ASHLAND – A discussion about a proposed abatement turned into a broader conversation about the relationship between the school board and the Economic Development Office during a work session Monday evening for the Ashland City School Board.
Representatives from SJE Rhombus shared information about the company’s plans and fielded questions from the board during a lengthy discussion.
The company is requesting a 75 percent, 15-year tax abatement as they consider building a new, 50,000 square foot facility in Ashland.
Kathy Goon, director of Ashland Economic Development, said the board is required to approve an abatement according to Ohio Revised Code if the abatement is more than 75 percent or for longer than 10 years.
SJE Rhombus was started in 1975 in Detroit Lakes, Minnesota, and now has offices in eight locations more than 400 employees. SJE Rhombus offers a wide range of control products for residential, commercial, municipal and industrial markets.
“What’s really most near and dear to our hearts is that we are committed to our communities and we are a 100 percent employee-owned company,” said Taunia Suckert, Chief Financial Officer of SJE Rhombus.
The company acquired CSI Controls from Bill Chandler in January 2008 and have continued to operate in the Ohio Street facility.
“We are finding that it is just not quite the right fit for us. For a manufacturing facility to have a multi-floor location creates a little bit of choppiness in the workflow and it’s just time for us to become a little more efficient. And that really was the impetus for us looking for another location,” Suckert said.
The company has added an average of five employees in Ashland per year for the past three years and expects that growth to continue.
“I obviously don’t have a crystal ball on that, but we would expect as part of our business plan, if the economy allows, that we would continue on with a pace similar to what we’ve been seeing and in those types of job. The engineering jobs, the sales jobs, the technicians jobs, building those things and all the support that comes with that, as well with the new facility needing some site facilities and maintenance staff to support that as well,” said Mark Ostlie, director of operations for SJE Rhombus.
Ostlie said the company is planning on being a long-term member of the Ashland community and that the new facility will be an asset for the company.
“One of the big keys is, it’s not much larger than the total square footage we are occupying now for the first phase, however the plan is that it’s all on one floor open floor space,” Ostlie said. “If you visited where we’re at, we’ve got production on multiple floors. From materials movement and staffing, we’re seeing better efficiency and space utilizations in some of our other plants with a single-floor plan.
Board member Bryan Lefelhoc asked what happens if SJE Rhombus is not able to uphold the growth and job numbers promised in order to get the abatement.
Goon reassured the board that if the company is unable to uphold its end of the agreement, the abatement can be amended or even required to pay any back taxes that were not paid.
“We watch that every year. We have a meeting in August. By September we get the information on all the outstanding enterprise zones and community reinvestment areas,” Goon said. “So everybody is paying attention to what is happening to make sure that these abatements are being upheld by the companies that get them.”
When asked by Board Vice-President Dr. James Wolfe if there were other sites the company was considering, Ostlie said the company’s headquarters in Minnesota produces many of the same products as the Ashland site and there is space for expansion.
Although SJE Rhombus is employee-owned, decisions on where the company expands or builds are made by an independent advisory board.
Ostlie said plans for a possible new building in Ashland are very preliminary but the cost estimate ranges from $5 million to $8 million.
“These were rough numbers, just estimated from an architectural firm,” Ostlie said. “We’re in the due diligence process right now, meeting with some architects to put together a proposal for what a facility looks like. And when information comes on that, we’ll go out to bid to contractors and get some firm numbers.”
A local construction company would likely be used to build the new facility.
Ostlie said that if things continued to move forward, the company likely would break ground before winter.
Lefelhoc voiced concerns about how it would appear to SJE Rhombus’ competitors in Ashland if the board approved the abatement.
“Can you see where we could be seen as taking sides with a particular business against other tax-paying businesses in this community who don’t have those tax abatements,” Lefelhoc asked.
Wolfe told Ostlie and Suckert that he hadn’t made up his mind about how he would vote on the abatement and that he was going to ask a lot of questions so he could make the best decision for his constituents.
“In the end, we understand as a board that the true impact on us financially is fairly limited,” Wolfe said. “When we sit up here as elected officials, we are taxpayer advocates more than school advocates because we don’t stand to gain a lot or lose a lot whether you get this abatement or not. But what happens is that the money you would have paid in additional taxes would have lowered the taxes for every other taxpayer in Ashland. And we’re taking that away from them … We need to be able to say to the community as elected officials we thought this through, and in the balance we thought this was a good decision.
“That’s our perspective as school board members, thinking about how this affects the taxpayers that also have to support the schools. Because this could have lowered their burden, we just need to have a good, solid reason to explain to them why we are not choosing to act on their behalf and instead act on your behalf.
Wolfe asked several questions of Suckert and Ostlie, requesting details that were lacking from the company’s abatement application.
Goon said that the details which were missing from the company’s original application have been covered in the abatement agreement. Board members said they had not received the draft agreement.
“Honestly, these are questions that we would prefer to ask at an Economic Development Committee meeting. It really is not my preference to have to ask you at a board meeting. It’s just that we’ve had no input in this process up to this point,” Wolfe said.
Wolfe read a statement from Board President Will Gravitt who was unable to attend Monday’s meeting.
“I would likely vote to support the request submitted to us for approval this evening because I am certain many people have worked long and hard to ensure that the community’s best interest are the top priority. However, I do think that this process is not leading to the best results for the school district and the community. The ‘Yes’ vote of the school board comes as a presumed afterthought to a process from which it is largely disconnected. It is my intent that in the near future the board will determine and communicate the criteria that will guide our tax abatement approval. In short, this school board wants to be part of a business-friendly community for businesses that are community-friendly,” Gravitt wrote.
After more than an hour of discussion with Ostlie and Suckert, the SJE Rhombus representatives left the meeting and the board discussed ongoing communication issues between the board and the Economic Development office.
The major issue for board members is the lack of school board representation on the Negotiating Committee, which is a city committee which considers abatement requests. The school district’s previous treasurer had served on the committee. When she left the district, she was replaced on the committee by Hal Sheaffer. Ashland Mayor Duane Fishpaw appointed Sheaffer to fill the vacant seat.
“You’ve got three people from the City, I’m just struggling to understand when it affect the County, when it affects the school, and you have an open position that you would not fill it with the traditional school person,” Wolfe said.
“We as a school board serving the district are as interested in economic development in this county and this city as anybody. That’s part of what we do here, is to try and drive economic development by providing good schools so folks will come here and find this is a good place to start their business and raise their family,” board member Rick Ewing said. “As long as the school district has a part in this. I think there’s been a breakdown in communication that has led to this. It’s not our job to be up here grilling an industry about what kind of economic value they bring to this community. However, we have a responsibility as elected officials by Ohio Revised Code to vote on the subject. So personally, I take that as a charge. I’m not going to rubber stamp anything. I want to know if I’m making a good decision, if I’m representing my constituents, the taxpayers, appropriately.
“I think all we’re asking here is that I think there’s some improvements that could be made in the communication process. I think membership on that Negotiating Committee is one way to do that.”
“All we’re asking is that, even if we don’t like what you decide, at least have the courtesy of telling us, well here’s what we’re thinking and here’s how we’re working through the process so that when we send you this formal 14-day notice you can have a little more background as to how we got to where we got to. Boy that would be great, because it just says you value us. I want you to know we value you. Even though it may not always seem that way,” Wolfe said.
Goon said there was another seat open on the Negotiating Committee and Fishpaw said they will consider asking a school representative to fill that position.
