Tax break for Pennex expansion OK’d

LISBON – A 15-year tax break agreement that benefits a Leetonia plant undergoing a $33 million expansion received final approval Wednesday from Columbiana County commissioners.

The property tax break is being granted to Pennex Aluminum, which is expanding operations to add a aluminum extrusion press line and specialized fabrication production center at its property at the county Port Authority’s industrial park in Leetonia.

The new 170,000-square-foot building will triple the company’s presence in the industrial park and increase the number of jobs from 75 currently to an estimated 140.

County Development Director Tad Herold said the company was contemplating expanding at another plant before it decided on Leetonia.

“I think the Pennsylvania site was a very strong contender, and I think the ability to provide the (tax break) to Pennex was a major factor” in deciding to expand here, he said.

Although commissioners had final approval, the agreement also required the approval of the Leetonia school board and Leetonia Village Council since those government agencies are giving up future property tax revenue that would result from the expansion.

Under the agreement, officially known as an enterprise zone agreement, a 100 percent tax abatement is granted to Pennex but it applies only to the value of the improved real estate and new equipment resulting from the expansion.

While the tax abatement is 100 percent as it applies to Leetonia, the village will financially benefit from the 65 new jobs to be created. Those workers will be subject to the village’s 1.5 percent income tax and they are expected to be paid a combined of $2.3 million per year.

The school district will also benefit some under the agreement, with Pennex to pay the school board the equivalent of 25 percent of the real estate taxes that would have otherwise been generated by the expansion.

Commissioners were obviously pleased to be able to play a role in the creation of new jobs. “It shows when people work together and no one’s concerned about who gets the credit, good things can happen,” said Commissioner Michael Halleck, who was also gratified the new jobs were unrelated to the shale gas boom under way in the region.

“It’s good to be diversified when it comes to manufacturing,” he said.

Herold pointed out the same parties entered into a similar 15-year enterprise zone agreement in 2001 after General Extrusions moved into the industrial park. The company was later acquired by Pennex.

“Because of the success of the prior enterprise zone agreement the parties were able to get together and hammer out an agreement that was mutually beneficial,” he said.

Pennex will begin paying 100 percent real estate and personal property taxes on the existing plant and operations after the existing agreement expires in 2016. Commissioners created the enterprise zone for the industrial park in 1998.