Battery Maker EnerBlu Gets $30M Tax Incentive for Kentucky Move

Daily Tax Report: State provides authoritative coverage of state and local tax developments across the 50 U.S. states and the District of Columbia, tracking legislative and regulatory updates,...

By Alex Ebert

California battery company EnerBlu Inc. is getting two silver mint julep cups, a handle of Maker’s Mark, and up to $30 million in tax incentives for moving its headquarters to Lexington and opening a new plant in eastern Kentucky.

The private company’s planned $412 million investment was heralded Dec. 15 by state and federal politicians, as well as investors such as American Electric Power Co., Inc. (AEP). U.S. Rep. Hal Rogers (R-Ky.) called it “the real deal” that is projected to add 110 jobs at the headquarters and 875 jobs at a to-be-built Pikeville, Kentucky plant that will build batteries for electrical commercial vehicles.

The deal was championed because it brings hundreds of new manufacturing jobs to a part of the state decimated by the decline of the coal industry. The unemployment rate in that part of the state is 6.7 percent, and incentives approved by the state last week are tied to creating jobs paying an average of $39 per hour, including benefits. The median per-capita income in that part of the state is only $10.06 per hour.

Silicon “Holler”

“An abandoned land becomes a new landscape for new opportunities,” Rogers said at a Dec. 15 press conference in Pikeville. “This is the first major development project for ‘Silicon Holler.’”

Flanking politicians during the press conference were some unlikely investors—an actor born in the area and an energy executive who both said they believe the business will bring energy jobs back to the community.

Boyd Holbrook, star in the Netflix show “Narcos,” said he was encouraged to see energy jobs coming back to the community where his father was a miner. “Let’s take it back to America’s energy capital.”

Instead of muscling out the smart-grid company, Matthew Satterwhite, president and chief operating officer of electrical utility Kentucky Power Co., a subsidiary of AEP, said that once he learned about EnerBlu he became part of the recruitment process and got AEP to invest instead of compete.

“I’ve got an energy company coming in and I’m a power company. I could stiff arm that and say, ‘I don’t want that coming here,’” he said. “This is the future.”

Nationwide Bid

The Kentucky Economic Development Finance Authority wouldn’t disclose which other states were vying for EnerBlu or what they were offering. However, company executives and local politicians said the bidding process was nationwide. Media reports had said that EnerBlu was also considering a transfer to Nevada, Utah, or Washington.

“We went everywhere. Johnny Cash had nothing on us,” Michael Weber, EnerBlu executive chairman said, choking back tears. “Here we were welcome like nowhere else.”

Pikeville has around 7,100 citizens, according to U.S. Census data. However, Gov. Matt Bevin (R) said the only other factory in the world working on batteries similar to EnerBlu’s started as a 35-person factor in China and now has 8,000 workers.

Economic development officials from Nevada and Washington didn’t immediately respond to requests for comment. The Utah body that approves development incentives didn’t vote on an incentive agreement with EnerBlu, Sara Adelman, spokesperson for the Governor’s Office of Economic Development, told Bloomberg Tax in a Dec. 15 email.

To contact the reporter on this story: Alex Ebert in Columbus, Ohio at aebert@bloomberglaw.com

To contact the editor responsible for this story: Cheryl Saenz at csaenz@bloombergtax.com

Copyright © 2017 Tax Management Inc. All Rights Reserved.

Request Daily Tax Report: State