Who should qualify for sales tax exemption?
Chapter 100 Bonds were the topic of discussion at the Mexico City Council meeting held Monday night. Who should qualify for the sales tax exemption? Will the businesses create jobs in Mexico, and should the City have a tax abatement policy to determine how to handle future requests were among the questions discussed in the heated conversations.
A number of people turned out for the council meeting, including Pearl Motor Company CEO George Huffman, Fluid Power Support Industry owner Mark Korman and Gold Crest Distributing L.L.C. owner Mel Toellner — all three of whom have been approved or are requesting to receive Chapter 100 exemptions or abatements.
The meeting opened with a public hearing concerning the annexation of Pearl Motor Company's new home, located at 3100 S. Clark, and a 0.17 acre parcel south of 3076 S. Clark (owned by David and Virginia Robertson) into the city limits. The hearing closed with no public comment.
Later in the regular meeting, council approved an ordinance (5-0) authorizing the City to issue its Industrial Development Revenue Bonds to Toellner to finance a project for Bee Gee Holding Company L.L.C. Council approved the ordinance 5-0. Toellner has guaranteed his expansion will bring more jobs to the city and will pay a penalty if he is unable to fulfill that promise.
Korman's company — located outside Mexico city limits — was granted Chapter 100 Bonds by the Audrain County Commission earlier in July to help his local industry grow. Korman had no business on the Council agenda, and no members of the county commission were present.
Councilman Chris Williams questioned what the city was gaining from these agreements. The only agreement he sided with was Gold Crest.
"If Mel doesn't come through (as stated in his agreement) his company is required to pay a $50,000 fine to the City. What is the City gaining from the other two companies? Neither one of them have those requirements," Williams stated. "Don't get me wrong. I want Mexico business to grow, but I think the City needs a policy in place to determine how we should handle future requests for Chapter 100s."
Williams questioned the continued loss of city sales tax from the abatements, and he believes each of the companies should have the same stipulations. He noted that neither Pearl nor Fluid Power Support are required to hire any number of new personnel or pay penalties if their business plans fail.
"If we had a tax abatement policy then the problem we have wouldn't be a problem and the public would understand what is going on," Williams said. "A lot of this is poor public relations."
Korman addressed the council, noting that he has hired seven new people since his Chapter 100 bonds were granted. Both he and Huffman voiced their opinion about the City's support to local businesses.
"We're both hometown people and we're tired of getting run over like we're doing something wrong (by asking for support)," Korman said. "It's time to stop slapping the local guy around."
He added that "poor public relations is a necessary evil."
Mexico residents Ralph Mika and Jim Williams voiced their opinions and objections to abating taxes. Mika noted how much the schools lose and Williams noted that "giving everything away can ruin the community." Both voiced support for city growth, but neither seemed sold on Chapter 100 bonds.
Chapter 100 bonds are for business recruitment and expansion, with the benefit of property tax abatement and sales tax exemption on construction materials. The bonds may be used to finance various industrial project, including:
• costs of industrial plants, warehouses, distribution facilities.
• research and development facilities, office industries, services facilities providing interstate commerce.
• agricultural processing industries; and
• land, buildings, fixtures and machinery in connection with the IDB-financed development project.
In other news, the council also approved the following:
• a resolution authorizing a change order with Missouri Petroleum Products Company for the 2013 Micro Seal Project.
• a resolution authorizing a change order to the Wastewater Treatment Plan Phase II Contract with River City Construction.
• an ordinance to establish a procedure to disclose potential conflicts of interest and substantial interests for certain municipal officials.
• an ordinance amending Mexico City Code, regarding "No Parking" signs on parts of Campground Road.