Question
ABCXYZ Corporation, a major manufacturer company, is the largest employer in the township of Oakwicka small, Midwestern suburban community with a population of about 15,000
ABCXYZ Corporation, a major manufacturer company, is the largest employer in the township of Oakwicka small, Midwestern suburban community with a population of about 15,000 residents. ABCXYZ employs an estimated 2,000 people on its 63-acre campus and nearly half of the employees reside in Oakwick. ABCXYZ pays approximately $200,000 in property taxes annually to Oakwick, a figure that generally increases by 2% each year. These revenues collected by Oakwick go directly into the general treasury with the other property taxes collected by the community. Oakwicks approved annual balanced budget totals $16,000,000 for this year.
ABCXYZ announces that a state in the Southwest has provided a lucrative corporate tax incentive that is too appealing to pass up, and thus it is planning to close its operations in Oakwick and move out at years end. As part of its public relations campaign to help the environment and create recreational opportunities for young people, ABCXYZ has decided to offer Oakwick the property for just $1 after ABCXYZ has razed the plant and restored in to its natural state. However, the community is deed-restricted to only use this property for open space and recreational activities. Historically, Oakwick has been in desperate need of recreational amenities for its citizens but has had very little open space to achieve this goal.
Additional facts to consider:
1) ABCXYZ has offered the same job at the same salary to any current employee who agrees to move with the company. Half of the companys employees who reside in Oakwick will decide to take the offer.
2) It will be Oakwicks responsibility to develop the site for recreation.
3) Should Oakwick decide against the deal, ABCXYZ has indicated that it would make the same offer to the county and state in which Oakwick is located.
-As the chief financial officer for the township of Oakwick, how would you dissect this offer? Consider and identify all direct and indirect budgetary considerations (both operating and capital expenses) that may result from this possible transaction and ABCXYZs move out of Oakwick. What would be your recommendation to Oakwicks elected officials?
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