Commission approves PILOT agreement for textile facility purchase

Published 3:17 pm Tuesday, July 17, 2018

Members of the Carter County Commission approved an agreement with a Pennsylvania-based textile company as part of an effort to help keep a local industry in operation.

During Monday’s meeting of the Commission, Carter County Industrial Development Board Chairman Phil Isaacs and Carter County Mayor Leon Humphrey presented commissioners with a proposed Payment In Lieu Of Taxes (PILOT) agreement with HLC Industries that would grant them a tax abatement in exchange for HLC funding improvements to the ColorWorks Inc. facility and maintaining a set number of employees. Joining the two for the presentation was Michael Landau, the fourth generation in his family to operate HLC, who spoke to the Commission regarding his company and their plans for ColorWorks.

Currently, HLC is negotiating the purchase of ColorWorks, which is an employee-owned custom textile dyeing and finishing operation located in Elizabethton.

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“How we are affiliated with ColorWorks is we are their largest customer,” Landau said. “We’ve been in negotiations now for a while, and we need your assistance. We hope you will approve these tax abatements.”

Because ColorWorks is an employee-owned company, Landau said they have not had the necessary capital to invest in improvements to their equipment and facility, something his company will work on if the purchase goes through.

“What we intend to do is make a lot of capital improvements,” Landau said. “We have budgeted $1.2 for investment. That is fixing up their equipment and buying new equipment.”

Landau said without the capital improvements and acquisition, ColorWorks could face the closure of the facility because of difficulties meeting production demands.

“If that happens, I’m out of business too,” Landau said, noting there is only one other company in the country that provides the same textile dyeing and finishing services that ColorWorks does.

According to Isaacs, the proposed PILOT is for a 100 percent tax abatement for five years as long as the company maintains a minimum of 75 full-time employees. If the company shows a 20 percent growth in employment over that level during those five years, the PILOT would automatically renew for an additional five years. If the company fails to maintain the employment level, they will be penalized with a three-year rollback on the taxes and will have to pay that money back to the county.

“We wanted to add some meat to this agreement and give them some incentives,” Isaacs said. “This is primarily about job retention and also some job growth, and providing job security for those employees up there.”

Isaacs said the county currently receives about $30,000 each year in taxes from ColorWorks — about $23,000 in real property and around $6,000 in personal property, which includes the equipment in the facility. If the abatement remains in place for the full ten years, it would add up to around a $300,000 tax break for HLC Industries, which is approximately one-fourth of the amount the company intends to invest in ColorWorks’ facility and equipment.

Commissioner Randal Jenkins made a motion to approve the PILOT agreement with one change — instead of the agreement auto renewing in five years, Jenkins proposed the agreement be brought back to the full Commission at that time for re-approval. Commissioner Mike Hill provided the second for the motion.

The PILOT agreement was approved on a vote of 22-2 with Commissioners John Lewis and Robert Carroll providing the two dissenting votes.