City, state boost Katayama

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Company will get 2.25 percent back in taxes for reinvestment in Shelby plant

By Todd Martin

Government agencies that often offer economic incentives to attract new businesses now are giving traction to something new: giving incentives to existing businesses.

 “This is the best thing to happen to businesses around here in a long time,” Bobby Hudson told the Shelbyville City Council at Thursday’s meeting. “It’s fantastic for industries and cities because it targets the present businesses as well as new industries.”

Hudson, the president of the board of directors for the Shelby County Industrial and Development Foundation, was at the council’s meeting to support a resolution to offer Katayama American Company, located at 6901 Midland Industrial Drive, an incentive through the Kentucky Business Investment Program.

The council passed the resolution, the first of its kind. The program isn’t new, but Hudson said the Kentucky Cabinet for Economic Development, which oversees the program, is, for the first time this year, requesting that cities and counties pass a resolution instead of just informing the cabinet of their intentions.

Shelbyville’s resolution states that Katayama will receive a reduction in its local occupational tax from 1.5 percent to .75 percent for new hires that fit the criteria related to the qualifying project as determined by the Kentucky Economic Development Finance Authority.

The new hires go along with the planned expansion that the company announced in 2010. In addition to expanding its facility by 27,330 square feet, Katayama, Hudson said, has hired about 25 new employees, but he said he expects there could be about 40 more new hires.

On top of Shelbyville’s incentive the state reduces that amount by three times, or 2.25 percent, from the company’s state tax bill.

“Now that’s three percent that goes back into the company to help pay for expansion or specific pieces of equipment,” Hudson said, although he noted that companies do not have to divulge in what way they’ll use the savings.

Shelbyville Mayor Tom Hardesty said this is not a new practice, but that it has been very beneficial.

“We’ve been offering incentives to businesses for years, trying to help bring people to town,” he said. “But this is for the expansion of businesses, and it’s really helped.”

Hudson agreed, noting that the industrial foundation has used the program several times.

 “We just recently used it with Martinrea when they got everything back up and running full time,” he said.

Martinrea added more than 125 jobs last year when the company increased production at its Shelbyville plant to coincide with the increased production at the Ford plant in Louisville.

“We also used it in our discussions with Harley Davidson [in 2009], and that was going to be a big draw for them,” he said.

The incentive is only for new hires, which could total about 65 employees for Katayama, so Hardesty said it hasn’t been a burden to the city.

“Well, half of something is certainly better than all of nothing,” he said. “Without these incentives, some companies may have a more difficult time continuing to expand.”

Hudson told the council that he likely would be back for more resolutions soon.

“We’ve been doing this the last couple of years, and I think we’ve probably helped at least half the companies around here,” he said. “We have a few others we’re working with right now, but I can’t say which ones yet.”