Effingham officials’ efforts to keep a large employer in the city received national attention Wednesday when an article in the Wall Street Journal gave the city a pat on the back for retaining the Sherwin-Williams Co. distribution center in these difficult economic times.

Although the city put an economic package on the table in May to keep the paint giant in town, it only learned about three weeks ago the company intended to stay.

“We’ve been negotiating with them for over a year,” said Effingham Economic Development Director Todd Hull. “It was about three weeks, four weeks ago they let us know they were going to stay.”

The Effingham City Council passed an incentive package in May aimed to keep the company at its existing location off Wabash Avenue on the edge of the industrial park. But the company was still negotiating its lease up to about a month ago when a deal was reached between the owner of the warehouse property and the paint company.

The decision means the city will keep the more than 300 jobs at the distribution center.

It’s those jobs city officials believe is worth the seven-year tax increment financing deal it worked out with Sherwin-Williams, and in return, it’s the employees of those jobs that made the company want to stay.

“Our work force was a big part of them staying,” said Hull.

The Wall Street Journal article confirms Hull’s statement.

“The economics of the deal and the Effingham location’s strong work force were among factors that Sherwin-Williams considered in deciding to renew its lease, according to Madeline Muser Hayes, director of corporate real estate for Sherwin-Williams.”

According to the article, the distribution center at Effingham is the largest in a network of about six centers with 4 million square feet of warehouse space the company owns or leases.

“The Complex, which has about 85 loading docks, temporarily stores goods before they are sent out to be sold in Sherwin-Williams stores in 12 states,” states the Wall Street Journal article. “About 3.5 million pounds of the Ohio company’s products — including paint manufactured in Chicago and paint brushes from Oregon — roll in and out of the 1.2 million-square-foot facility daily on a fleet of trucks.”

The city incentive package gives the paint company a 100 percent property tax rebate for the next two years and a 50 percent rebate for the remaining seven years of the lease agreement. In exchange, Sherwin-Williams will complete $3.3 million in repairs and expansions at its Effingham facility and will maintain 200 jobs at the center for the entirety of the agreement.

“If the number of jobs drop below that number during that seven-year period, the agreement is null and void,” said Hull.

Although the company was still negotiating its lease agreement when the city package was approved in May, Mike Conway, director of corporate communications indicated the company planned to stay where it was.

“We’ve been there for more than 20 years. ... There’s just a number of different pieces of the pie, but all the bases are coming together fine,” he said after the city approved its agreement with the company.

Renovations to the building are to begin before the year is out and will be completed by June 30, 2012.

The $3 million in improvements at the Effingham facility will be paid for by Lawrence Kadish, the owner of the property and real estate investor based in Old Westbury, N.Y., as part of the seven-year lease agreement with the paint company, according to the Wall Street Journal article.

Hull is quick to say the city was able to retain the distribution center because it had the ability to offer the incentive package through tax increment financing. That type of economic tool is becoming even more important now the state has such serious budget woes, Hull said.

However, he also makes it clear it was a team effort to keep the company in Effingham when its lease expired in 2011. According to the Wall Street Journal article, Sherwin Williams considered moving to newly constructed space in Indianapolis, Fort Wayne, Ind., and the Chicago area.

“All parties worked on this — the city, state and landlord — and we were able to put together a good package,” said Hull. “The city council was very aggressive with this. They recognized how important Sherwin Williams was as an employer. It would have had a drastic effect on our community if it had left.”

As for other prospects of expansions or new companies coming to town, Hull said things have picked up in the last four to five weeks.

The renewed activity could be a sign economic factors are improving and it may be because some businesses are still doing well within their own sectors despite the tailspin the economy has been in for the year, said Hull.

“We’ve had some companies and developers contact us,” Hull said. “An interest in green projects has picked up, also.”

Donna Riley-Gordon can be reached at 217-347-7151 ext. 129 or donna.riley-gordon@effinghamdailynews.com.


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