(WKBN) – General Motors may have to pay back up to $60 million in tax credits after closing its Lordstown plant. Meanwhile, the company has extended an option to repurchase the Lordstown plant if it wishes.
The news was first reported by ProPublica in partnership with The Business Journal and later confirmed by public records requests made by WKBN.
According to Todd Walker, chief communications officer of the Ohio Development Services Agency, GM received $14.2 million in Job Creation Tax Credits and $46.1 million in Job Retention Tax Credits from the state.
The 15-year Job Creation Tax Credits were approved in July 2008 in exchange for the commitment to create 200 new full-time jobs and retain 3,700 full-time employees at Lordstown, according to a letter to GM from the Ohio Development Services Agency.
The letter dated March 3, says because GM failed to maintain operations at the plant, it was considered a breach of the agreement to close it. As such, the Office of Strategic Business Investments, Development, will recommend a 100% refund of the tax credits issued, and the Ohio Department of Taxation may bill any interest.
GM closed its Lordstown plant in March of 2019 and made the decision to sell it to Lordstown Motors Corp. for $20 million in November 2019. Lordstown Motors Corp. plans to use the plant to produce electric trucks there.
As part of the sales agreement, however, GM loaned Lordstown Motors Corp. startup costs in the amount of $40 million in exchange for the option to repurchase the plant and use some of the land around it.
Documents filed Monday in the Trumbull County Recorder’s Office indicate that GM extended the option to repurchase the Lordstown plant through August 31.
In response to the Ohio Development Services Agency’s issue with the tax credits, GM blamed market conditions and U.S. demand for small cars as the reason for the closure. A letter dated April 3, in response to Ohio Development Services Agency, says GM has continued to have a presence in the Ohio job market, citing its new battery plant in Lordstown and other operations throughout the state.
GM added that it actually employed more people from 2011 to 2016 and invested more in the area than was required by the agreement for the tax credits. The company cited investments at its other Ohio plants and its partnership through a STEM program at Youngstown State University. The company also cited planned operations at the Lordstown plant by Lordstown Motors Corp.
According to Walker, the Ohio Development Services Agency will make a recommendation to the Tax Credit Authority regarding remedial action, and the Tax Credit Authority will make the final determination at an upcoming meeting on whether or not a refund of tax credits issued is required, and if so, how much.
The next meeting is currently scheduled for Monday, July 27, 2020.