Officials: Greenwood Arbonne facility 90% behind on job creation

Greenwood Common Council could revoke a tax break granted 16 years ago after officials said a skincare company failed on its promise to bring more than 400 jobs to the city.

Arbonne International, LLC, 800 Commerce Parkway West Drive received a 10-year $379,356 tax credit on personal property, including heavy machinery, in 2006. Also, the building’s original landlord was granted a 10-year real estate discount. Quadrangle Development Co. for $662,000.

As part of Arbonne’s tax break deal, the company agreed to hire 435 workers over a 10-year period, along with a certain amount of wages and capital investment in return for the tax break, city documents show. The company should maintain or exceed these numbers under the agreement, as well as submit an annual CF-1 form detailing how many devices were purchased, how many employees were hired, and the average wage at the facility.

However, Arbonne has not honored the end of the agreement, city officials say. When the company filed its CF-1 form for the next year’s tax benefits, it reported a significant decrease in headcount.

An Arbonne spokesman did not respond to a request for comment before the deadline.

Significant staff reduction

In the company’s latest CF-1, representatives reported 46 employees. That’s nearly 90% below the company’s hiring commitments, said Adam Stone, chairman of the city’s CF-1 compliance committee and a financial advisor who routinely works for the city.

“On a mental note, hundreds of jobs are gone, and as a percentage, that’s about 90%,” Stone said.

Earlier this month, the committee recommended that City Council declare Arbonne noncompliant and end the cut. The committee believes this is better than trying other measures, Stone said.

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With this recommendation, city officials have announced their intention to end the cut. The city council will ultimately have the final say on the termination after the company has an opportunity to respond, he said.

Issues found in the verification process

The discovery resulted from a review conducted by the CF-1 Compliance Committee. The compliance issue wasn’t discovered earlier because it “slipped through the cracks,” Campbell said.

“The committee reviewing these is fairly new,” Campbell said. “…And apparently the county never said anything about it. It’s one of those things that slipped through the cracks.”

Through the review process, the city also determined that the company had four more years left of its cut.

“Somehow, according to county information, they have … four more years of cuts ahead,” Campbell said Wednesday.

The reason the company has four more years to reduce is due to the gradual construction of the site. The company reported new builds during periods that were still under the mitigation cap, Stone said.

The cap applies to the capital investments that the company has committed to invest in the warehouse. The company promised an investment of $7,864,500. The actual level of investment in the CF-1 for next year is not publicly available at this time, as information about the cost of new equipment is considered confidential, officials said.

Problems have arisen before

This isn’t the first time Arbonne has failed in what it promised the city.

In 2008, officials found that the company had failed to provide the city with proof that it had met its job-creation criteria. Officials said at the time the company had not submitted any compliance forms for the first few years of the cut.

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This discovery was made after a request for the report was received after the company announced layoffs earlier this year. The non-filing went unnoticed at the time, as the first compliance form was never filed in 2007, according to previous reports from the Daily Journal.

Arbonne was reportedly not commenting on the issue at the time.

In the past there have been times when the company filed documents with the county but not the city. The city should review the paperwork, sign it, and forward it to the county, Stone said.

Because of the erroneous filings, the county continued to apply the reductions in years when the city failed to receive the required documentation. Arbonne’s previous CF1 filing and compliance process issues are “water under the bridge” for the city and are not the reason the mitigation is about to end, Stone said.

The city also has no issues with how county officials have approached Arbonne in the past. The current outstanding issue is the number of jobs reported by the company, he said

The city usually tries to be business-friendly by giving companies a benefit when in doubt, but in this case the committee recommended ending the cut, Stone said.

“It was the committee’s recommendation that, ‘Hey, the taxpayers have already benefited, they’ve made the investments,'” Stone said. “At this point, that workload really needs to be considered more carefully if the Council is to continue this mitigation agreement going forward.”

The committee now monitors compliance

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Issues like these are one of the reasons the audit committee was formed, Campbell said.

The committee consists of City employees and Stone. On behalf of the City Council, the committee reviews mitigation compliance and is responsible for organizing and maintaining all records of compliance and agreement over the years, Stone said.

“Essentially, we’re naming observations and things that we think the council should consider as part of reviewing a company’s compliance,” he said.

For years, the City Council, which is responsible for approving CF-1 forms each year, stamped them without asking many questions. Over time, however, council members began to see that there were issues with it, and after speaking with Mayor Mark Myers, members became more vocal that a fix was needed, Campbell said.

“We’ve seen that become a problem,” Campbell said. “If companies don’t live up to the commitments, they shouldn’t benefit.”

The reductions are complex and usually take five to ten years. Because of this, there are many documents and requirements embedded in each review. The committee’s job is to make sure companies’ cut files are complete and that the spirit of what the city council approved for each cut is being carried out correctly, Stone said.

“We’re actively trying to try to monitor any sort of discrepancies and differences to make sure those cuts are granted and properly monitored,” Stone said.

Arbonne officials have been asked to appear before the city council at the next regular meeting on Oct. 3. During that time, the company will be asked to provide information on why the cut should not be ended, Campbell said.

If the company doesn’t provide the information or show up for the public hearing, the cut could end, he said.

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