Not A Taxing Day

October 20, 2006
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GRAND RAPIDS — While it may not have been the all-time biggest business-tax-break day in city history, city Economic Development Coordinator Daniel Oegema thought the last City Commission meeting may very likely have produced the most exemptions in one sitting in the last four years.

City commissioners granted 10 abatement requests on a single Tuesday, which will account for $13.7 million in new business investment, retain 579 existing jobs, and create 151 new jobs.

But while the city was setting a recent abatement record, commissioners also released a company from commitments it made for three abatements received earlier.

Model Pattern Inc., which is doing business as MP Components, has suffered during the recent tool-and-die slump and had to reduce its work force from 80 to 40 employees. Then the company lost its lease at

25 Leonard St. NW
and wasn't able to find another suitable location in the city.

Company President Joseph Schlatter told the city that he looked at 13 sites in the city, but none worked out. So MP Components recently moved to ByronCenter, after doing business in the city since 1973.

"He is trying to keep his business alive," said Susan Shannon, city economic development director, of Schlatter.

Commissioners granted MP Components permission to relocate, and released the firm from past and future liabilities tied to the abatement agreements. Those contracts saved Model Pattern $42,600 in taxes.

"It doesn't always work out as planned, as we lost an employer to another city," said 1st Ward Commissioner James Jendrasiak.

The new and abated tax figures are income and property taxes over a dozen years. The new taxes the city expects to harvest from the abatement programs have been projected to be more than 2.5 times the amount the city will give up. The city will receive $56,411 in new taxes and give up $20,083 in abated taxes, on average, for each year of the abatement period. (See chart.)

The exemption given to International Tooling doesn't include abated taxes because the project is a building renovation and is considered a rehabilitation project, so the existing real property tax base is being frozen for the next 12 years.

Eight of the 10 abatements are industrial and fall under Public Act 198. Two are exemptions for obsolete properties — Stratus Properties LLC and Taylor Coldbrook LLC — and these are covered by Public Act 146. Stratus is renovating

345 State St.
, and Taylor Coldbrook is doing the same to
1115 Taylor Ave.
Both buildings are vacant, so there aren't any jobs to retain.

For the calendar year, the city has granted 15 industrial exemptions that represent $17.7 million in investment. More than 740 jobs will be retained and 143 new ones are expected to be created.

In addition, four obsolete property exemptions were awarded this year and will account for more than $6 million in investment. Sixty-four jobs will be retained and 238 will be created, with 200 of the new jobs expected to come from renovation of the old Imperial Metals building on

Ionia Avenue
that the Irish Twins Group LLC is undertaking

In all, the abated taxes from the 19 requests granted this year total $338,600, and the new taxes that are expected to come from the projects total $853,740. The companies are investing more than $23.7 million this year, and 381 new jobs have been projected to come from those projects.

Oegema said the city has to get all the abatement applications to the state by Oct. 31.

"We're not handing out tax breaks," said 2nd Ward City Commissioner Rick Tormala. "We're creating jobs."     

Company   

Invested Amount

Jobs Retained

Jobs Created

News Taxes

Abated Taxes

Hansen-Balk Steel

$3,678,610

48

$60,000

$45,000

Paragon Firstronic

$2,000,000

51

50

$234,200

$38,000

Matador Tool & Die

$1,950,000

44

10

$72,000

$9,000

Great Lakes Triad

$1,188,379

85

$22,860

$15,000

Advance Plating

$1,183,924

18

$13,500

$8,000

Stratus Properties LLC

$1,065,000

12

$53,280

$38,000

Taylor Coldbrook LLC

$1,000,000

20

$72,000

$56,000

Stelter Partners LLC

$900,074

45

16

$61,000

$25,500

Pearson Foods Corp.

$527,695

200

30

$78,500

$6,500

International Tooling

$220,000

88

$9,600

$0

Totals

$13,713,682

579

151

$676,940

$241,000

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