General Motors broke tax-incentive agreements it had with Ohio for its former Lordstown assembly plant when it shuttered the facility, and should fully repay the more than $60 million in credits issued to the automaker.

That’s according to the state’s Development Services Agency, which according to a letter in early March will recommend to Ohio’s Tax Credit Authority to terminate the agreements and demand a 100 percent refund.

But GM is asking to be spared from repaying the state, asking in April the state consider its belief that repaying the credits “would be inconsistent with the spirit of economic development and our significant manufacturing presence” in the state and the Mahoning Valley.

The April 3 letter from GM lays out reasons why it should not have to refund the credits, including small-car market contraction as consumer preference shifted to trucks and SUVs and GM’s massive presence in Ohio, which includes several plants, nearly 4,000 hourly and salaried workers and investments of more than $3.3 billion since 2009.

In addition, Troy D. Kennedy, GM’s U.S. property tax manager, highlighted GM’s joint venture with South Korea’s LG Chem to build a $2.3 billion electric vehicle battery-cell plant in Lordstown that when fully operational will employ upward of 1,100 people.

“GM believes that our significant manufacturing and operating presence in the state of Ohio, and the dramatic changes to the U.S. automotive market between 2011 and 2017, are critical factors for the Development (Development Services Agency) to consider in applying the agreements,” Kennedy wrote. “GM continues its commitment to the state of Ohio and the Mahoning Valley.”

The authority hasn’t taken up the matter, and it’s unclear when it may do so. It’s next meeting is July 27. The authority will determine whether a refund of the credits issued is required, and if so, how much.

INCENTIVES

According to Development Services, GM has received $14.2 million in job creation tax credits and $46.1 million in job retention tax credits. They were used to improve the plant to support the production of the second-generation Chevrolet Cruze.

The state’s March 3 letter outlines the particulars:

∫ On July 28, 2008, GM was approved by the tax credit authority a 75 percent, 15-year job retention tax credit in exchange for GM committing to retain 3,700 full-time employees in Lordstown.

∫ The same day, the authority approved a 75 percent, 15-year job creation tax credit in exchange for GM committing to create 200 new full-time employees and keep the existing 3,700 working. Both agreements were executed with the authority in January 2009.

So when GM closed the facility March 6, 2019, it defaulted on the agreements, according to the state.

GM’S RESPONSE

“Our correspondence with the state of Ohio highlights our considerable presence through the state of Ohio, our current investments in the Mahoning Valley and the impact of the current economic crisis facing our nation,” said GM spokesman Dan Flores. “We are respectfully asking the state to consider our belief that a repayment of the tax credits would be inconsistent with our significant manufacturing presence in Ohio and the Mahoning Valley.”

Kennedy wrote GM was mindful of the impact on the local community and Ohio of the decision to close the plant and “moved with a sense of urgency” to find a solution to lessen the impact, that being the automaker’s decision to sell the facility to Lordstown Motors Corp., which is attempting to start production of an all-electric pickup truck, the Endurance, in early 2021.

Lordstown Motors bought the 6.2 million-square-foot plant from GM for the rock bottom price of $20 million, and GM extended a $40 million loan that helped Lordstown Motors acquire the facility.

“Coupled with our battery electric joint venture with LG Chem, the investment by Lordstown Motors establishes Lordstown in the electric vehicle future that GM is driving toward,” Kennedy wrote.

Also, GM felt a crunch caused by the viral outbreak, which caused it to suspend manufacturing temprarily, Kennedy wrote.

Now, Democratic state Rep. Michele Lepore-Hagan of Youngstown wants the state, if it’s determined GM should repay the funds, to reinvest that money back into the Mahoning Valley.

“If the state makes good on collecting these funds, they must come back here to the Valley,” she said. “These workers deserve the Ohio promise of better jobs, brighter futures and an economy that works for everyone. Our state should be working just as hard as they do to make that happen.”

CLOSING THE PLANT

GM announced in November 2018 its plans to idle the facility after 54 years of automaking in Lordstown as the company shifted its focus to electric vehicles, trucks and SUVs. The last Cruze came off the production line in March 2019.

There was a large community-based effort to save the plant and try to convince GM to assign another production vehicle there, but that ended with a new contract between GM and United Auto Workers in the summer of 2019 that formally allowed the automaker to close the facility. By then, many of the 1,500 workers left there when the November announcement was made had either transferred to other GM plants or retired.

GM announced in November 2019 that it would sell the facility to Lordstown Motors Corp.

rselak@tribtoday.com