The Lufkin Business Park’s first tenant will hold a ground-breaking ceremony this week, as local 4B Economic Development Corporation members look ahead to the upcoming year.
Innovative Metal Components, described as an industry whose core discipline is focused on the aerospace industry, is the first planned tenant in the city’s industrial rail park off state Highway 103 east. Last month, Lufkin City Council approved $750,000 in funding, a $1.25 million loan and tax abatements for the company, which is expected to provide approximately 80 jobs within the next five years. The council approved the funding unanimously, with council member Don Langston recusing himself from voting.
Wesley Armstrong, vice president of business development for the company, expects the business to begin functioning in the first quarter of 2011. The company is already accepting resumes for its startup staff.
“We’ll start with about 23 employees and grow as aggressively as we can,” Armstrong said. “The feedback we’ve received so far has really been fantastic.”
“They have already received orders surpassing their year one budget,” said city of Lufkin Director of Economic Development Jim Wehmeier. “Though this is a startup company, it’s being run by people who have been in the industry for years.”
The funding provided to Innovative Metal Components, Wehmeier said, came from the 4B Corporation, which is funded through a portion of the city’s sales taxes after the department was approved by voters in 2004. Each year, that money is put aside to provide potential businesses with incentives, should they choose to settle in Lufkin. This will be the first building constructed through the use of 4B funds, though it is certainly not the first business to utilize their incentives.
Through that funding, the city will be able to finance the construction of Innovative Metal Components’ facility, which will then allow it to be leased back to the business, with interest going back to the 4B Corporation. That way, all the money provided up front will be returned to the economic development board. The $750,000, in particular, provides the city with ownership of Innovative Metal Components’ facility and land.
“This happens more often than not,” Wehmeier said.
In addition to the incentive package, the new business will also receive tax abatements, a process that is also “standard procedure,” Wehmeier said. Tax abatements generally allow the company to be exempt from any taxes in their first year, after which they will be responsible for a larger percentage of their taxes with each year in business.
Without that abatement and incentive package, Armstrong said, Innovative Metal Components probably would not have chosen to settle in Lufkin.
“Plus, the startup would have probably been delayed three or four years,” Armstrong said. “It’s a win-win situation, which are the only business deals that work.”
The city’s agreement with Innovative Metal Components, Wehmeier said, will also help protect it in the event that the company does not succeed. The contract is structured so that the company will not own any equity in the land or facility until the loan is completely paid off, allowing the city to retain ownership of the company if the business defaults.
Innovative Metal Components, Wehmeier said, will create good jobs while providing a good deal of income to the city and giving Lufkin more exposure to larger corporations.
With 2011 right around the corner, Wehmeier said, the 4B Corporation has high hopes for Lufkin.
“We have a lot of work ahead of us with the business park,” Wehmeier said. He also expects the 4B Corporation to continue to work with existing businesses as the economy turns around.
“We’re pretty optimistic about getting a great jump start in 2011,” Wehmeier said.
When asked how it felt to see a long-term project finally reach ground-breaking status, Wehmeier said that because there are always more misses than hits in economic development, it always feels good to see one take hold.
“We’re pretty blessed,” Wehmeier said.
Anyone who wishes to submit a resume to Innovative Metal Components can e-mail Armstrong at firstname.lastname@example.org.
Larissa Graham’s e-mail address is email@example.com.