Deal lets Marathon save $2M in taxes

By LOU WILIN
STAFF WRITER

Marathon Petroleum Corp. will avoid more than $2 million in taxes by temporarily ceding ownership of its planned new buildings to the Blanchard Valley Port Authority.

Government bodies, like the port authority, do not pay sales tax. So sales tax will not be levied on construction materials for Marathon’s $80 million project, which includes office and service buildings, and parking garages.

If Marathon was the owner during construction, it would pay more than $2 million in sales tax, said Jerry Arkebauer, consultant to the port authority.

Marathon will pay for construction of the buildings. Then it will lease them for six to 20 years before buying them for $10,000 under a deal approved Thursday by the port authority board.

Marathon plans to transfer ownership of the downtown building sites to the port authority by April 1 and pay the port authority $225,000 for its role in the tax avoidance, Arkebauer said.

Construction is to begin in May on the first parking garage, to be built at the southeast corner of Sandusky Street and Beech Avenue. To be built over the next three years are another parking garage, an office building, and a multi-use office/service building, expanding Marathon’s downtown complex.

One of the new office buildings, across Hardin Street from Marathon’s headquarters, will be headquarters for pipeline subsidiary MPLX LP. The subsidiary will add 150 jobs averaging $100,000 per year by December 2017.

Port authority aid in Marathon’s growth is precisely what Findlay and Hancock County government leaders envisioned when they created the port authority in 2007. It offers low-cost financing and tax breaks to companies, nonprofit groups and governmental bodies for projects involving buildings, equipment or land. It has not had many deals because the economy slumped in 2008, shortly after its start, and halted development. But now it is bearing an intended fruit.

“This is one of the incentives that contributed to (Marathon Petroleum’s) decision to expand in Findlay,” said Don Templin, Marathon Petroleum chief financial officer. Other communities and states were competing to gain the Marathon expansions.

“This is what we’re supposed to be doing, and we just need more projects,” Arkebauer said.

In the deal approved Thursday by the port authority:
• Marathon, possibly by April 1, will transfer to the port authority title to the land on which the buildings will be constructed. Marathon will pay the port authority a $225,000 upfront fee for its help in the maneuver.
• When the land is transferred, the port authority will issue up to $90 million in bonds for construction of the two office buildings and two parking garages. Marathon Petroleum will buy all of the bonds, and the cash it pays for the bonds will pay for construction.
• Construction of the first parking garage will begin in May. Construction of the rest of the buildings will occur over three years. Marathon said it has not set specific dates for the other buildings. Because the port authority, a government body, will be the owner of the land and buildings, no sales tax will be charged for the construction materials.
• Marathon will lease the buildings for 6 to 20 years with no lease fee. After six years, Marathon will have an option to buy the buildings from the port authority for $10,000.

The parking garage at the southeast corner of Sandusky Street and Beech Avenue will have 800 spaces over five levels.

Other buildings to be constructed include a six-story, 120,000-square-foot MPLX headquarters on the south side of Hardin Street, and a three-story, 45,000-square-foot multi-use office/service building at the southwest corner of Sandusky Street and Beech Avenue. A parking garage south of Hardin Street and over Beech Avenue will have 1,200 spaces on six levels.

The former Elks building at 601 S. Main St. will be razed this spring. The former RCM Architects building at 613 S. Main St. will be demolished in 2015. Trees, green spaces and employee gathering areas will replace them.

A corporate hotel/conference center for use by Marathon and possibly other companies could be built at the northeast corner of Main and Lincoln streets. The hotel would have about 100 rooms. Marathon is seeking investors to build it.

Wilin: 419-427-8413
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