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Company to request tax abatement from Tyler Council

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TYLER (TYLER MORNING TELEGRAPH) - A Tyler company that contributes almost $7 million a year to the local economy is asking for a three-year abatement agreement with the city in a move that could add up to 15 permanent jobs and a $12 million equipment investment.

If City Council approves the proposal Wednesday, the city will create a three-year 100 percent tax abatement agreement with Hood Flexible Packaging at 2410 N. Lyndon Avenue in northeast Tyler, according to information received from the city. The jobs, which would pay an hourly rate of $17.75 to $18.10, would add about $700,000 to Hood's annual payroll, according to information received from the city.

"Tax abatement is a way of encouraging companies to reinvest in a community," Tom Mullins, president and chief executive officer of the Tyler Economic Development Council, said Monday. Mullins is also the president and CEO of the Tyler Area Chamber of Commerce.

In return for the company's $12 million equipment upgrade to Hood Packaging's Tyler operations and the additional jobs, the company will not pay city taxes for three years, Mullins said. For a company to qualify for tax abatement, it must meet a least one of three requirements: it must invest at least $1 million in new equipment or a new plat, add at least 25 new permanent jobs, and increase payroll by at least $400,000 or more, he said. Hood qualified on two of those three requirements, Mullins said.

Hood is a manufacturer and supplier of heavy-duty plastic shipping sacks with headquarters in Hattiesburg, Miss. Its major customers include Dow Chemical and ExxonMobil, according to information received from the city.

Tyler is competing with this investment with another Hood location in Canada.

Hood Tyler has requested tax abatement to help make the expansion more competitive, according to information received from the city. If the investment is not approved, there are eight jobs that would be at immediate risk and an additional two that eventually could be cut as business share is lost at the plant, the information from the city says.

In other news, the city will have to reimburse the Department of Energy $86,000 for some decorative light poles installed downtown, even though field personnel with the DOE initially approved the city's use of the poles.

In June 2009, the City Council approved an application for an Energy Efficiency and Conservation Block Grant to upgrade the traffic signal system in the downtown business district, according to information received from the city. The city spent almost $1 million for the decorative poles, and the federal grant was funded at 91 percent of that amount.

At the time of installation, DOE field inspectors approved the use of decorative poles for in the project. However, in a recent audit of the grant by DOE auditors, the use of decorative poles was not approved. The Department of Energy requested a reimbursement of the cost difference between decorative and standard poles in the amount of $86,239.02.

The city council meets at 9 a.m. Wednesday at city hall, 212 N. Bonner St.

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