Grand Haven To Max Out Tax Breaks

July 26, 2004
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GRAND HAVEN — Changes to a city policy should provide greater continuity and guidance in how Grand Haven issues industrial tax abatements.

In enacting a clear policy on how the city will weigh and award tax abatements for manufacturers, city leaders are continuing last year’s decision to pursue a more pro-business stance than before.

“We’re putting a message out — we want new industry to come to town,” said Mayor Roger Bergman.

“We want to be as pro-business as we can. The intent is to work with industry and keep our current industries in town and expanding and innovating, and to encourage them to upgrade.”

For years, City Hall’s stance toward industrial tax abatements under Michigan Public Act 198 has been ambiguous.

Bergman’s predecessor openly opposed awarding industrial tax breaks as an economic development incentive, even though most communities have viewed the use of tax breaks as a staple of their economic development strategy.

Now, with several vacant industrial facilities in the city and manufacturers facing difficult times, the city is embracing the use of tax breaks to lure new firms, to retain existing industry and to encourage expansion.

The city council in May adopted a new policy that — in line with state law — allows 50 percent property tax abatements for eligible firms for up to 12 years .

The council previously was willing to give tax abatements only up to five years on real property and five years for personal property.

Bergman hopes the new tax abatement policy will resonate with existing employers and lead to them expanding their operations locally, as well as provide an incentive for new employers to make a business investment in the community.

Bergman said two large employers have indicated they will move production from other facilities to their Grand Haven plants.

Bergman said he believes communities need to use whatever economic-development tools are available to lure new businesses and support existing employers that are expanding.

He said this is particularly true at a time when manufacturers face harsh competition.

“They can pick other places to be,” Bergman told the Business Journal. “We want them here.

“They have lots of choices out there. Hopefully we can make a difference and encourage them to stay here,” he added.

“We’re trying to say ‘Grand Haven is the place we want you to be today and 20 years from now.’”

Grand Haven’s manufacturing base largely consists of small firms, although the city is home to two larger and growing manufacturers: Shape Corp. and JSJ Corp.

As of two years ago, the 70-some manufacturers in the Grand Haven-Spring Lake area, employed more than 4,400 people and collectively had an annual payroll of $28.4 million.

That was the substance of a 2002 survey conducted by The Chamber of Commerce in Grand Haven. The survey also found that those firms paid some $800,000 in city property taxes and — when indirect benefits and spin-off employment are figured in — added nearly $200 million annually to the local economy.

The change in the city’s tax abatement policy sent a clear signal to manufacturers based in the city, Chamber of Commerce President Joy Gaasch said.

“The value of the message that the council has sent to the business community is just astounding,” Gaasch said.

“It’s something we need to be ever diligent of. We cannot take any component of our economy for granted.”

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