Caterpillar deal by the numbers
What: Caterpillar Logistics Serviceswill build a $68.6 million, 1.3 million-square-foot distribution center in Commerce Park on Hoke Road in Clayton. The new plant is expected to employ 500 to 600 people at $11.75 an hour.
The deal: Caterpillar will spend $65 million for land, buildings, construction and equipment. The remainder will come from a variety of public tax breaks and public money, including:
From Ohio:
- A 10-year, 75 percent state tax break of $1.85 million beginning Jan. 1, 2011
- $1 million in grants
From Clayton:
- Donation of 163 acres to Caterpillar, including 20 acres the city purchases from the Miami Valley Career Technology Center for $500,000
- 15-year 100 percent tax abatement on all real property improvements
From Montgomery County:
- $700,000 ED/GE grant to pay for upgrade of Hoke Road
CLAYTON — For years Miami Valley's economic development boosters have touted the Crossroads of America — Interstate 70 and I-75 — as a prime spot for an investment in new industry.
Apparently some Caterpillar executives in Illinois were listening. Deals inked on Monday, Dec. 7, landed a big prize: Caterpillar Logistics Services agreed to construct a $68.6 million distribution center at Commerce Park on Hoke Road in Clayton.
The company credited incentives and the site's proximity to interstates 70 and 75 for the decision to build in Clayton.
The city of Clayton agreed to donate 163 acres of land and the state of Ohio threw in a tax break package worth $1.85 million. Montgomery County also approved a $700,000 ED/GE grant to improve Hoke Road.
Caterpillar said its distribution center — its second-largest in the U.S. — will bring 500 to 600 new jobs paying $11.75 an hour plus benefits and an annual payroll of $12-14 million.
The logistics company is a subsidiary of Caterpillar Inc., a Peoria-Ill.-based heavy equipment manufacturer.
Clayton expects to net $210,000 a year in new income tax revenues from the company's employees. The Northmont School District will get half of the increase in the city's income tax from the project. The city is offering a 15-year, 100 percent tax abatement on improvements to the property to Caterpillar. That abated tax would have gone to the school district.
"The school district will be made whole," Gwen Eberly, the city's economic development director, said of the income tax sharing plan.
Eberly said the company would begin construction early next year with completion in the first quarter of 2011. According to the agreement, the company promises full employment within three years.
City officials, who had been working on the deal for almost two years, praised the regional cooperation in landing a major employer during these economic hard times. The state, the county and the Dayton Development Coalition all were major partners, Clayton Mayor Joyce Deitering said.
As part of an enterprise zone agreement, the city will extend a 15-year, 100 percent tax abatement to the company on all real property improvements. Another part of the agreement gives the Northmont School District 50 percent of the increase in the city's income tax from the project. The school district depends on property taxes for its local funding.
"We are very excited to welcome Caterpillar to the Clayton community," Deitering said. "Clayton is fortunate to be part of a region that has quality employees and is well-suited for logistics and distribution companies.
"This is far and away the largest investment in our community ever," Deitering said. "Clayton is fortunate to be part of a region that has quality employees and is well-suited for logistics and distribution companies."
The company will invest $65 million in the project: $50 million for the building and $15 million in equipment.
The city will donate the 163 acres — the entire 143-acre Commerce Park, plus 20 acres from the Miami Valley Career Technology Center the city purchased for $500,000 — as long as the company continues operations through at least 11 years. If the company closes the operations during the first seven years, it will be liable for the full purchase price; in the eighth year, it would be liable for 75 percent of the price; the ninth year, 50 percent; and the 10th year, 25 percent.
"It's the biggest thing that ever happened to Clayton — city or village," said councilman Bob Peters, who has served nearly three decades on the village and city councils.
"This will be Caterpillar's second largest distribution center in the United States," said Gwen Eberly, the city's economic development director. She said the facility will be used for some light assembly and distribution of parts. The company's largest distribution center is in Morton, Ill., east of Bloomington, Ill., on Interstate 74.
The council also approved an ED/GE grant from Montgomery County for $700,000 to upgrade Hoke Road to add extra lanes from Ohio 49 south to the Commerce Park.
The state tax break package worth $1.85 million means Caterpillar gets a 10-year tax, 75 percent break that begins Jan. 1, 2011. The state tax credit authority requires the company to operate at the Clayton site for at least 13 years.
The state also is providing a $1 million in grants.
According to Eberly, the city was working with the Montgomery County Jobs Center on a hiring timeline. Those interested should contact the Jobs Center or go to www.jointeamcaterpillar.com for details.
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