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Council approves TIF amendment for Tropical Products after company cites contamination and higher costs
Summary
The council voted to adopt amendments to the tax-increment financing agreement with Tropical Products, lowering the company's fifth-year TIF percentage and adjusting job-creation requirements after the project encountered asbestos remediation and higher-than-expected costs.
The Salem City Council adopted proposed amendments to the city's tax-increment financing agreement with Tropical Products on Highland Avenue, approving changes the company requested after discovering asbestos contamination and incurring substantial remediation costs.
Why it matters: Tropical Products sought adjustments to job-creation targets and a reduced tax-exemption percentage in year five of its TIF agreement. The company reported an asbestos cleanup that added roughly $6 million to project costs and said total private investment exceeded its original projection.
Council discussion and details: Councilor Merkel explained the changes: Tropical Products discovered asbestos during construction in 2022, which required remediation costing an estimated $6,000,000; the company completed the new facility in March 2024. The presenter said Tropical Products's total private investment exceeded $30,000,000 (about 65% more than the original projection of $19,000,000). The company has retained 10 previous employees and hired nine new full-time employees in 2024, but it cannot meet the originally projected 23 new permanent full-time jobs within the first five years. The company proposed instead to create 40 to 50 new permanent full-time jobs over the next five years. To reflect that history and revised schedule, the amendment lowers the TIF from 20% to 10% in the fifth year, producing an estimated tax-exemption reduction of about $20,000 in that year.
Support and vote: Councilors who spoke in favor cited the company's investment, neighborhood engagement and remediation work. Councilor Marcello praised the company for open communication during remediation and for serving as a neighbor. The council approved the amendment by roll call vote; the motion passed unanimously.
What was not changed: Councilor Merkel reminded the council that with all TIFs the city still collects the base tax value and only exempts the anticipated increase in taxable value under the TIF; the city does not lose the base revenue.
Next steps: The amended TIF terms will apply as described; Tropical Products will be in year one of its exemption schedule beginning July 2024 and the reduced percentage will be reflected in the fifth year per the amendment.
