Twinsburg Economy Still Recovering from Chrysler Plant Closure

Editor's note: There was an error in how much the city would collect in 2012. That number has been corrected and is reflected in the story.

Twinsburg collected about $4.5 million (Editor's note: This number has been corrected) more in income taxes through June 30 than it did the first half of 2010.

Income tax collections for the end of 2012 are estimated at $20 million. (This story has been corrected from a previous version). 

The city has collected about $13.6 million this year.

Total income tax revenue for the past four years:

• $17.9 million in 2008
• $17.1 million in 2009
• $18.9 million in 2010
• $19.9 million in 2011

When Chrysler closed in July 2012, the city lost about $2.2 million in annual income tax withholdings. Income taxes account for about 82 percent to 85 percent of city operations, director of finance Karen Howse wrote in an email.

The majority of operating expenditures pay for personnel, police and fire departments, administration and public works.

“When the automotive industry went down, of course it took Chrysler with it, and it took other part suppliers in the area with it,” economic development director Larry Finch said. “Because this area in Northeast Ohio had so many auto-oriented businesses in it, it really hurt this area dramatically.”

In 2009, Chrysler announced the plant would close and immediately started laying off employees.

City income tax collections typically lag a business quarter or two while the changes trickle down throughout the economy. Because Chrysler accounted for such a large part of income tax revenue, the city started to feel the drop right away.

When the plant closed in July 2010, 1,268 people had lost their jobs, including 533 from Summit, 236 from Portage and 206 from Cuyahoga counties.

“It was like the coup de grâce for our budget,” Finch said. “It took $2.2 million dollars out of a $17 million dollar budget.

“You can also see declines in most every other industry in the community because of a lack of demand for products because of the recession,” Finch said. “And, of course, housing starts were down to zero, so there was no new construction in housing.”

The city applied for and received grant money to complete a nearly year-long study on the loss of plant revenue both inside and outside the city.

The study found the plant’s closure meant more than $39 million in total lost wages from all employees both in and out of state. Finch tried calculating the effect on supplier network companies — anyone aside from Chrysler who built a part used in car manufacturing. He identified 76 firms and was able to contact 33 companies; he found 12 had phone numbers that were disconnected or no longer in service.

To recoup the loss from the Chrysler plant, residents approved a 0.25 percent income tax rate from 2 percent to 2.25 percent effective January 2010. That additional quarter percent yields about $2.7 million a year.

Since then, a number of new or growing existing industries such as medical and health care, general manufacturing and instruments and controls have given the city a boost.

The Chrysler plant property owner, city and state are also working to redevelop the 2.2 million square feet of plant space that sat on 167 acres. The city was awarded $3 million from the Clean Ohio Revitalization Fund to clean the site of contaminants from decades of manufacturing. The property owner will execute the remediation. In addition, the city was awarded $2.2 million for public infrastructure projects that will pay for paving roads, installing sewer and water lines and landscaping.

Once the plant’s remaining 400,000 square feet of debris is removed, the state will parcel out land to create Cornerstone Business Park. The first tenant, Vistar, a division of vending machine distributor Performance Food Groups, has already signed on.

Meanwhile, the city is trying to get more activity around the Square, including the former Kent State University Geauga Campus, and fill openings in the Canyon Falls Corporate Office Park off Aurora Road.

“We’re getting to the point where the city is almost built out,” Finch said.

There are few commercial properties available and several smaller commercial projects moving forward. Finch estimated industrial land in the city is close to 90 percent occupied and residential is about 95 percent occupied.

For those rare vacant buildings, the city has a community reinvestment program to help fill them. Goodrich and Windstream have both taken advantage of the program where the city issues a grant equal to a portion of what the business paid in income taxes the previous year.

As a result of these efforts, Howse said the city has managed to grow the general fund revenue while keeping expenditures lean.

“As of today, the city’s year to date income tax collections is up by 23 percent over last year,” Howse said. “It is our hope that as (the) economy improves, business performance will too and in turn so will the city’s income tax.”

Editor’s Note: In this series, Patch gauges the recovery of 18 Ohio communities based on income tax receipts since the Great Recession. Read about