County may OK a new tax-free zone

March 23, 2009
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County commissioners will decide later this week whether to let the city of Kentwood apply to the state for the region’s first Renewable Energy Renaissance Recovery Zone.

Under the state’s Renaissance Zone Act, Kentwood isn’t defined as an “eligible distressed area” and can’t directly apply for the nearly tax-free zone. But Kent County can on the city’s behalf, and the county’s Finance Committee recommended last week the full board do so, even though an approved Kentwood zone would cost the county tax and millage revenue.

The Renewable Energy Zone law is roughly a year old; the statute allows 15 to be granted throughout the state.

“We expect fierce competition (for a designation),” said Rick Chapla, vice president of business development at The Right Place Inc.

“This is our first West Michigan Renewable Energy Zone and it fits with our economic diversion plan at Right Place,” he said.

Heat Transfer International, a three-year-old firm based in Dutton, wants roughly a three acre parcel near the airport at 4720 44th St. SE declared a zone. The company specializes in biomass gasification, a carbon-neutral process that heats solid mixtures of waste into gas. HTI employs 10 now but expects to increase its work force to 90 within five years, if the state approves its application.

“These are well-paying jobs,” said Chapla. “They’ve shown a strong commitment to buying from the supply chain in Kent County.”

HTI was added to the Michigan State University Biosystems Engineering Industrial Advisory Board last week. Dave Prouty is the firm’s president.

Gaining the zone designation would allow HTI to operate relatively free of most state and local taxes from 2010 until 2021. HTI would then have to pay 25 percent, 50 percent and 75 percent of that tax burden in 2022, 2023 and 2024, respectively. In 2025, the firm would fully return to the tax rolls.

Kent County stands to lose an estimated $37,179 in tax revenue over the duration of the 15-year zone. State law doesn’t require the county to apply for Kentwood, and the county can’t prevent its property taxes and millage revenue from being captured in that zone.

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