Hyperlogistics Group Takes Advantage of Tax Abatement in Rickenbacker Global Logistics Park in Central Ohio

COLUMBUS, OH, March 02, 2011 (Press-News.org) With lingering high unemployment and sluggish recovery to the Great Recession, some communities are competing more mightily than ever to attract new businesses and the accompanying jobs. Companies have always had numerous choices to make when it comes to choosing a site. High-rise or single story? Downtown or suburbs? Lease or buy? But in the last decade, the decision-making process has almost become a bidding war in which location alone is no longer enough to seal the deal.

Commercial and industrial site selection professionals often juggle competing offers and review details regarding labor availability, infrastructure and transportation access. Hoping to stand out, communities usually sweeten their pot with financial incentives offered through municipal, county, state and federal government programs. The most common incentives are grants, low-interest loans, and tax credits and abatements. Some governments also offer financing programs. But cash isn't always king. "Incentives are part of the whole, but not the sole deciding factor," says Michael Stevens, deputy development director for the city of Columbus.

You can have the greatest incentives in the world, but without the right site for the company's needs, they don't come into play. We lead with the assets of Columbus: quality of life, workforce, pipeline of talent from our universities, physical infrastructure and location advantage. Then we use financial incentives as a differentiator," Stevens says. But in today's economy, when businesses are squeezing every cent out of each dollar, financial incentives are moving up on the list of site selection considerations.

Area Development, a national economic development publication, reports that such perks took three of the top 10 spots in its 2009 Corporate Survey. Labor costs were the most important site selection determinant for more that 96 percent of respondents, followed by highway accessibility at 93 percent. Tax exemptions ranked third at 88 percent, corporate tax rates took fifth place at 87 percent, and state and local incentives came in eighth at 8.5 percent.

Clients understand these financial tools could be available to help them expand, relocate or start a business. Money is tight these days, and we've found that a lot of companies in all types of industries are looking for incentive money," says Rob Bishel, a partner at Rinehart & Rishel. The Columbus law firm specializes in helping clients secure government incentives.

The credit crunch tied to the recession also has contributed to a growing interest in such programs. "It's not necessarily because Ohio has a lot of money to hand out, It's budget outlook actually is pretty bleak right now. I think it's more that the banks won't or can't lend for the types of commercial projects we're seeing," Rishel says.

ATTRACTING ABATEMENTS. Norfolk Southern Corp.'s Rickenbacker Intermodal Terminal was constructed with the promise of transforming Central Ohio's logistics industry. Shipping containers are transferred between trains and trucks at the 175-acre facility adjacent to Rickenbacker International Airport. Each day six trains service the terminal, which has the capacity to handle more than 250,000 containers and trailers annually.

When Hyperlogistics Group co-owners Geoff Manack and Seatta "Sam" Layland learned of Norfolk Southern's plans in 2007, they decided to relocate their logistics business closer to the intermodal terminal. In 2008, they moved a few miles to Rickenbacker Global Logistics Park. "The location near the intermodal was critical, yes, but we wouldn't have picked this particular site in Pickaway County without the 100 percent, 15-year tax abatement," says Manack. "We don't pay property tax on the improvements, which is our building. That's very significant for us. Real estate tax on a large building like ours over 15 years is a lot of money."

Hyperlogistics bought nearly 30 acres and built a 407,000-square-foot warehouse. The 1,576-acre industrial park straddles Franklin and Pickaway counties and is being developed by the Columbus Regional Airport Authority, Duke Realty Corp. and Capitol Square Ltd.. Pickaway County has to be competive to attract logistics jobs, so we've largely mirrored the tax abatements offered by Franklin County," say Nate Green, director of the Pickaway Progress Partnership, the economic development agency for Pickaway County and its municipalities.

When a company looks a the industrial park, we won't lose the deal because of the tax abatement issue. Our incentives show prospects that we're interested in having them locate in Pickaway County. We want them to come here and succeed, and that means reducing the cost of doing business here. Incentives help us do that," Green says.

The intermodal location made Hyperlogistics' site selection decision clear-cut. The process for other companies is unusually more protracted and may involve retaining real estate brokers and other advisers. "Typically we're the first point of contact for a client," says J.R. Kern, principal at Capital Equities, a commercial real estate services provider. "We partner with other professionals to build a team that guides clients through the decisions that result in the best property and the best deal. That can include financial incentives offered by various governmental entities."

While some commercial real estate companies are reluctant to collaborate on incentives, Capital Equities doesn't shy away from teamwork. "Sometimes it does lengthen the time it takes to close a deal, and any incentive package doesn't make us any more money. It's good for the client, though, and we see that as adding value to the deal and our services," Kern says.

Some business owners try to navigate the various incentive options on their own. Think twice before doing so. "Would you know a good deal? Are you sure you're aware of all that's available and the impact it can have on your company? The incentives can be complex. They're like any other negotiated item in the deal," Rishel says.

Requirements pertinent to equity levels, prevailing wage or project timing may lie in the fine print. "Then mix in money from state and local entities, combined with the project's private financing, and you're dealing with a lot of moving parts that may not always work in concert with each other," Rishel says. Some executives wrongly believe they won't qualify for incentive programs. "Businesspeople tell me they didn't know what was available to them. Many think they have to relocate or create a huge number of new jobs. That may or may not be true," Rishel says.

Many incentives have ongoing requirements, such as investing a certain amount of money in a facility or generating a set number of jobs. Occasionally, businesses that are granted tax credits or abatements fall short of those metrics. Sometimes that results in sanctions, but other times government officials are willing to work something out. "An overlooked aspect of accepting the incentive is meeting the parameters. They're usually tied to job creation. If the company cannot meet the goals it initially agreed to, we can help the company explain to the city and the citizens why that is and help forge solutions," Rishel says.

About Hyperlogistics Group
Hyperlogistics Group, established in 1973, is a full-service third party logistics and transportation provider and Foreign Trade Zone operator with national headquarters in Columbus, Ohio. Hyperlogistics provides highly-monitored and measured services to a broad range of industries from automotive and light industrial to food and medical items. Working closely with each depositor, Hyperlogistics constantly develops improved operational plans to maximize productivity and reduce supply chain costs. For additional information, please visit www.hyperlog.com.