Sunday, January 29, 2023

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Commissioners burst gas supplier’s hope for extension on county incentives agreement

A plea from an industrial gas supplier for more time to meet its end of an incentives agreement has gone down like the Hindenburg with Alamance County’s board of commissioners.

During a regularly-scheduled meeting on Tuesday, the commissioners unanimously rejected a request from the Pennsylvania-based firm Airgas for a two-year adjustment in a timetable that it had originally negotiated in 2017 when it accepted an offer of $470,000 in tax-paid incentives from the county to build a production facility in Mebane.

A specialist in atmospheric gases like oxygen, hydrogen, and helium, Airgas had initially promised the county that it would have a facility worth at least $47 million up and running in Mebane by the end of 2019.

The company also predicted that this plant would have a staff of at least 35 employees, who were to be brought in incrementally through 2022. In return, the county’s board of commissioners offered Airgas five annual payments of $94,000 apiece – with the first payment slated to take place in 2020.

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Under this six-year-old agreement, the company agreed to accept a prorated sum from the county if the tax value of the new plant fell short of the anticipated figure in 2019 and each of the four subsequent years. Airgas’ contract doesn’t include any provisions for postponing this timetable even if the facility’s construction becomes bogged down for reasons entirely out of the company’s hands.

Yet, this sort of adjustment was precisely what assistant county manager Brian Baker presented on Airgas’ behalf when the commissioners convened their first regular meeting of 2023 on Tuesday.

Assistant county manager Brian Baker

That evening, Baker asked the county’s governing board to rejigger the contractual timetable in light of challenges that he said have kept Airgas from completing its plant even now– more than three years since the original target date in 2019.

“They’re a great company,” the assistant county manager went on to assure the commissioners. “But they ran into some delays…there are a myriad of reasons for those delays…It’s a combination of the fact that the [NC] 119 bypass was delayed, and they were required to build another road to access their facility. Then, once they kind of got going, that’s when Covid hit. They had a hard time staffing; their demand went way down, and they had a hard time staffing.”

Baker said that Airgas still hopes to meet the original benchmarks set forth in the contract. He nevertheless confessed that, as of this moment, the company has yet to satisfy any of the metrics laid down in the incentives agreement.

Baker’s figures revealed that, in the case of the facility’s tax value, the company had eked out just $27.3 million by the end of 2021, rather than the anticipated $47 million value. The company could, moreover, claim a staff of just 21 people by that same point in time, rather than 35 individuals that it had previously pledged to have on the payroll.

In spite of the company’s shortfalls, Airgas is still entitled to a portion of the promised incentives even under the terms of its original deal with the county. According to Baker, the company had qualified for a prorated payment of $21,711 in 2020 based on the assessed tax value of its facility by the end of 2019. The company could’ve also collected sums of $36,834 for each of following two years under the terms of the contract. Baker added, however, that the company has yet to formally approach the county to receive any of these payments.

“They haven’t requested their first payment,” he acknowledged. “We would’ve written them a check in 2020, but they haven’t requested it.”

Baker told the commissioners that Airgas can still draw down its contractually guaranteed payments for each of the past three calendar years. But, by moving the timetable ahead by two years, he said that the company could recoup a larger share of the proffered incentives – beginning with a payment of $56,628 for 2022 along with four additional payments.

[Story continues below photos.]


COUNTY COMMISSIONER REACTION TO THE REQUEST FOR AN EXTENSION ON INCENTIVES TIMETABLE

“I think that an agreement is an agreement.  When we sign things, we’re supposed to honor them.” – County commissioner Pam Thompson

“I would be firm but frank and say ‘you made the agreement, you live with it.’  Don’t come back to me in two years and say ‘oh, Covid happened; we couldn’t hire truckers.’” – County commissioner Bill Lashley

[Even] if the original agreement is flawed, it’s at least clear on what happens if the metrics aren’t met.” – County commissioner Craig Turner


The commissioners, for their part, seemed pressed to justify such an accommodation on behalf of a company that had failed to live up to its end of the bargain.

“I think that an agreement is an agreement,” commissioner Pam Thompson opined. “When we sign things, we’re supposed to honor them.”

“I would be firm but frank and say ‘you made the agreement, you live with it,’” agreed commissioner Bill Lashley; “don’t come back to me in two years and say ‘oh, Covid happened; we couldn’t hire truckers.’”

Meanwhile, Steve Carter, the vice chairman of Alamance County’s commissioners wondered out loud “what kind of Pandora’s box” he and his colleagues would be opening if they honored Airgas’ request.

In order to gauge the potential ramifications, Carter asked his fellow commissioners to postpone their decision so that Baker can determine if any of the county’s other incentive recipients are in a similar predicament. In response, the assistant county manager assured the vice chairman that Airgas is currently the only company which has approached the county about the difficulties it has had meeting its contractual obligations.

As an added rationale for Airgas’ request, Alamance County’s attorney Rik Stevens argued that, in accepting the company’s proposal, the county would also be updating the original contract to clarify some of the vagaries that he said have previously marred the county’s incentives agreement. But this pitch didn’t seem to pass muster with county commissioner Craig Turner, who is himself an attorney by trade – and a specialist in contractual disputes.

“[Even] if the original agreement is flawed,” Turner told the rest of the county’s board before the 5-to-0 decision to deny the company’s request, “it’s at least clear on what happens if the metrics aren’t met.”

For his part, Mebane city manager Chris Rollins told The Alamance News on Wednesday after the commissioners’ Tuesday night vote that Airgas had not approached the city of Mebane about seeking any sort of similar extension on its separate incentives agreement with the city, which has similar timeframes.

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