Johnson City Commission approves letter supporting Crown Labs' incentive, downtown buildings sell-off

Zach Vance • May 2, 2019 at 11:30 PM

Johnson City commissioners capped a busy meeting Thursday by selling off some of its downtown real estate and approving a letter in support of a $450,000 job retention and growth grant for Crown Laboratories Inc.

While the letter in support of the economic incentive was not included in the initial agenda packet, City Manager Pete Peterson explained in detail what the deal would entail and what would be expected of Crown Laboratories, a Johnson City-based pharmaceutical company known for making Blue Lizard sunscreen products.

“What they are looking to do is an expansion of their manufacturing and distribution operations by adding in new product lines, additional square footage for manufacturing, office space and a retro-fitting of their current facility. This expansion would also include the growth of their corporate headquarters with the potential to relocate their office within the city to a larger location,” Peterson said.

That roughly $27 million expansion would involve the creation of 216 new jobs during the next five years with an increase in annual payroll of $17 million, according to Peterson. The company currently has 203 jobs with an annual payroll of roughly $12 million.

“The company has been in a high-growth mode over the last 18 months, making numerous acquisitions, product expansions and (it) has bought facilities throughout the country where these products are manufactured and distributed from. This is a desire to bring most of those firms to Johnson City and create those new jobs and centralize their operations,” Peterson said.

“What we are proposing is to help them meet their financial needs to create these new jobs by approval of a job retention and growth grant.”

Crown Laboratories would be required to make annual reports to the Industrial Development Board, who would facilitate the grant, showing job creation numbers and increased payroll amounts.

At the end of five years, if Crown Laboratories did not create the expected 216 jobs, it would have to pay back $2,084 for each job missed.

In addition to that, Peterson said there would be a property tax abatement of real property and equipment up to 100 percent over a 10-year period for the new manufacturing facility expansion.

“This is a wonderful opportunity to reinvest into an existing business that (CEO) (Jeff) Bedard has pretty much made a homegrown business here in Johnson City, along with other local investors,” Peterson said.

Citing the city’s flat growth projections, Vice Mayor Joe Wise said opportunities like these are essential for ensuring future generations have employment here.

The approval Thursday was only a letter in support of the agreement, which will have to be approved by Crown Laboratories’ Board of Directors. Once the actual contracts are finalized, those will come back before the City Commission and Industrial Development Board for approval.

Real Estate Deal 

The real estate deal entailed the city accepting a $600,000 offer from developers Shane Abraham, of Universal Development and Construction, and Philip Cox, of Mitch Cox Companies to sell four buildings covering the 300 block of East Main Street.

Those properties included the former J.C. Penney’s building; the former Hands-On Museum/Woolworth building; the former Sears building; and the smaller building at 323 E. Main St.

At Monday’s agenda review meeting, Cox and Abraham explained their plan for renovating the four buildings, using the upper floors for residential living and the bottom floors for commercial use and office space.

The two partners, doing business as AC Commercial Properties, will now have 90 days to close on the property and come to terms with the city on a development agreement to guide what can and cannot be done with the property.

“The old Sears building and the small retail shops (at 323 E. Main St.) would be our immediate, first renovation. I think you would see us break ground on that certainly before the end of the year, maybe late third quarter or early fourth quarter,” Abraham said.

The four buildings have been on the market since August 2018, when the city executed a one-year agreement with Mitch Cox Realtor Shannon Castillo. During that time, the city has only received one other offer and it involved the demolition of the one of the four buildings.

That agreement had the city asking $621,500 for the JC Penney’s building; $500,000 for the Woolworth building; $279,000 for the Sears building and $140,000 for the property at 323 E. Main St.

“While the offer to some, and I’ve gotten a few calls on this, might seem low, these buildings have been sitting there for a long time,” Mayor Jenny Brock said. “What I personally feel is we can discount the price on these to help the developer mitigate some of the risk in redeveloping these properties.”