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file an annual report for 2017 and will not be in compliance with tax abatement requirements for 2017. Under requirements of the tax exemption agreement and the County's Chapter 1100 tax exemption regulations (see attachment 4), INEOS is required to provide a number of new jobs at a high average wage level, file an annual report on or before January 15' of each year beginning in 2013, abide by representations made to the Board, and comply with tax exemption requirements. The annual report filing provides the County with a timely and convenient opportunity to verify compliance with tax exemption requirements prior to the March 1 annual filing deadline for an economic development tax exemption. If at any time the Board determines that INEOS is not in compliance, the Board may revoke, revise, or suspend the tax exemption. While INEOS does not intend to comply with the tax abatement requirements for the 2017 tax year and has not provided an annual report for 2017, INEOS has provided quarterly 2016 employment reports to County staff. Staff reviewed those reports and verified INEOS's compliance with tax abatement requirements for this past tax year (2016), including representations made in its tax abatement application. At this time, staff is bringing data to the Board to document INEOS' compliance with tax abatement requirements for this past year (2016). Staff is also informing the Board that INEOS will not qualify for the tax abatement exemption for 2017 and is seeking Board action to suspend the abatement exemption for 2017. By suspending the exemption, the Board may keep open the possibility of transferring any remaining years of the plant facility's 10 year tax abatement to a future prospective purchaser/operator of the facility if they meet the original tax abatement requirements. ANALYSIS Consistent with the tax abatement ordinance (see attachment 2), INEOS was approved to receive a ten year tax abatement of its ad valorem taxes for the General Fund, Municipal Services Taxing Units, and the Emergency Services District. That abatement was approved at 100% for years one through three, with a 10% yearly decline each year starting with year four at 90% abatement and ending with year ten at 30% abatement. If INEOS had continued its operations in compliance with the agreement, it would currently be in year five of the tax abatement schedule and would be eligible for 80% abatement for year 2017. Over the last several years, INEOS obtained approval of economic development incentives, developed a bioenergy production facility at the southwest corner of Oslo Road/74th Avenue (former Ocean Spray site), and hired facility personnel. Employees were first hired starting in late 2011, even before the plant was fully completed. By the end of 2012, INEOS had 56 employees. The number increased in 2013 and in 2014, rising to 64 employees in late 2013 and 68 employees in late 2014. In December of 2015, INEOS reported employment levels in the mid -50s. For 2016, employment levels had fallen to an average of 50 employees for the entire year (over 50 employees were on payroll for the first 10 months, with 41 employees for the 11th month and 29 employees for the 12' month). As shown in the table below, average wages per employee for the year 2016 were $84,520.69. The average annual wage calculation includes employees that worked only part of a quarter. In fact, excluding wages of those employees would increase the average annual wage. The 2016 average annual wage exceeds all previous year annual wages (see attachment #5). C•\Users\GRANIC-1\AppData\Local\Temp\BCL Teclmologies\easyPDF 7\@BCL@18051225\@BCL@18051225.docx 2 P35