Officials: Greenwood Arbonne plant lags 90% on job creation

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The Greenwood Common Council could revoke a tax break given 16 years ago after officials said a skincare company failed to deliver on its promise to create more than 400 jobs in the town.

Arbonne International, LLC, 800 Commerce Parkway West Drive, received a 10-year tax abatement of $379,356 on personal property, including heavy machinery, in 2006. There was also a 10-year property abatement given to the owner building, Quadrangle Development Co. for $662,000.

As part of the Arbonne tax abatement agreement, the company agreed to hire 435 workers over a 10-year period, as well as a certain amount of salaries and capital investments, in exchange for the tax relief, according to city documents. The company was expected to maintain or exceed those numbers as part of the deal, as well as file an annual CF-1 form explaining the amount of equipment purchased, the number of employees hired, and the average salary at the facility.

However, Arbonne did not hold out until its end of the deal, city officials say. When the company submitted its Form CF-1 for tax benefits next year, it reported a significant drop in the number of employees.

An Arbonne spokesperson did not respond to a request for comment by the deadline.

Significant drop in staff

In the company’s most recent CF-1, representatives reported 46 employees. That’s nearly 90% below what the company has committed to hiring, said Adam Stone, chairman of the city’s CF-1 compliance committee and a financial consultant who works regularly for the city.

“As of right there are hundreds of jobs and as a percentage it’s like 90%,” Stone said.

Earlier this month, the committee recommended that city council declare Arbonne non-compliant and end the reduction. The committee was of the opinion that this would be better than attempting other actions, Stone said.

With this recommendation, the municipal authorities announced their intention to end the reduction. The city council will ultimately have the final say on the dismissal once the company has had a chance to respond, he said.

Issues detected during the review process

The finding is the result of a review by the CF-1 Compliance Committee. The compliance issue was not discovered sooner because it “slipped through the cracks,” Campbell said.

“The committee that reviews them is fairly new,” Campbell said. “…And apparently the county never said anything about it. It’s one of those things that slipped through the cracks.

Through the review process, the city also discovered that the company still had four years off.

“One way or another, according to county information … they have another four years of reductions to come,” Campbell said Wednesday.

The reason why the company has another four years of reduction is due to the gradual construction on the site. The company reported new construction in periods that were still below the reduction cap, Stone said.

The ceiling corresponds to the capital investments that the company has promised to invest in the warehouse. The company pledged an investment of $7,864,500. The actual amount of investment on the CF-1 for next year is not publicly available at this time, as information regarding the cost of the new equipment is considered confidential, officials said.

Problems have already arisen

This isn’t the first time Arbonne has broken what it promised the city.

In 2008, officials discovered that the company had failed to provide the city with proof that it had met its job creation metrics. Officials at the time said the company did not file compliance forms for the first years of the reduction.

This discovery was made after a report request was received after the company announced layoffs that year. The failure to file went unnoticed at the time as the first compliance form was never filed in 2007, according to previous reports from the Daily Journal.

Arbonne did not comment on the matter at the time, according to reports.

In the past, there have been times when the company has filed paperwork with the county, but not the city. The city is supposed to review the documents, sign them and submit them to the county, Stone said.

Due to the filing errors, the county continued to apply the abatements in years when the city did not receive the required documentation. Arbonne’s past CF1 filing and compliance issues are “water under the bridge” for the city and are not the reason the cut is threatened with termination, Stone said.

The city also has no problem with how county officials have approached Arbonne in the past. The outstanding issue right now is the number of jobs reported by the company, he said.

The city typically tries to be business-friendly by giving businesses the benefit of the doubt, but in this case the committee recommended ending the reduction, Stone said.

“It was the committee’s recommendation that ‘Hey, the taxpayer has already benefited, they’ve made the investments,'” Stone said. “At this point, if the board wants to pursue this reduction agreement in the future, that job performance really needs to be weighed more carefully.”

Committee now monitors compliance

Issues like this are part of the reason the review panel was formed, Campbell said.

The committee is made up of city and Stone employees. On behalf of the city council, the committee reviews reduction compliance and is responsible for organizing and maintaining all compliance and agreement records over the years, Stone said.

“Essentially, we call for observations and things that we think the board should consider as part of a company’s compliance review,” he said.

For years, the city council, which is responsible for approving the CF-1 forms each year, was content to approve them automatically without asking many questions. However, over time council members began to see there were issues with this, and after talking with Mayor Mark Myers, members became more vocal about the need for a solution, a said Campbell.

“We saw that becoming a problem,” Campbell said. “If companies don’t meet their obligations, they shouldn’t benefit.”

The reductions are complex and are usually in place for five to ten years. For this reason, there are many documents and requirements integrated into each revision. The committee’s job is to make sure the companies’ reduction records are complete and that the spirit of what the city council has approved for each reduction is executed correctly, Stone said.

“We’re actively trying to try to help monitor any kind of discrepancies and differences to try to make sure these reductions are granted and monitored appropriately,” Stone said.

Arbonne officials have been asked to appear before City Council at its next regular meeting on October 3. During that time, the company will be asked to provide information on why the reduction should not be terminated, Campbell said.

If the company does not provide the information or appear at the public hearing, the reduction could be terminated, he said.

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