Parma City Council considering economic development grants related to Advance Door

PARMA, Ohio — When it comes to economic development grants in the city of Parma, Economic Development Director Erik Tollerup has a theory.

“An improved economic climate helps everybody,” Tollerup said. “Naturally, it’s a very competitive market out there. Most communities in Cuyahoga County are already built out so it’s very difficult for us to create new business opportunities.

“We do spend a lot of time trying to backfill vacancies, so (economic development grants) give us some assistance in making that happen and competing against counties like Lorain and Medina that have a lot of open space for new construction. We’re trying to keep jobs here in Parma and Cuyahoga County.”

Currently awaiting approval by city council are two such economic development grants. The first involves Advance Door Company, which over the last year relocated from Cuyahoga Heights to 5260 Commerce Parkway West in Parma.

The company brings with it to Parma 37 full-time and three part-time jobs with a payroll of $2.4 million.

“Advance Door Company is eligible for a 44 percent rebate on payroll taxes for 10 years,” Tollerup said. “We also granted them a $20,000 storefront improvement grant to help with the costs of upgrading their electrical service and installing new shipping bays.

“With a business coming in like that, with a payroll of $2.4 million right off the top, they do have the opportunity if they exceed $3 million (in payroll) for that deal to extend to 15 years at 50 percent rebate.”

Then there’s Allied Development, which owns The Shoppes at Parma. The family-owned real estate group is receiving two economic development grants related to the opening of Ace Hardware and Chik-fil-A at the popular shopping plaza.

“Normally, we don’t incentivize retail but the economic impact of COVID necessitated that we look at working with Allied and The Shoppes,” Tollerup said. “We decided to incentivize Allied to bring new tenants and the city would grant a 35 percent payroll rebate for five years.

“When COVID hit, we all remember how some businesses were not allowed to open while restaurant and retail operations were shaken to their foundation. Ace Hardware is expected to create 14 full-time and nine part-time jobs, while Chick-fil-A has 10 full-time and 115 part-time jobs. Together both are expected to have $1,295,000 in payroll.”

Parma Mayor Tim DeGeeter said such grants play a large role in the city’s economic development.

“We’re excited to have Advance Door Company in Parma with the purchase of real property for their business,” DeGeeter said. “We also are excited to offer a storefront improvement grant along with a payroll tax rebate.

“During COVID-19, the Shoppes of Parma and their tenants were extremely hit hard. We wanted to assist by moving forward with some economic development tools.”

As far as one company having two economic development grants tied to other businesses, Tollerup said it’s not that uncommon.

“The landlord who puts the investment into the building to build it out can write it into the lease whoever they put in there that amount of payroll is for them to approach the city and get the grant award,” Tollerup said.

“That’s what Allied did. Allied basically purchased the Ace franchise and put that in The Shoppes. While Chik-fil-A is a different owner, Allied took on the expense of clearing the office building that used to be there. This allows them to recuperate their cost for bringing in new tenants.”

Tollerup said for the better part of two decades Parma’s policy has been to partner with new and expanding businesses using incentives tied to payroll tax revenue over property taxes.

The latter not only hurt school funding but often left the city — and school district — financially exposed if businesses failed.

“With payroll tax sharing, the city is rebating what we have already received,” Tollerup said. “The award goes up as the business thrives or it can go down if the business fails with its financial projections.”

Currently Parma has nine active economic development agreements involving Pitt Ohio, Prince & Izant, Melin Tool, OSG USA, Health Aid of Ohio, Perry River Road (former Triad Metals), Cleveland Freightliner, Axelrod Buick and Coastal Quality Construction.

“The majority of users of this economic development agreement are companies that were looking to locate somewhere in Northeast Ohio but the city stepped up, said we have this program, this is what the city can do to incentivize you to locate here and it worked,” Tollerup said.

Read more news from the Parma Sun Post here.