CLARIOS

Clarios is receiving an abatement on personal property taxes as part of an expansion thanks to a decision by the City Council.

Clarios and Daily’s Premium Meats are expanding their production, and the city of St. Joseph is helping by abating personal property taxes.

Clarios is investing $25 million to expand its facility and production, which will lead to 114 new jobs. Daily’s Premium Meats’ $9.5 million expansion isn’t as extensive but will add 10 new jobs.

“(Clarios) does the battery manufacturing for a lot of the automobiles, which was one of their typical products, but they’ve also gotten into the other technologies that have come out,” said Brad Lau, the vice president of economic development at the St. Joseph Chamber of Commerce. “So this is an expansion of those particular lines so that they can meet that demand.”

As an incentive to expand, the St. Joseph City Council agreed to issue Chapter 100 revenue bonds to both companies.

“We can assist corporations that are wanting to expand here in St. Joseph with that money,” City Councilman Marty Novak said. “It’s a good thing. It’s going to be invested in something tangible that will stick around here, so it’s going to benefit St. Joseph.”

Essentially how it works is a company buys the bonds from the city, while the city leases back the company’s new equipment needed for its expansion. Since the equipment is in the city’s name, it’s not taxed. The staggered tax abatement for Clarios and Daily’s Premium Meats will last 10 years.

“It’s used to encourage companies to expand in St. Joseph, as well as locate to St. Joseph,” Lau said. “Even if it’s an expansion, we’re a lot of times competing with other facilities in the corporate structure, so it’s important for us to have a mechanism to be able to provide that incentive so that they can be competitive.”

Using Chapter 100 bonds to entice companies to locate or expand in St. Joe is at no risk to the city, either. If a company doesn’t hold up its end of the bargain, the city would take the equipment back and use it to pay off the remaining bonds.

But both the company and the city have a reason to make the arrangement work. For the company, it helps the bottom line. For the city, it brings in new business, jobs and eventually additional tax revenue.

“Just from the bottom-line standpoint, it helps the company in our particular location in St. Joseph to perform and have a better rate of return for the corporate structure,” Lau said. “Hopefully, the idea is that when they’re looking at a future expansion, they will look at St. Joseph because of that opportunity.

“I always say 100% of 0 is 0,” Lau said. “Even if you were to tax all of it and you don’t get the project, you don’t get anything.”

Quinn Ritzdorf can be reached at quinn.ritzdorf@newspressnow.com

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