Johnson City company needs to hire 88 to keep tax benefits

Nathan Baker • May 10, 2018 at 11:53 PM

A Johnson City company has 10 months to complete a hiring spree and avoid penalties on the tax benefits and grants given to it by the city and state.

In a required performance report, NN Inc. claimed 72 full-time employees in March. That’s 88 employees shy of the minimum threshold of 160 the company needs by next year to meet the requirements of a payment in lieu of tax, or PILOT, agreement with the Johnson City Industrial Development Board.

In an email, Northeast Tennessee Regional Economic Partnership CEO Mitch Miller said the jobs report clearly shows NN’s hiring progress, and said the company still has the opportunity to meet the requirements of the PILOT agreement.

The company has been a great partner with the economic partnership, he added, and he believes the company is committed to do what it can to grow its Johnson City employment base.

In the first year of the tax incentives agreement, the company reported 21 jobs. That grew by 26 in 2015 and 17 in 2016. In the last year, NN added eight jobs in Johnson City.

The agreement with the city exempts the company from property taxes on its Mockingbird Lane building for five years, starting in 2015. In 2020, it will pay 10 percent of the assessed taxes, then increase its payment by 20 percent until 2025, when it will pay the full assessed amount. The company is also exempt from paying taxes on the equipment it placed in its building for five years, then will pay the full taxable amount starting in 2021.

The agreement exempts NN from more than $900,000 in property tax payments over its 10-year term.

If NN fails to reach 160 jobs by March of next year — 80 percent of the 200 jobs it and economic development officials promised — its payment for the year will increase proportionally. If another eight jobs are added in the next year, for example, the company will have created half of the jobs required in the agreement, and will pay 50 percent of the assessed taxes on the property.

When the agreement was signed in 2014, company and local officials billed it as an expansion of NN’s global headquarters, which would be accompanied by an expansion at one of the company’s local manufacturing facilities.

Last year, the company sold its bearings plants in Mountain City and Erwin, quashing any possibility of it expanding its local manufacturing holdings, and announced it would move its global headquarters to Charlotte, North Carolina.

In a press release announcing its headquarters move, NN said it would “continue to have a presence in Johnson City,” but it did not say what that presence would be, and dozens of calls since then to company representatives have gone unanswered.

If the company reaches the jobs requirements of the local PILOT, Miller said it can retain the tax abatement benefits.

Johnson City Industrial Development Board Chairman Gerald Thomas said Thursday he hasn’t spoken with the company directly, but said Miller and other employees at the economic partnership have relayed commitments from NN to keep jobs in Johnson City.

Thomas said the company told those officials it plans to meet the PILOT requirements, and said he had to be confident it would.

“What else can you do? You have to wait and see,” Thomas said. “One thing to remember, if they don’t meet those requirements, we have a nice building we’ll own.”

NN also received a $2 million grant in 2014 from Tennessee as part of the Department of Community and Economic Development’s FastTrack program. State documents show the company was reimbursed from the grant program for expenses related to the buying and retrofitting of the Mockingbird Lane building.

According to the company’s agreement with the state, if it doesn’t create and fill 160 net new jobs by March 9 it will be required to pay back a portion of the grant proportional to the jobs it failed to create.

On NN’s website, it lists 12 available jobs in Charlotte and three in Johnson City, one of which is a temp-to-hire position.

This week, the company announced the closing of an acquisition of a medical device manufacturer, Paragon Medical.

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