Question

ABCXYZ Corporation, a major manufacturer company, is the largest employer in the township of Oakwick—a 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. Oakwick’s 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 year’s 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 company’s employees who reside in Oakwick will decide to take the offer.

2) It will be Oakwick’s 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 ABCXYZ’s move out of Oakwick. What would be your recommendation to Oakwick’s elected officials?

Answer 1

Fact:
Oakwick is a small suburban community and population is also not much more. but ABCXYZ is also largest employer of township and providing almost 30-40% of total employment.

As well ABCXYZ ltd will have to leave Oakwick anyhow because of getting tax incentives ABCXYZ is giving whole property at $1 for public charity subject to deed restricted Oakwick also need space for recrational activities so will achieve its goal

Arguments:
So we need to think from Oakwick point of view. First thing Oakwick really need a place recreational activities and itis getting free of cost. Also if would not go with this option then it would have to create a space for the same and it seems like most of its budget will get expend into this.
Even if ABCXYZ sells it off to another corporate still it would be more opportunity for getting livelihood of people. However a lots of human asset is there so if Oakwisk provides tax incentive still it would end up with profit but now the question comes should that take space as recreational area or not so answer is yes it should accept otherwise ABCXYZ will sell this off and more environmental issues would be there so if outgoing corporate is going by settling down everything by going green it would be beneficial for the town.
As well 20-30% people will movealong with ABCXYZ so less public expensewould be there. Also by considering its annual budget which would be saved and could be expend in other area like hospital, schools etc. Therefore in nutshell Oakwick should buy space at $1.

Conclusion:
If not going to buy space- Oakwick will have to spend money on creating new space as well new employers so budget would be insufficient.
If going to buy space- Oakwick would end up with rofit by saving cost for recreational activities and will win public trust as well in long run