HomeMy WebLinkAbout02-06-09 Westside business may pump $5.7 million into economy
Office of the Mayor
NEWS RELEASE
February 6, 2009
12 p.m.
Westside business may pump $5.7 million into economy
Contact:
Mikki Dobski, Director of Communications & Special Projects, 235-5855 or 876-1564
or Don Inks, Director of Economic Development, or Robert Mathia, Assistant Director of
Economic Development, 235-9371
In the bitter winter of a national recession, a westside business is looking to expand its
operations, build a new manufacturing facility and warehouse, and create 28 new full-
time jobs.
The move would represent a new investment of nearly $4.3 million and new first-year
wages of $1.4 million that would be pumped into the South Bend economy.
But to do so, Royal Holdings Inc., doing business as Royal Adhesives, 2001 W.
Washington St., is seeking approval of two tax abatements, which gained unanimous
support Friday from the South Bend Redevelopment Commission. Tax abatements are
not an elimination of taxes, but a phase-in of the new taxes on new investment over a
defined period. All abatements require final approval from the South Bend Common
Council.
Royal Adhesives is a manufacturer of specialty adhesives for use in industrial and
commercial settings. It is seeking the abatements to assist with:
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Demolition of the former O’Brien Paint building to make way for construction of an
8,294-square-foot manufacturing facility.
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Adding a 22,525-square-foot warehouse to support operations.
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Equipping the manufacturing facility with nearly $3.2 million in equipment, including
mixers, raw material storage tanks, various pilot mixers for development work, and
testing equipment associated with the production and testing of specialty adhesives.
“We welcome this opportunity from Royal Adhesives to invest in our community’s
economic future with short-term tax assistance that will enable the growth of a locally
based company,” said Mayor Stephen J. Luecke. “Despite difficult national
circumstances, it’s an encouraging sign that South Bend businesses still serve vital
commercial needs. The City of South Bend will continue to do its part to foster a positive
business climate.”
The project is estimated to create 28 new, permanent, full-time positions with an annual
payroll of nearly $1.4 million. It also will maintain 116 existing full-time positions, 25 of
them being minority employees. The company’s current annual payroll is nearly $6.14
million.
Total new investment includes $1,127,543 for construction improvements, $3,168,075 for
equipment and $1,390,806 in new annual payroll, for a total of $5,686,424.
The maximum combined tax abatement would not exceed $93,099 – less than one-third
of the $308,117 Royal Adhesives would pay in real and personal property taxes over a
five-year period. The City would only receive these new taxes if the project is completed.
The amount of tax abatement could vary based on final selection of contractors. A three-
year real property tax abatement would result in the abatement of $28,556 in taxes, while
the company would pay $73,449 in taxes over three years. A five-year real property tax
abatement would result in the abatement of $39,675 in taxes with payment of $130,333.
Because Royal Adhesives would buy equipment, it also would be eligible for a five-year
personal property tax abatement of $53,424. The company would pay an estimated
$177,784 in personal property taxes during the five-year period.
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