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Rebuilding a company
A prime location, tax breaks and business-friendly politics inspire American LaFrance to stick with Lowcountry
By Dan McCue
Staff Writer
Tax breaks, a favorable political climate in the City of North Charleston and the opportunity to forge a unique partnership in a high-profile location all played a significant part in American LaFrance’s decision to remain in the Lowcountry after it moves from its present location in the Palmetto Commerce Park this time next year.
The emergency vehicle maker plans to invest more than $35 million over the next year to create a new manufacturing and headquarters facility on the campus of Charleston Southern University.
Within the next three years the company, which employs 430, will increase its local work force to between 850 and 900 employees, company officials said.
“We’re very excited about our new location and facilities,” said American LaFrance President and CEO John Stevenson. “This is a relationship that brings together the very best of business, education and community.”
DaimlerChrysler AG’s sale of American LaFrance to Patriarch Partners, a New York-based investment company, last year precipitated the move. DaimlerChrysler sold the operation, but is keeping the property off Ladson Road for commercial-van assembly.
A large section of the plant is being retooled by DaimlerChrylser for the anticipated daily production of 100 Sprinter vans a day at the facility. For a brief period, roughly seven months, beginning in November, the auto giant and American LaFrance will be running parallel production operations within the same facility.
All things considered
The deal that will bring American LaFrance to the CSU campus came together quickly over Easter weekend, said the university’s president, Jairy C. Hunter Jr. In fact, he admitted, it wasn’t even on his radar screen until he began preparing to attend a family wedding that weekend in Florida.
“(North Charleston) Mayor Keith Summey told me it was going to be a busy weekend when he asked for my cell phone number,” Hunter said. “By that Sunday night, my wife said I looked simply exhausted, but I knew we had taken advantage of a rare opportunity that held wonderful benefits for the university.”
Stevenson said in the months since Patriarch Partners had taken ownership of American LaFrance, the company had looked seriously at a number of sites, including locations in Dorchester and Berkeley counties, four within the city of North Charleston, and even a few in other states.
“We’re rebuilding a company,” Stevenson said of the search. “We felt we had an obligation to look at all possibilities.”
Sources told the Charleston Regional Business Journal that one of the driving factors in the search was a concern raised by Lynn Tilton, CEO and founder of Patriarch Partners, that the manufacturing facility not get lost in a faceless industrial park.
That said, none of the sites had the appeal of the 60-acre site adjacent to Interstate 26 that CSU is in the process of developing into a commercial and medical office park.
“Without question, this site offered us the visibility we felt we needed,” Stevenson said. “We’re on the brink of a new day for a company that in the past was routinely rumored to be going out of business, and we want people to see us grow.
“We also wanted to retain our employees, who have done a tremendous amount of hard work turning this company around,” he said.
There was one sticking point, however: CSU loved the idea of having American LaFrance’s 57,500-square-foot headquarters located in its office park, but wasn’t as keen on having its 420,000-square-foot assembly plant located there.
“That’s when it occurred to us that we had additional property behind the college that we hadn’t even considered developing.” Hunter said.
The company ultimately agreed to lease a total of 45 acres from CSU, the headquarters being located on a site visible from I-26, and the plant being tucked behind the university. An access road to the assembly plant will connect the facility to the interstate at the College Park interchange.
The facilities are being designed and built by a team comprised of affiliates of the Clayco Realty Group Inc., Venture One Properties LLC, Landmark Enterprises Inc. and First Commercial Investments LLC.
The manufacturing complex will feature a state-of-the-art, custom-fire products fabrication and assembly plant, a vehicle testing track, a pump test pit, a research and development center, a modification and refurbishing center and a store for American LaFrance memorabilia.
The headquarters building will include a customer showroom with five large bays, multiple conference rooms, offices and a lounge.
Additionally, several vintage American LaFrance fire trucks will be kept on display and used for public events.
Ground will be broken for the project within the next two weeks, and the company expects to begin moving into its new buildings in March 2007, three months ahead of when it must leave its current facility, Stevenson said.
Cementing the deal
But it took more than the availability of a prime location to entice American LaFrance to stay.
Steve Dykes, Charleston County’s director of economic development, said the incentive package given to American LaFrance was modeled on the package given to Western Star Trucks when it moved into the same building American LaFrance currently occupies.
“It’s called fees in lieu of taxes, and it’s something we use frequently to cement economic development deals in a very competitive climate,” Dykes said. “It’s our way to level the playing field.”
As Dykes explained it, without incentives a manufacturer in Charleston County would be taxed 10.5% on the appraised value of its building and assets. This value is then multiplied by the current millage rate of 255.1 to determine the amount of taxes owed.
“In this case, we’ve agreed to tax American LaFrance only 6 percent on the appraised value of their asset, so right away it’s a 40 percent savings for the company on its taxes,” he said.
“That shows you how much we thought was at stake in this situation,” Dykes continued. “Not only would we have lost more than 400 current jobs, the capital investment and the tax base, but we would have lost their future investment as well.”
But Charleston County didn’t stop there. It also provided American LaFrance with a special source revenue credit, essentially an additional tax cut based on their projected tax bills for the next 20 years.
“Basically, we’ve agreed to give them a 28 percent rebate on the taxes we’ve projected they’ll be paying over the next 20 years, and we’ve agreed to provide them that rebate over the next six year, when the dollars will mean a lot more in terms of supporting their startup costs,” he explained.
Dykes estimated that American LaFrance’s tax bill during this period would have come to $8 million. Instead, it will receive a rebate over the next six years of $2,240,000.
While the county brought tax breaks to the table, the city of North Charleston brought something else—a willingness to help American LaFrance quickly move through the building approval process.
“North Charleston is a very business-friendly place, and one that makes clear it will work hand-in-hand with a business so that it gets the permit it needs as quickly as possible,” Dykes said.
John Cawley, Dykes’ counterpart in the city of Charleston, said the negotiations with American LaFrance were a team effort consisting of himself, Dykes, the Charleston Regional Business Alliance and CSU.
“These are always complicated matters, because there are so many players at the table and so many factors for the company to consider.”
The tax abatement was one of them. State law allows a company to opt either into a fee in lieu of taxes agreement as American LaFrance has, or a city-sponsored five-year tax abatement program. A company cannot opt for both.
“As a company you have to look at your tax situation and figure out which program works best for you. In this case, obviously, American LaFrance went for the county program.”
Greasing the government wheels
Instead of providing a financial assist in this case, Cawley said he would serve as American LaFrance’s point man in city government. “Anything I can’t resolve or address, I’ll take directly to the mayor,” he said.
It’s a role Cawley said he plays for all companies that relocate or expand in North Charleston.
“While American LaFrance hasn’t experienced any problems yet, in the past in this role I’ve reached out to the Charleston Water Works on behalf of local companies to resolve water issues,” Cawley said. “In other cases I’ve simply been called by companies who’ve said, ‘We submitted some plans and they’ve been there two weeks, can you see what you can do to break it loose? ”
Dan McCue is a staff writer for the Business Journal. E-mail him at dmccue@charlestonbusiness.com.
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