KINGSPORT — City leaders approved a $10.5 million incentive for Eastman Chemical Co. earlier this week, a measure undertaken in connection with the company’s plans to build a $250 million state-of-the art plastics recycling facility.
Through a process known as methanolysis, Eastman’s new recycling facility will convert more than 100,000 metric tons of plastic waste that cannot be recycled by current methods into premium, high-quality plastics.
The $250 million investment is expected to create 90 jobs, with construction beginning this summer.
Mechanical completion of the facility is expected by year-end 2022.
Eastman expects this initiative to contribute $600 million of new business revenue in the coming years.
The new facility will be located near the southeast area of the plant, just above the Holston River and bounded by John B. Dennis Highway on the east.
HOW THE PILOT WORKS
The incentive approved by the Kingsport Board of Mayor and Aldermen and the Kingsport Economic Development Board is a PILOT (payment in lieu of taxes).
When a piece of property is improved with new construction, its value is increased, and thus the taxes increase. Under a PILOT, instead of paying the full increase in taxes, a company would instead pay a percentage of the increase.
In Eastman’s case, the PILOT would not kick in until 2023 — essentially when the facility is complete and operational — and would result in a property tax savings of $10.5 million.
“We are pleased to continue our long history of investments in the City of Kingsport,” said Betty Payne, spokesperson for Eastman. “Kingsport continues to be the home of our largest manufacturing site, and the addition of this new facility will help tackle the global plastic waste crisis while providing growth and economic impact for Eastman, the state and our region.”
DEAL BENEFITS EASTMAN, CITY
The PILOT is for 10 years and will go into effect in 2023 with Eastman paying 14% of the increase in taxes. In 2024, that amount will increase to 20%, then an additional 10% each year until 2032.
If at any point during the PILOT, Eastman is able to achieve $10.5 million in savings before the 10-year period concludes, then the PILOT would end, said City Manager Chris McCartt.
During this timeframe, Eastman will also be paying its baseline amount in taxes on the property: roughly $500,000 to the city and $600,000 to the county. The increase in city taxes over the life of the PILOT will be approximately $3.9 million, McCartt said.
One final provision of the agreement is that Eastman will give Kingsport five acres adjacent to Borden Park — property that includes an overgrown baseball field and backstop.