The Development Authority of Cobb County on Tuesday unanimously approved increased incentives to subsidize a perfume manufacturer’s expansion, at a net loss to county coffers.
The authority two years ago gave the company, Arylessence, a 10-year property tax abatement to expand its facility in the northeastern part of the county. The Cobb County Board of Commissioners also waived $620,000 in building permit fees.
Arylessence plans to hire 30 new workers who will make an average of more than $75,000 per year. The expansion will also create 100 temporary construction jobs, according to the company.
But material and labor costs have skyrocketed over the past two years, stalling the expansion.
The company reapplied for the incentives with a new project cost of $37 million, a $10 million increase. That increased the total value of the property tax abatement to $2.1 million, according to a new analysis from Alfie Meek, a well-known economist based in Flowery Branch.
Meek’s analysis estimated 10 of the new employees would live in Cobb County, creating six new households and four new students in the school system. Figuring in the incentives and the costs to serve the new residents, Meek said the expansion would bring $575,000 in net revenue to the county and $888,000 to the school system over a decade.
But, like two years ago, the fiscal impact analysis did not include the waived building permit fees. Accounting for those, the incentives will result in a $45,000 net loss for the county over 10 years. If future county revenues are calculated in today’s dollars, with a discount for inflation, the loss jumps to $212,000.
Development Authority Executive Director Nelson Geter defended the property tax incentives.
“We don’t penalize a client because of other incentives that are made available to them,” Geter told The Atlanta Journal-Constitution. “We think it’s a great project for Cobb County.”
Cobb County Economic Development Director Sabrina Wright declined to comment.
Arylessence Chief Operating Officer Bret Tanner thanked the seven-member development authority board for its vote.
“We’re looking forward to this being a successful expansion,” Tanner said.
Arylessence plans to build a 54,000-square-foot facility that will increase the company’s manufacturing capacity and add offices and a receiving area for raw materials.
The company’s incentive falls under the development authority’s “targeted industry” program, which requires the creation of at least 25 new jobs. Geter said it wouldn’t matter if fewer than half the employees lived in Cobb.
“They have payroll that’s processed out of Cobb,” he said. “They spend money in Cobb when they come, so the overall benefit is exponential. They go to lunch, they go out to the malls.”
As part of the expansion, the company also intends to train existing employees for higher-skilled positions, resulting in promotions and raises, said Dana Johnson, executive director of the Cobb Chamber’s economic development initiative, SelectCobb.
Incentives are typically granted to lure new businesses, but Geter said the company had the option of expanding elsewhere.
“They could go across the line and build it in Cherokee County,” he said. “We want to make it as attractive as possible for them to remain in our county.”
The board of tax assessors will be asked next to sign off. The proposal calls for the development authority to issue a $37 million bond on the company’s behalf, which a superior court judge must validate, raising concern from some development authority board members. Filing deadlines and other administrative requirements are temporarily suspended at the Cobb County Superior Court after a failed attempt to transfer the online filing service to a new provider.
Kevin Brown of Seyfarth Shaw, a development authority lawyer, said judges and district attorney’s office are aware of their case.
“We should be OK,” he told the board.
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