By Kevin Kelley
An agreement for the city to grant a 75-percent tax abatement for 10 years on a new building planned for the Hyland Software campus won approval from City Council Nov. 1, but not without objections from one councilman.
Ed Hack, the Republican who represents Ward 1, was the only councilman to vote against the abatement. He suggested that Hyland, one of the city’s largest private employers, is gaining too much power.
“They say jump, and we say, ‘How high?’” Hack said during the council caucus meeting that preceded the regular meeting. Hack added that he would only consider supporting the deal if the tax incentive money were put in escrow for 10 years to ensure the company’s commitment to staying in Westlake.
During the council meeting, Hack said he realized that many consider tax incentive deals to be a necessary evil these days. He noted that Hyland was the recipient of two previous incentive deals for previous expansions. He also pointed out that the city will need to finance road improvements around the interchange at I-90 and Crocker Road. Those improvements are required, at least in part, Hack said, because of the traffic from the growing number of employees at Hyland’s Clemens Road campus.
Hack said the city should focus on attracting new businesses.
“I thought we should always keep an eye on ourselves as a community, offer the amenities, and keep the city triple-A (in terms of financial bond ratings), and be a community in which businesses would want to locate without having to constantly go out with the tax incentives,” Hack said.
Council President Michael Killeen said he agreed philosophically with Hack, but that tax incentive deals are “an economic fact of life.”
“It frankly becomes about a business decision,” Killeen said, adding that Hyland will generate millions of tax dollars in spite of the abatement. The council president added that Hyland originally requested 100 percent abatement on the new building for 15 years.
According to statements in the Community Reinvestment Area agreement, Hyland will create 714 new full-time jobs at the end of 2017, resulting in more than $70 million in additional payroll. The company currently employs 1,140 persons.
Under the agreement, Hyland may have to pay back some of the incentive money if the new payroll tax falls below 80 percent of the company’s projections.
The agreement also calls on Hyland to make “reasonable efforts” to ensure that 25 percent of new hires are Westlake residents.
City Council and the Planning Commission gave their approval to Hyland’s planned three-story building last month. According to the abatement agreement, construction of the building will cost $17.6 million, with an additional $3 million going toward furniture and fixtures.
Mayor Dennis Clough told West Life that the city initiated tax incentive agreements after losing several businesses to Avon.
Westlake was not the first city to get involved in incentives,” Clough said. “Hyland Software is one of the largest companies in the city, and we definitely want to make sure they don’t leave us.”
Tax abatement deals have become ubiquitous and are necessary for cities to remain economically competitive, the mayor explained.
“I understand Ed’s (Hack’s) point of view,” Clough continued. “In a perfect world, no one would offer incentives.”
Last month, the Ohio Tax Credit Authority agreed to rebate half of Hyland’s state taxes for five years if it creates and keeps an agreed-upon number of jobs.