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Cabinetmaker gets incentives to expand

CHARLESTON, W.Va. -- The West Virginia Development Office has assembled a package of incentives designed to help American Woodmark Corp. expand its kitchen cabinet manufacturing plant in Moorefield.

A memorandum of understanding between the development office and American Woodmark was released following Thursday's meeting of the West Virginia Economic Development Authority, the state's financing agency.

American Woodmark's incentive package has several parts. According to the memorandum, the company promises to:

* Make a minimum investment of $15.2 million within three years in its plant in the Robert C. Byrd Hardy County Industrial Park off Corridor H outside of Moorefield. The investment will include $12.6 million for equipment and $2.6 million for building and parking improvements.

* Create a minimum of 187 good-paying jobs with benefits, increasing employment from about 318 to no less than 505 -- a level that must be maintained for at least three years. The plant's annual payroll is forecast to grow from about $9.7 million to $15.4 million after the third year.

David Warner, executive director of the state Economic Development Authority, said the authority has received a $1.5 million loan from the West Virginia Infrastructure and Jobs Development Council to buy American Woodmark's $12.6 million worth of new equipment.

The authority will lease the equipment back to the company. Because the authority will own the equipment, American Woodmark will not have to pay any state personal property tax on it.

State property tax on $12.6 million would typically amount to about $170,000 a year.

Companies that get this kind of tax break often sign a payment-in-lieu-of-taxes, or PILOT, agreement with the county commission so there is some revenue to help pay for schools and essential services.

The Hardy County Commission passed a resolution in July that supported the project but didn't include a PILOT agreement.

Mallie Combs, executive director of the Hardy County Rural Development Authority, said the state already owns the real estate and equipment American Woodmark uses in Moorefield and the company is making a major investment.

Combs noted that Hardy County lost two other American Woodmark plants in recent years "and there was an opportunity to create 187 jobs. So what we all agreed to do is support the way it currently is."

Regarding the lack of a PILOT agreement, Mark Julian, director of the development office's business and industrial development division, said, "It's a local decision. They (county commissioners) have to decide what they're willing to do. It's entirely up to them.

"I think we had a situation where they could add 187 jobs in Hardy County. They (American Woodmark) have to have no less than 505 jobs at the end of the performance period. In Hardy County, that's big news."

The deal is meant to help West Virginia compete with several surrounding states, where manufacturing equipment is not taxed.

Julian said, "The expansion could have gone to Virginia or West Virginia. They (county commissioners) passed a resolution supporting the leaseback. We went ahead and did it."

Under terms of the memorandum, the company must repay the $1.5 million loan to the state Infrastructure and Jobs Development Council if it does not fulfill its promises. But if the company meets its commitments the loan will be forgiven.

The development office has promised to:

* Provide up to $400,000 a year to help pay for construction of a road linking the industrial park to Corridor H.

* Pay $2,000 in training support for each new American Woodmark employee, with an initial amount of $374,000.

* Work with the state Tax Department to help the project qualify for the state Economic Opportunity Tax Credit, the Manufacturing Tax Credit and the Manufacturing Property Tax Adjustment Tax Credit.

In addition, materials and equipment purchased for direct use in manufacturing by the company will be exempt from the 6 percent state sales tax.

American Woodmark is headquartered in Winchester, Va. In addition to its South Branch Valley plant, the company has manufacturing facilities in Arizona, Georgia, Indiana, Kentucky, Maryland, Tennessee and Virginia. The company also has nine builder centers across the country. The Home Depot sells its cabinets.

Contact writer George Hohmann at or 304-348-4836.



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