CLEARWATER – For the past 38 years, Instrument Transformers Inc. has been a corporate citizen of Clearwater. Now, the company – a subsidiary of the giant General Electric Company conglomerate – wants to expand both its plant and its workforce in Clearwater and has requested a tax break for doing so.
In 1995, the Florida Constitution was amended to allow municipalities to grant “Economic Development Ad Valorem Tax Exemptions” to companies considering moving to those municipalities or expanding their existing operations in them. On Nov. 6, 2012, Clearwater voters authorized that concept in hopes of luring highly paid jobs to their city.
Currently, Instrument Transformers has 436 employees in a 190,700 square-foot plant on 17.44 acres at 1907 and 1925 Calumet Street. It considered building a plant in Louisiana or abroad, but decided to buy additional land, which will eventually be annexed into the city, and build a 208,000-square-foot plant in Clearwater at a total cost of $49 million for the land, construction and machinery. The site plan was approved by Clearwater’s Community Development Board on Oct. 15.
“This project is really about bringing new jobs for the citizens of Clearwater,” Denise Sanderson, the city’s assistant director of economic development and housing, told the Clearwater City Council at its Dec. 2 work session.
The expansion is expected to bring 263 new jobs to Clearwater. On average, 143 of them will pay at least $41,810 per year, which is 100 percent of the Pinellas County average annual wage published by Enterprise Florida on Jan. 1, 2013.
“We’re excited about this project,” said Assistant City Manager Rod Irwin.
On Aug. 14, 2013, the city council authorized the city’s planning and development department to negotiate the details of what the project, then known by the code name Project Banner, could bring to Clearwater and what the company expected in return. Negotiators determined that by exempting 75 percent of the tax on $2.1 million of real property and $16.5 million of tangible personal property such as machinery, Clearwater would lose $195,065 of tax revenue in the current fiscal year. But that amount only compares the full and reduced rates on the expansion; there will be no reduction in the taxes on the existing plant and machinery.
To qualify for a tax incentive, a company must sell at least 50 percent of its goods outside the Tampa, St. Petersburg and Clearwater area. Instrument Transformers, which sells 99.75 percent of its goods outside the Tampa Bay area, had no trouble meeting that requirement. It also had no trouble meeting the minimum requirements of creating ten new jobs, investing $100,000 and paying wages that equal or surpass the Pinellas County average.
The resolution authorizing city staffers to negotiate with Instrument Transformers specified that the revenue lost through the tax breaks must, within seven years, be offset by the ripple effect of the jobs created. But Clearwater officials predict that that payback threshold will be reached within 2.1 years, and future taxes on the new facility are expected to add $500,000 a year to the city’s coffers.
“This represents an excellent return for the citizens of Clearwater,” Sanderson told the council.
And if the councilmembers’ feedback is any indication, the measure should have no trouble passing at the council’s Dec. 5 meeting.
“This is the kind of win that is really exciting,” Vice Mayor Paul Gibson told his colleagues on the dais. “I’d sign off on these all day long.”
“This is exactly the direction we needed to go,” Councilmember Jay Polglaze agreed.