City Must Review Factors Affecting Job Creation Criteria

January 12, 2004
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Recent action by the Grand Rapids City Commission belies an issue related to criteria for granting Renaissance Zone status, that of required job creation.

The city last week released half a $200,000 letter of credit backing Wolverine Coil’s Renaissance Zone status, though the company has not been able to meet the job creation criteria. Wolverine has fulfilled every other aspect of the agreement used to grant the tax-free zone status, and the city agreed to extend the job creation deadline until December. City Economic Development Director Susan Shannon noted that several other companies have not been able to meet that criteria (most recently Benteler Industries) and in each case, she said, “we work with them.”

Grand Rapids Business Journal suggests the city and state review this aspect of granting Ren Zone status, perhaps eliminating it in view of the facts of this new economy.

First, the Ren Zone legislation was built of the old economy, a period of time economic analysts believe is a bygone heyday, especially for manufacturers. The achievement of the legislation was that it kept business that planned to expand within the State of Michigan rather than following lures set by southern states, and provided a unique recruitment tool. The success of this was measured in Michigan’s ability to win Site Selection magazine’s top rank three consecutive years, years marked by national expansion. Grand Rapids became the state’s crowning example of Ren Zone success and was cited as such statewide.

While many indicators show the economy to be rebounding and in fact advancing, it is termed “a jobless” recovery, marked by historic gains in productivity. Such is not so much a trend but may be a mark of the fundamental shift in this, the technology age.

Criteria review should be planned with the facts, rather than remaining in the “box” of old models as though nothing has changed. From the “cool cities” concept rooted in the findings published in the “Rise of the Creative Class” back to Alvin Toffler’s “Second Wave,” it is apparent the city may be asking for impossible promises rather than solid planning.

Further, recall that in the mid-90s, the fact of a smaller labor force (compared to the number of retiring boomers) only began to show itself, but was enough to make then Gov. John Engler a zealous pen pal with alumni of Michigan colleges and universities as well as natives. That statistic is as firm now as then.

The Ren Zones have worked to keep business expansion in Grand Rapids and prevented further loss of jobs, and that may be sufficient reward until the dust of this economic transition storm settles to provide clear vision.           

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