It took nearly three years for Hudson to join a countywide initiative aimed at deterring cities from poaching each other’s businesses, but only six months to experience its benefits.
Lianda Corp., a plastic and polymer importer, is moving from Hudson to Twinsburg, which triggers the Summit County Job Preservation Agreement both cities had signed.
As a result, Hudson will receive a portion of the income tax Twinsburg collects from the company over the next three years.
The company employs 13 people with a $1 million payroll, so the revenue generated won’t have a serious impact on either city’s bottom line.
But economic development directors of both communities say they’re glad the plan is in place, for the financial effect it has when a company is large and the neighborly symbolism when the business is small.
“It worked the way it was supposed to,” said Hudson’s Chuck Wiede.
The agreement calls for Hudson to receive 40 percent of the income tax collected from Lianda in the first year. Twinsburg Planning Director Larry Finch said that will amount to about $7,800 in 2012.
Hudson will receive 30 percent of the revenue generated in the second year and 20 percent in the final year of the agreement.
However, if another company moves into the 1340 Corporate Drive address in Hudson that Lianda is leaving, the amount due to Hudson will be adjusted accordingly.
That caveat is new this year and the reason Hudson City Council finally approved joining the Job Preservation Agreement.
“We felt very strong” about adding that provision, Wiede said. “It wouldn’t be right” for one community to pay another if an outside company came in and filled that space with new jobs, he said.
Wiede said he tried to help Lianda find a new home in Hudson. The company was leasing and seeking to buy a larger office and warehouse, but no existing properties in Hudson fit its needs.
Finch said after Lianda found the perfect new home at 8285 Darrow Road, the company approached Twinsburg asking for a financial incentive.
Twinsburg City Council voted to admit the company into its Occupancy Program, which encourages development of vacant properties. The Darrow Road site has been mostly empty for three years.
For 10 years, Twinsburg will give Lianda a grant equal to 33 percent of income tax collected annually from its employees. Next year, that will leave the city with about $6,900 in new income tax revenue, Finch said.
“We wouldn’t have gone that high or that long if they weren’t buying the building,” Finch said. “It’s a sign they are committed here long term.”
The Job Preservation Agreement was initiated after a 2008 controversy involving Hudson.
Macedonia officials complained when Hudson gave incentives to the construction supply company Norandex, which moved its 85 employees across the municipal line.
Twinsburg also questioned Hudson’s economic development strategies when the city offered a 100 percent, 15-year real estate tax abatement in luring Meyer Distributing Co. and its 100 employees from Twinsburg to the Hudson Crossing Business Park.
Noting that the county doesn’t gain anything economically when one Summit County city lures a business from another Summit County city, County Executive Russ Pry encouraged communities to sign the anti-poaching pact.
Hudson resisted until this year because the City Council wanted the clause about altering an agreement when a vacated property is filled.
This year, nine of 13 Summit County cities are signatories to the pact.
Summit County Director of Development Connie Krauss said the county doesn’t collect information about who is using the agreement. Anecdotally, she knows of a handful.
In August, Barberton received a check for $20,000 from Akron as a result of losing 60 jobs when the roofing company Cardinal Group moved.
“We don’t get involved unless there’s a dispute,” Krauss said, and to date, there have been none.
On Thursday, representatives from several cities met for an annual review of the agreement’s language and guidelines and to propose changes.
Paula Schleis can be reached at 330-996-3741 or pschleis@thebeaconjournal.com. Follow her on Twitter at http://twitter.com/paulaschleis.