Steelcase Pays Abated Taxes

September 29, 2006
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GRAND RAPIDS — City commissioners accepted a check from Steelcase Inc. recently and put the issue of abated taxes for the company's Eastern Avenue Leap chair plant to rest for good.

Steelcase and the city had worked to resolve the matter since last June, and did so with the world's largest office furniture manufacturer agreeing to pay $93,766 to cover abated taxes from a five-year period. The abatement was granted by the city in 2001.

"Steelcase has listened very carefully to this commission," said Deputy City Manager Eric DeLong. "They have deposited that amount with our treasurer."

The city's share of those taxes is only $17,192. The rest will go to the KentIntermediateSchool District, Grand RapidsCommunity College, the Michigan school operating fund, Kentwood schools, the Interurban Transit Partnership and KentCounty. The state school fund will get the bulk of those dollars: $38,305.

The taxes were abated from 2002 through this year.

Steelcase requested and received the tax abatement from the city for the plant at

4060 Eastern Ave. SE
and pledged to buy $3 million worth of machinery and equipment to produce the chair line at the site. The abatement was good until 2014.

But Steelcase announced earlier this year that it intended to sell the plant site to Ashley Capital, a New York real estate firm that plans to build a mixed-use project on the property. Selling the land prior to the abatement's expiration and moving the production of the chair out of the city means the company can't keep its part of the abatement agreement.

"It was their business decision to break that agreement, and that will happen from time to time," said 1st Ward Commissioner James Jendrasiak.

Ashley Capital is expected to close on the sales transaction with Steelcase by the end of this year or early next year. The city's Brownfield Redevelopment Authority approved the reimbursement for the clean-up of the site last week, meaning the East Coast firm will likely get some tax relief if the city commission and the state agree with the authority's decision. The firm is asking for roughly $30 million in tax assistance.

"The tax revenue [from the project] comes to $2.5 million," said 1st Ward Commissioner Roy Schmidt. "The $93,000 pales in comparison."

Schmidt added that Ashley Capital told the brownfield authority it would invest $142 million into building homes, apartments, offices and retail space that it has marked for the Steelcase property.

In July, city commissioners finalized a transfer with Wyoming officials for a small piece of Steelcase land. The transfer means that all the company's property is in Grand Rapids for the next 50 years and that Ashley Capital has only one city to interact with on its project. The city of Wyoming agreed to the transfer because it will receive its share of the property's tax revenue even though the land is in Grand Rapids.    

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