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Mullican Flooring incentive gets OK’d by Commission

Washington County Economic Development Council CEO Mitch Meredith helped give the presentation of the Mullican Flooring package during the Washington County Commissioners July meeting on Monday night at the George Jaynes Justice Center.
Washington County Economic Development Council CEO Mitch Meredith helped give the presentation of the Mullican Flooring package during the Washington County Commissioners July meeting on Monday night at the George Jaynes Justice Center.

By COLLIN BROOKS

Staff Writer

[email protected]

The Washington County Commission approved a $600,000 appropriation from the capital projects fund balance to the Washington County Industrial Development Board and delegated authority to the IDB to negotiate and accept payments in lieu of taxes during their July meeting on Monday night.

Now the proposal will be presented to Mullican Flooring in hopes that they open a distribution warehouse in a 126,000-square foot warehouse at 129 Roweland Drive in Johnson City. The money will be used as an economic incentive for the company to chose the location in Washington County, instead of similar sites in Bowling Green, Kentucky, and Wise, Virgina.

The property will be bought by the IDB and then leased to Mullican, who will pay a 15-year lease

“This is an initiative that will bring 200 more employees to complement the 231 that are already employed in Washington County and Johnson City today (by Mullican Flooring,)” Washington County Economic Development Council CEO Mitch Meredith said during the presentation.

The proposal surfaced at the beginning of June, as a $1.2 million investment by Washington County. However, Washington County Commissioner David Tomita, who also serves as a Johnson City Commissioner, presented the plan to the Johnson City Commission in order to gauge their interest level. That effort was a success, as Johnson City agreed to contribute $600,00 to complete the total that was initially requested.

The tax value of the property is $1.342 million and as reported earlier, the company has told the WCEDC that they would prefer the 75 cents per square foot rental agreement that will increase by $12,000 annually. In the lease agreement, Mullican can buy the building after 10 years for $715,000 or if carried out 15 years they can purchase building for $1. The rate of return for the investment is close to 9 percent for the county.

Mullican Flooring moved their headquarters to Johnson City in 2000 and the average that they have agreed to produce in five years will be $40,600.

The vote passed 19-6 with Greg Matherly, Sam Humphreys, Robbie Tester, Mike Ford, Steve Light and Danny Edens voting against the measure. Commissioner Pat Wolfe asked Washington County Attorney Tom Seeley whether the appropriation of the funds is within the state’s constitution.

“This is not a lending of credit; this is not a loan. This is a payment in lieu of taxes,” Seeley said. “So that approval is required by this board and the city commission. This does not require a county-wide referendum.”

The WCEDC has been working on the deal for 11 months and mentioned that Mullican will face penalties if they don’t meet their performance terms. The resolution reads that Mullican “shall be subject to escalated rent terms or increased payment in lieu of taxes in the event that the company does not meet at least 80 percent of the employment portion of the Performance Terms as required in the Proposal (the Tennessee Department of Economic and Community Development’s grant adjustment or repayment requirements are also based on satisfying at least 80 percent of the employment commitment.”

Mullican Flooring has said they will make their decision as to where they will place their new warehouse at the end of July.