City grants abatements

July 17, 2009
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City commissioners recently approved two Public Act 198 industrial tax exemptions that are expected to be worth nearly $1.2 million in private investments, create a total of 10 new jobs, and help to retain 75 existing jobs.

Thierica Inc., 900 Clancy Ave. NE, has purchased seven parcels in the 900-block of Lafayette Avenue NE for expansion purposes. The company will invest about $900,000 to build an 8,392-square-foot addition, build a truck well, buy some production equipment and reconfigure existing production lines.

The construction project will cost about $560,000, while the equipment purchase and installation is expected to run $340,000.

Thierica manufactures interior components for the auto industry and manual guidance instruments for the aerospace field.

"They currently employ 41 people and will add three to their staff," said Kara Wood, city economic development director.

"This will generate about $5,100 in property taxes and $9,435 in income taxes over the 12 years of their abatement," she added.

The city expects to gain $786 in new income tax revenue annually from the project.

Medbio Inc., at 630 S. Division Ave., plans to spend $285,908 on a silicone injection molding press, two plastic injection molding presses and other pieces of equipment. The new equipment will allow the firm to broaden its bid base in the medical device industry and compete for more in-house work instead of having to outsource jobs.

MedBio is a contract manufacturer in the medical and biotechnology industries. It has 38 employees and plans to add seven positions from the equipment purchases. The city stands to gain nearly $1,900 in new income tax revenue each year from the new jobs.

Both exemptions are good for 12 years. Half of the real and personal property taxes due from the projects will be abated for the length of the exemption. The state has to approve both exemptions.

An exemption scorecard
Here is an annual breakdown of the 12-year industrial tax exemptions that Thierica Inc. and MedBio Inc. recently received from the city.

Thierica Inc.

MedBio Inc.

Investment: Real Property

$560,000

$0

Investment: Personal Property

$340,000

$285,908

Existing Jobs

41

34

New Jobs

Average New Job Hourly Wage

$12.60

$13.00

Total New Taxes Generated Per Year

$21,773

$6,911

Total New Taxes Abated Per Year

$10,887

$3,456

Total New Taxes Paid Per Year

$10,887

$3,456

New City Property Taxes Generated Per Year

$5,115

$2,380

New City Property Taxes Abated  Per Year

$2,557

$1,190

New City Property Taxes Paid Per Year

$2,557

$1,190

New City Income Taxes Generated Per Year

$786

$1,893


Source: City of Grand Rapids Economic Development Department, July 2009

Industrial tax abatements down last year

As expected during a recession, requests for Public Act 198 industrial tax exemptions in the city of Grand Rapids were down last year, as city commissioners only approved seven in 2008. Still, the private investment pledged by the manufacturers that received the abatements totaled $24.2 million, with 133 new jobs coming over the 12-year life of the exemption.

Income & Property Taxes

Over 12 years

Company

Investment

Jobs Retained

New Jobs

New City Taxes

City Taxes Abated

Able Manufacturing

$238,069

$20,922

$5,946

Ideal Printing

$3,250,000

54

$4,400

$3,400

MICO Industries

$2,462,000

50

$14,000

$4,000

Oliver

$2,678,000

232

$33,600

$21,000

Paragon Firstronic

$1,042,000

60

$53,225

$26,019

Thierica Inc.

$4,434,000

85

16

$59,547

$9,227

Precision Aerospace

$10,100,000

122

50

$405,607

$202,932

12-Year Total

$24,204,069

561

133

$591,301

$272,524

Annual Tax Total

561

$49,275

$22,710

Source: City of Grand Rapids Economic Development Department, July 2009


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