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Commission grants Daehan half a requested tax abatement on a nearly $6.5 million investment

By Fred Guarino

The Lowndes Signal

For the second time in as many meetings, the Lowndes County Commission approved half of a requested tax abatement on machinery and equipment from Daehan on Monday, Feb. 26. But this time instead of a $2.4 million investment, the company was requesting an abatement on a nearly $6.5 million investment combined between Daehan and Hyundai.

The 50 percent abatement was approved subject to an approval of County Attorney Hank Sanders, who asked the commission to make it pending his review of the request.

Sung Taek Kim, accounting manager, and Yong-Kee Chun, president of Daehan Solution Alabama LLC, appeared before the commission to resubmit a request and asked for the same tax abatements the company has enjoyed in Lowndes County the past 15 years.

Previously the commission granted the company 50 percent of the tax abatement requested on an investment of $2,434,000 regarding machinery and equipment and mold and die to be placed in service from April 1,2018 to Sept. 30, 2018 and expected to create five to 10 jobs in the year 2018.

The company resubmitted an abatement request on a new investment of $6,459,060 associated with the new Hyundai Sanga Fe Model.

That investment includes Daehan machinery and equipment $2,434,000, Hyundai Motor Manufacturing (HMMA) TM project tooling $3,337,560 and HMMA ADA PE project tooling $723,500.

The machinery and equipment and mold and die are to be placed in service in the same time period as the previous request and still expected to create five to 10 jobs in the year.

Kim told the Signal the last request for a tax abatement was for Daehan’s investment in the project only. But, “After that submission, Hyundai asked Daehan Solution to combine their investments in this county. Daehan Solution combined those amounts…the total came up to about $6.5 million and resubmitted.”

Chun told the Signal that since last year the market has declined and Hyundai is suffering low sales. So, he said Hyundai decided to bring the Santa Fe new version production from Georgia (where it had been produced for the last several years) to Montgomery to make up the sales.

He said, “So, we want the county to allow us the same tax abatement which was provided as an incentive for the last 15 years.”

Kim explained the commission that the request was coming from Daehan while Hyundai would own the equipment in the Daehan facility because Daehan would be responsible for the taxes.

To grant the 50 percent tax abatement, the commission first voted to reconsidered the abatement approved at the last commission meeting and then approved 50 percent of the abatement requested on Feb. 26.

Chun asked the commission to reconsider. But Commissioner Robert Harris responded that the county is “still trying to recuperate our initial incentive package that we did in 2003 when Daehan first came.” He said, “That’s a 30-year debt that we are in, we’re trying to recuperate, so, that’s why we did the 50 percent.”

Commission Chairman McAlpine said, “Mr. Kim, we do appreciate you coming before us. We approved 50 percent.”

In other matters, the commission approved a USDA grant and loan for cameras at the John Hulett Detention Facility. The county will receive a grant of $50,000, but will take a loan for $186,962 for a period of 20 years with annual one lump sum payments from the general fund.

The commission also approved County Engineer David Butts to properly bid the pursue the purchase of a new boom cutter.

The commission did not discuss a letter from Pioneer Electric Cooperative Inc. as Harris said he had not read it. But the company sent a letter to McAlpine saying it is unable to comply with a request from the commission to place a one-year moratorium all disconnect and reconnect fees.

According to the resolution drafted by Sanders and presented to the commission for their signatures at the Monday, Nov. 27, 2017 meeting, the moratorium would be for the period of one year from Dec. 1, 2017 until Nov. 30, 2018.

The resolution stated, “Pioneer Electric Cooperative provides electric services to many of Lowndes County’s citizens at a higher rate than other utility entities” and, “the disconnect and reconnect fees are particularly burdensome on the families with the least financial resources.”

The letter from Pioneer Executive Vice President and General Manager Terry Mosely states, “Respectfully, we are unable to comply with the this request as it requires Pioneer to violate its bylaws and the very tenets on which a cooperative operates Additionally, this operational change would be a slap in the face for the vast majority of our members who pay their bills in a timely manner, and do not create these expenses.”

Commissioner Dickson Farrior expressed frustration that the county cannot get funds to resurface roads when people want answers.

Referring to tax bill by the Legislature that would be pledged to fund bonds for road and bridge work, Farrior asked Sanders, “Are we any closer to getting a 4-cent gasoline tax passed?” And, “Is there a possibility it is not going to happen?”

Sanders replied, “I guess fair answer to that is, yes, there is a possibility it is not going to happen.”