Keeler Zoned Out

April 14, 2006
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GRAND RAPIDS — City officials want to get the word out that the Keeler Brass Co. plant at 955 Godfrey Ave. SW will become available at the end of next year.

Why is the city so keen to let potential buyers know this?

Because the 600,000-square-foot building is in the nearly tax-free Renaissance Zone, and some time still remains on the tax-exemption clock.

The city ratified Keeler’s Renaissance Zone application in 2002 for a property that covers roughly 12 acres by adding the manufacturer to an existing zone that is exempted through 2011.

While city officials hope they can help encourage someone to buy the plant, they also hope they can recoup the tax dollars the city said it has lost to Keeler.

“They did not perform according to the Renaissance Zone development agreement,” said Deputy City Manager Eric DeLong.

DeLong said the FKI Group, the British engineering conglomerate that owns Keeler, decided to move production from the Godfrey plant to Tennessee, and that decision violates its agreement with the city.

Under the zone contract, the city said the company agreed to invest $2.75 million in the plant and add 35 new jobs to its 2001 workforce of 375.

“They met the investment criteria,” said Daniel Oegema, of the economic development department.

But, Oegema added, Keeler didn’t create the jobs it pledged to add. Those jobs would have added income-tax revenue to the city coffer, dollars that would have helped cover the property-tax revenue the city gave up by granting Keeler the zone designation.

City Economic Development Director Susan Shannon said that in each year since 2002, when the zone designation started, the city has lost $69,000 in property taxes from Keeler, a total that will reach $345,000 when the company ceases operations here at the end of 2007. Shannon added that the city expected to get about $30,000 each year in income tax from the new jobs at the plant.

Keeler had to post a performance bond worth $625,000 when the company agreed to the Renaissance Zone contract, and the city is checking with attorneys to determine whether it has a legal right to the bond.

“We do think we’re in the right to ask for the entire performance bond. They’re operating until 2007 and not paying taxes,” said Shannon.

“We’re going to start a series of meetings with them to negotiate and to get the word out about the Renaissance Zone property,” she added.

State law prohibits the city from canceling a zone agreement while it is still active. Twelve of the zone’s 15 years offer full exemption from most state and local taxes, while three years provide partial exemption.

Assistant City Attorney Stan Bakita said the city needs to review the zone agreement carefully and get a trusted opinion on the city’s legal standing.

“One of our options is to file suit on their agreement,” he said.    

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