NEWS

Longaberger struggles become city's debt

Kent Mallett
Reporter
  • The company's basket building employed just 68 at the end of last year, down from the 500 in 1998.
  • Longaberger's total workforce is 230, down from 8,200 in 2000, when it was a $1 billion company.
  • Longaberger's tax increment finance payments to Newark are $2 million shy of 1999 projections.
  • The company has been delinquent in tax payments in the past and owes $250,000 now.

NEWARK – Longaberger's basket-shaped corporate headquarters, a worldwide architectural marvel when the building opened to great fanfare in 1997, has become a financial headache for Newark taxpayers.

The seven-story replica of the company's Medium Market Basket employed just 68 people at the end of last year, a far cry from the 500 who filled the building in 1998. Longaberger's total workforce is 230, a fraction of the 8,200 employees at its peak in 2000.

The company is $250,000 behind on its tax increment financing payments to the city of Newark and Licking Valley School District and would be $350,000 behind by the end of 2015 without any payments, Licking County Auditor Mike Smith said.

Overall, the company's TIF payments to the city are $2 million shy of projections made in 1999 because of the late payments and a 2007 reappraisal that lowered the basket's value.

The city borrowed $3.2 million to make road and utility improvements on East Main Street and Dayton Road for the Longaberger development. The city has paid $6.8 million, including interest, but received just $4.1 million from Longaberger.

Smith sends a list of delinquent properties to the county prosecutor and treasurer every August for foreclosure consideration.

Mayor Jeff Hall said he has talked to county officials about the best course of action.

"They're delinquent, and it's something we'd like payment on, sure," Hall said. "But is (foreclosure) a solution? What's that solve and what's that do? They're restructuring. What they haven't done is locked up and completely gone out of business."

The city received $25,587 in tax increment financing payments in 2014. The 1999 projections were for the company to pay $364,587 annually for city infrastructure improvements to the area. The valuation of the property was cut in half in 2007, making its obligations about $170,00 annually.

Russell Mack, a board member of Longaberger parent company CVSL, said the company has no plans to sell the basket building and challenges its tax bill.

"Property values in the area have fallen over the years," Mack wrote in an email response. "We are working with our real estate advisers, and we are disputing the assessed taxable value of the Big Basket building."

Half the building is available for lease. Some employees in Newark spend part of their time supporting multiple CVSL companies.

"That's a very large building, and we have more space in it than we need to run Longaberger, so obviously, it makes good sense to make the excess space available," Mack stated.

Support functions such as finance, accounting, treasury, legal and graphic design, and information technology are handled out of CVSL headquarters in Dallas, Mack said.

More TIF deals?

The city plans to add a TIF for an apartment development on River Road, but the mayor said it will be different from the Longaberger TIF.

"The Longaberger TIF put all the eggs in one basket," Hall said. "That's a terrible pun, but it did. For the River Road development, we'll stockpile the money and spend it as we have it off TIF payments. We're not borrowing a bunch of money."

City Auditor Steve Johnson said he would not recommend the city repeat a TIF similar to the Longaberger agreement.

"I'd advise against a TIF," Johnson said. "I'm not in favor of a TIF where proceeds are used to retire debt because of the uncertainty of a TIF. It's city debt, so we're responsible for it."

The Licking Valley School District receives 25 percent of Newark's payment, according to the TIF agreement.

Jo Lynn Torbert, Licking Valley treasurer for 33 years, said the district has received almost $1 million from the TIF. That's about $500,000 shy of what was projected in 1999.

"The TIF was for a good reason," Torbert said. "What we've received is money we wouldn't have had.

"I'm sad because now they're struggling. I'm hoping they rebound and get back on their feet. We just take what we can get."

Longaberger still owes $43,757, due on Feb. 27, to Muskingum County for its 11 parcels. On June 26, it will owe an additional $33,456.

There is no current TIF agreement in Muskingum County, according to a spokeswoman in the county auditor's office.

kmallett@gannett.com

740-328-8545

Twitter: @kmallett1958

By The Numbers

Following are statistics for the city of Newark's Longaberger Tax Increment Financing district, created in 1996, for the Longaberger corporate headquarters, or basket building:

•TIF payments to city, 1998-2014: $4.1 million.

•City infrastructure expenditures: $6.8 million.

•Annual payments to city, projected in 1999: $364,587.

•Average payments to city, 1998-2014 (17 years): $242,579.

•TIF payments to city, 2014: $25,587.

•City infrastructure expenditures, 2014: $189,729.

Source: City of Newark

Basket building facts

Following are facts about the Longaberger Co.'s basket-shaped headquarters in Newark:

•Groundbreaking: Oct. 23, 1995.

•Opened: Dec. 9, 1997.

•Cost: $30 million.

•Size: 180,000 square feet.

•Height: Seven stories.

•Weight: 9,000 tons.

•Handles: 75 tons each; 320 feet long; 2 feet thick; 10 feet wide.

•Windows: 84.

•Capacity: 500 employees (68 at end of 2014).

•Atrium: 30,000 square feet, seven stories.

•Auditorium: 142 seats.

•Replica: 160 times the size of company's Medium Market Basket.

Source: The Longaberger Co.