, my perspective on this deal isn’t based on opinions, but instead on hard numbers.
First, let me share some details of this agreement.
PTTGCA has received a 15-year property tax abatement, which would begin when the project is approximately 50% complete. From that point forward, PTTGCA would still pay the base taxes, but any increase in property valuation will be abated.
Construction is estimated to take four or five years, during which time thousands of workers would be hired. During that construction phase, the project is estimated to generate between $20 million and $24 million in direct sales tax revenue, which will go to Belmont County.
Once the project is completed, PTTGCA has pledged to directly create 350 full-time permanent positions while estimating that the project will create an additional 100 people who are not directly paid by the companies, but will work on a daily, permanent basis for the project.
When the project is completed, the estimated property valuation is approximately $35 million. The project would invest $38 million in education to Shadyside LSD over the 15-year life of the agreement, and Mead Township would receive $9.5 million during the same period.
So I’ve done some math.
If there were no tax abatement, Shadyside Local School District would have received an average of $450,131 per year during the term of the 15-year property tax abatement; but through the abatement agreement, the payment from PTTGCA instead averages out to more than $2.5 million per year. Mead Township would have received an annual $47,431 without the agreement and will instead get payments that would average $633,333 annually for 15 years.
I understand that some residents are surprised that the plant wouldn’t generate more property tax than the estimates shared above.
After all, this is a multi-billion dollar project; won’t the property be worth more than $35 million?
We can only place a value on what is taxable by Ohio law. The land will have a site value, the buildings will have a value, and the rail for the railroad will carry a value. T
he main building is only roughly the size of a Walmart. All the other parts to the petrochemical plant will be categorized as personal property — including every tangible thing that is the subject of ownership, whether animate or inanimate, including a business fixture — which is no longer taxable under Ohio law.
Even as my math is adding up, I presume there are some residents who might remain skeptical. Both PTTGCA and its partner on this project, Daelim Chemical USA, are for-profit businesses, not charities.
Why would any company pay more to the school and township than what it would have paid in taxes?
Here I would argue that generosity is actually in the self-interest of the project companies. PTTGCA and Daelim are investing into this community with the intention of being our neighbor for many years to come. They have every motivation to lay the foundations of a relationship that will last lifetimes. Also, the complexity of financing this project is unbelievable. Any certainty they can provide to banks and lenders in this massive formula is a huge accomplishment.
There are a lot of strong feelings about this project in Belmont County, most of them very positive. Especially in the light of the global COVID-19 crisis, when good economic news is hard to come by, the prospect of new jobs, opportunity and activity is most welcome to many of our residents. Some even believe that we should entice these companies to build the plant, no matter the case.
But my job as auditor is to evaluate this deal on behalf of the people of Belmont County. Regardless of my own hopes about the project, if I thought this agreement wasn’t beneficial for our county and our residents, I would have recommended that our county commissioners reject it.
But this deal is one in which our community will come out very much ahead. I don’t know whether this project will go forward or not, but if it does, this economic development agreement makes it an even bigger win for us.
That isn’t my opinion; it’s just math.